26 November 2014 Consumer Protection Act Alert

Consumer goods and services code published for public comment

On 3 October 2014, the Consumer Goods and Services Code of Conduct was published for public comment, the aim of which was to enhance the rights of the everyday consumer and offer an increased amount of protection than that offered by the CPA.

Similarly to the Automotive code of conduct (discussed above), the Consumer Goods and Services code of conduct (CGS code) also sets minimum standards to be applied by persons in the industry and creates an alternate dispute resolution mechanism which is industry specific and overseen by various ombuds. The crucial difference however, lies in that the CGS ombud scheme (the alternate dispute resolution component) is only applicable to voluntary 'participants' who pay a fee to register in terms of the CGS ombuds' funding model.

The scope of industries to which the CGS code applies is wide and includes those for food, beverages, tobacco, toys, cosmetics and household tools but excludes certain other industries such as estate agents, banking and insurance. The functions of the CGS ombud are described in the code as being to investigate and evaluate contraventions and to facilitate settlement where a complaint has been lodged.

The procedure for handling a complaint is similar to that of the automotive industry. Firstly, the CGS ombud requires all of its participants to have an internal complaints process which is intended to always be a consumer's first port of call. If this fails, a complaint should be lodged with the GCS ombud who will acknowledge the complaint and either facilitate settlement itself or refer the complaint to another participant to do so. If a settlement cannot be reached, the ombuds will be entitled to conduct an investigation and make a non-binding recommendation. However, the power of the CGS ombud to award damages to a complainant is limited as the award will have to be confirmed by an appropriate court or tribunal as a consent order anyway. And if after this the dispute is still not resolved then the dispute may be referred to the National Consumer Commission and Tribunal. However, before referring a complaint, it is important to note that a compliant more than a year old cannot be referred to the CGS ombud.

Despite the similarities between codes, the CGS code seems to go a step further by providing specific standards to be applied to certain aspects of marketing and selling goods and services. For example, certain additional standards are applied to the labelling of products whereby a label is defined and suppliers are prohibited from presenting misleading labels. Suppliers are now also required to verbally disclose to a consumer when they are selling 'grey market goods', these being goods which have been imported without the approval or license of the registered owner of a trade-mark. The code also imposes liability on a supplier where a person or property is harmed due to unsafe goods, product failure or inadequate warnings and instructions. Extensive regulations are also outlaid for aerosol products, the display of prices and the recording of sales.

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