New Act gives consumers more clout

27 July 2010

The Consumer Protection Act has worldwide implications as foreign companies selling goods and services in South African consumer markets will also have to comply with the new legislation.

“These companies could be sued for damages if found in breach of product liability or labelling provisions,” Werksmans Attorneys said in a statement on Monday.

“It is critical for local retailers to understand the implications of importing products and for foreign companies to be aware of their obligations,” director and product liability specialist Eric Levenstein said.

Beyond borders

When the Act becomes fully effective later this year, it will apply to suppliers regardless of whether their head offices are within or outside South African borders.

“If a defective or incorrectly labelled product were to cause harm or injury to a South African consumer, the foreign manufacturer could become a co-defendant together with the local retailer or supplier in product liability litigation.”

Levenstein said the threat of such litigation could not be taken lightly.

“The Consumer Protection Act places the burden of proof squarely on the shoulders of the supplier and not, as in the past, on the consumer.”

Supplier provides proof

He said strict liability, as this was known, meant that the onus was on the supplier to prove that the product was not defective.

“The consumer only has to show harm or loss and that this was caused by the product concerned.”

The implication of strict liability for suppliers – local and foreign – is that it gives consumers greater legal clout when lodging product liability damages claims.

“This links up with the other major issue that foreign suppliers need to be aware of – the fact that their assets in South Africa could be forfeited to pay a damages order,” Levenstein said.

“The fact that their goods in South Africa could be judicially attached for jurisdictional purposes means that the product liability provisions of the Consumer Protection Act are far from toothless for foreign suppliers.”

Incorrect labels

The Act’s product labelling and information requirements should also be noted.

If a South African consumer suffered loss or injury because a foreign-made product had been wrongly or inadequately labelled, both the local retailer and the foreign supplier could be held liable.

“Suppliers will have to be particularly careful about proper labelling of products that need warnings or special instructions for usage,” Levenstein said.

“Where any product has a risk of an unusual nature that an ordinarily alert consumer could not be expected to know about, the supplier is compelled to bring this to the consumer’s attention in plain and understandable language.”