PRIVACY CONTRACTS AND DOCUMENTS This section will apply to all Suppliers
Direct marketing • The heading of this section is misleading, as it really, instead of prohibiting a Supplier access to consumer data, rather relates to and regulates a Supplier’s right to engage in direct marketing. • In this regard the CPA states that the consumer has the right to privacy including the right to engage in or prohibit, at his or her option, any direct marketing related communication. • CPA Section 11 Right to restrict unwanted direct marketing
Meaning of direct marketing • "direct marketing" has been defined under the CPA to mean any approach by a Supplier, either in person or by mail or electronic communication, for the direct or indirect purpose of promoting or offering to supply, in the ordinary course of business, any goods or services to the consumer or requesting the consumer to make a donation of any kind for any reason.
Direct marketing therefore can take on a number of forms ranging from cold calling or telemarketing, emailing, fliers, catalogue distribution, promotional letters, and street advertising.
Note • Direct marketing or advertising has been singled out because it can be used in an ambush manner without giving the consumer the opportunity to think about the consequences of his purchase. Said differently, the consumer usually does not initiate the contact, rather this is initiated by the Supplier or direct marketer, and hence the consumer usually has not taken the first step, at his or her choice or direction, to initiate and conclude the transaction.
Note • It is for this very reason ( i.e. because the consumer has not chosen to transact) that consumers are afforded protection, in particular those more vulnerable consumers against an overzealous and often desperate and unscrupulous salesman who takes advantage of that window period or opportunity, when the consumers guard is down.
Registry To facilitate the realisation of each consumer's right to privacy, and to enable consumers to efficiently protect themselves against the activities of a direct marketer, a person who has been approached for the purpose of direct marketing may demand during or within a reasonable time after that communication that the person responsible for initiating the communication or direct market contact, desist or refrain from initiating any further communication with that consumer.
Commission To give effect to this, the Commission may establish, or recognise as authoritative, a registry in which any person may register a pre-emptive block, either generally or for specific purposes, against any communication that is primarily for the purpose of direct marketing.
Effect • Once this registry had been established, any person authorising, directing or conducting any direct marketing must implement appropriate procedures to facilitate the receipt of any pre-emptive block demands and must not direct or permit any person associated with that activity to direct or deliver any further communication for the purpose of direct marketing to any such person (i.e. the person who has requested that such a pre-emptive block is registered in his name).
Register • Any request for a pre-emptive block, must not be at the consumers cost, and should rather be entirely facilitated by the Supplier at his or her own cost. • The Minister may prescribe regulations for the operation of a pre-emptive registry. This register however will not come into force for some time. As this particular section, under the CPA has been placed on hold until further notice by the Minister. • The above however does not negate or detract from the Suppliers obligation to establish at its own cost, its own register where consumers “opt out” requests will be registered.
Regulation of time for contacting consumers Following with the privacy theme, a Supplier may not make any direct with a consumer at home or at his or her office for the purposes of any form of direct marketing during any prohibited period, as prescribed by the Minister , except to the extent that the consumer has expressly or implicitly requested or agreed otherwise.
Regulation of time for contacting consumers To give effect to the above, and in order to protect the privacy of consumers, the Minister, may by notice in the Gazette, prescribe specific days, dates, public holidays or times of days when a direct marketer is prohibited from contacting by way of a direct market , any consumer. • CPA Section 12
Note • The Act deals with who may enter into an agreement and how, what an agreement's content and form should be, and matters such as how an agreement can be altered or ended.
Agreement defined • The Act defines agreement as 'an arrangement or understanding between or among two or more parties that purports to establish a relationship in law between or among them'.
FIXED TERM AGREEMENTS Reference CPA Section 14. Expiry and renewal of fixed-term agreements
Fixed Term Defined • A “fixed term agreement” has not been defined under the CPA. • However, on reading section 14, the provision, relating to and regulating fixed term agreements leads one to conclude that a fixed term agreement, is any agreement between a consumer and Supplier for goods or services which is for a period of at least 20 (twenty) business days or more • (i.e. exceeds 20 business days).
Note • This particular section caused a great outcry in the business community when it was first published for comment, as it in effect allows a consumer to cancel any fixed term agreement, notwithstanding that it may be for a defined fixed period, at any time, for no cause, provided that the consumer gives the Supplier 20 (twenty) business days notice of his or her intention to terminate the fixed term agreement in question.
Note • In light of the outcry and due to the drastic impact which this right may have on businesses and their respective bottom lines, the law saw reason and included an amendment to the provision which states that this particular clause may not be acted on, nor will it apply to transactions which have been concluded between a Supplier and any consumer who is a juristic person, i.e. any company, CC, Trust or association, regardless of their annual turnover or asset value.
Illustration • This in effect means that where a company as Supplier/landlord has concluded a lease agreement with another company, as consumer/tenant, (i.e. 2 juristic persons) for a fixed period of 5 (five) years, and the tenant or company leasing is a small company who has an annual turnover less than the threshold amount, who by definition, is a consumer, the lease agreement may not nonetheless be terminated by the company/tenant because it is a juristic person. • Threshold yet to be determined
Right to terminate for no cause • On the other hand, where an agreement is for a fixed term, as between a consumer who is a natural person and the Supplier, then in such an event, the natural person (consumer) in this case has the right to cancel the agreement, despite any provision of the consumer agreement to the contrary, and the right to cancel will arise upon:
Right to terminate for no cause • either the expiry of its fixed term, without penalty or charge, or • at any time, before such expiry, so long as the consumer gives the Supplier 20 (twenty) business days' notice in writing or in any other recorded manner and form which clearly sets out his or her intention to cancel the agreement.
Listed fixed term agreements • The Minister has the right to publish in the Government Gazette, certain types or categories of consumer agreements which have to endure for a defined period. • No such regulations have been published to date.
Listed fixed term agreements • As an illustration, this type of regulation could include and cover a gym service or membership agreement, prescribing that it may not be longer than a period of 4 (four) months. • In such an event Gyms would no longer be able to conclude contracts for longer than the 4 (four) month period.
Supplier’s rights to cancel • It is important to note that whilst the consumer has the right to terminate a fixed term agreement on 20 (twenty) days notice, the Supplier does not have the same right to cancel a fixed term agreement on 20 (twenty) business days notice for no cause.
Supplier’s rights to cancel • The Supplier may only cancel a consumer fixed term contract, on 20 (twenty) days notice, should the consumer breach the fixed term agreement. • In such an event the Supplier will first have to serve a notice of breach on the consumer giving him or her 20 (twenty) days written notice to rectify the breach, before it will have the right to cancel the agreement, which right will only come into force if the consumer fails to rectify the breach complained of within the 20 (twenty) day notice period.
Notice of expiration date • A Supplier is obliged in the case of a fixed term consumer agreement to notify the consumer in writing or in any other recordable form, not more than 80 (eighty), and not less than 40 (forty), business days before the expiry date of the fixed term of the consumer agreement, that the agreement is to expire.
Option to renew • In addition, should the Supplier wish to extend or renew the agreement, it must provide the consumer with an option to renew the agreement together with the material changes that would apply if the agreement is renewed.
Indefinite • Finally such letter or notice must also advise the consumer that should he fail to advise the Supplier of his election- i.e. that the agreement will come to an end, or that he is desirous of allowing the agreement to continue on the new terms and conditions, • then in such an event the agreement, on the expiry of the fixed term, will automatically continue to operate but on a month-to-month basis, subject to any material changes which the Supplier has expressly in the notice communicated to the consumer.
Effects of any cancellation under a 20 (twenty) day notice period given by the consumer
Arrears • When the consumer cancels the consumer agreement for no cause, and provided he provides the 20 (twenty) days notice of cancellation, the consumer will : • nonetheless still remain liable to the Supplier for any amounts owed to the Supplier in terms of that agreement for goods or services already received, up to the date of cancellation; and
Cancellation penalty • be liable to the Supplier for any reasonable cancellation penalty which the Supplier has imposed in consequence of any early termination,
Set off • and once these amounts have been deducted from any amounts held by the Supplier on behalf of the consumer, the Supplier must then credit the consumer with any amount that remains the property of the consumer as of the date of cancellation.
Regulations • In order to give effect to Section 14 dealing with fixed term consumer agreements, the Minister has the right to published regulations in the Government Gazette regulating and covering issues such as:
Regulations • the maximum duration for fixed-term consumer agreements, generally, or for specified categories of such agreements; • the manner and form of providing expiry notices to the consumer; • the manner, form and basis for determining the reasonableness of credits and charges levied as a result of a premature termination; • and • other incidental matters as required to provide for the proper administration of this section. • No Regulations have been published to date.
Action to comply • Change notice period given by Supplier to rectify in the case of default in all contracts to 20 days; • Insert consumer’s right to terminate any fixed contract for no cause – by giving 20 days notice BUT insert that deposit will be forfeited and / or a cancellation penalty will be imposed and where possible detail this amount in the agreement or on the invoice
Action to comply • Ensure notice of expiration sent to Consumer between the 80><40 day period setting our consumers options • -to renew on new terms and / conditions; or -month to month - terminate completely
Standard form, contract or other document • A court or Tribunal must interpret any standard form, contract or other document prepared or published by or on behalf of a supplier, or required by this Act to be produced by a supplier, to the benefit of the consumer—
More than one meaning • if any provision of this Act, read in its context, can reasonably be construed to have more than one meaning, the court or Tribunal must prefer the meaning that best promotes the spirit and purposes of this Act, and will best improve the realisation and enjoyment of consumer rights generally, and in particular by Black Persons (PDAP)
Ambiguity • so that any ambiguity that allows for more than one reasonable interpretation of a part of such a document is resolved to the benefit of the consumer; and
Restriction, limitation, exclusion or deprivation of a consumer’s legal rights • so that any restriction, limitation, exclusion or deprivation of a consumer’s legal rights set out in such a document or notice is limited to the extent that a reasonable person would ordinarily contemplate or expect, having regard to—
Restriction, limitation, exclusion or deprivation of a consumer’s legal rights • the content of the document; • the manner and form in which the document was prepared and presented; and • the circumstances of the transaction or agreement.
Interpretation by the courts • Therefore the court will look at the surrounding circumstances to ascertain if the document was explained to the consumer, that it was understood by the consumer, that it was directed at his level, did not contradict with other documents or provisions and that the document was fair and not unconscionable and did not expose the consumer to prejudicial circumstances.
Right to information in plain and understandable language Reference Section 22
Application? Applies to all suppliers’ business notices, contracts, invoices, terms and conditions, quotations , notice, document or visual representation.
In plain language • The producer of a notice, document or visual representation that is required, in terms of this Act or any other law, to be produced, provided or displayed to a consumer must produce, provide or display that notice, document or visual representation— • (a) in the prescribed form, if any, for that notice, document or visual representation, or; • (b)in plain language, if no form has been prescribed for that notice, document or visual representation.