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Companies using SMSs, junk mail or emails to market their goods need to take a long, hard look at the Consumer Protection Act coming into force. The Act will seriously regulate the way direct marketing takes place, says Chris Charter, a director at Cliffe Dekker Hofmeyr. Not only does the Act require all marketing must be fair and not misleading but direct marketing comes under specific scrutiny, with a number of regulations aimed to tip the balance of power away from suppliers and back to consumers. And it won’t only be the marketing company that will be held liable: the new Act will divide the responsibility between the supplier and his marketing company.
Says Charter: “This Act is great news for harassed consumers but not good news for the direct marketing industry, as it will seriously impede the whole model of direct marketing.” The Act stipulates consumers will have the right to pre-emptively block any direct marketing attempts, which includes adding your email address or cellphone number to a registry or putting up a “No junk mail” sign on your postbox. However, the Act takes it a step further by requiring marketers to assume a consumer has opted out of receiving anything until the registry has confirmed in writing the consumer in question hasn’t acted to block it.
The Act places the power firmly in the hands of consumers who bought something as a result of direct marketing. It entrenches “the right to cool off” for consumers. The cooling-off period will allow consumers to cancel a sale in writing up until five business days after the goods have been delivered.
“It’s a matter of great concern for developers how property sales that took place due to direct marketing will be handled under the Act,’’ says Trudie Broekmann, of Webber Wentzel. If ownership of a house is taken before registration (the moment when possession of the property legally takes place and which, in many cases, may take months) then in reality the new homeowner will have months to “cool off”.
Under the Act, the consumer is entitled to a refund if he cancels the contract within five days of delivery in writing. A report released by Cliffe Dekker Hofmeyr says that regulation will present a few difficulties. For example, if a mortgage needs to be cancelled, who will pay the attendant costs? However, Charter is sceptical that it can be proved a flyer or email directly resulted in a property sale months down the line. “There needs to be a close link between the direct marketing and the sale of the product or property – such as a salesman approaching you in a shopping centre and you making the payment right there and then.”
Companies using promotional competitions to market their goods also need to scrutinise the Act. Under the new regulations a consumer mustn’t pay to enter a promotional competition: that’s tantamount to running an illegal lottery. Effectively, it means if a consumer enters a competition via an SMS, the SMS can’t cost more than what an average SMS costs – 75c.
Those pesky letters claiming you’ve won a prize when in fact you have not will also be illegal: the Act encompasses both the organisers and the sponsors of the competition.
So do marketers need to start shaking in their boots? Eventually, yes, say lawyers. Although it will be very difficult to enforce the restraints against direct marketing the Consumer Commission will be looking to make a few examples of the industry to get everyone else to toe the line. “It will take a while for society to get to grips with their new rights, but the Act will go a long way in creating a culture of consumer activism,” says Charter.
The Act definitely has teeth, says Broekmann. Where consumers previously only had the expensive and time-consuming option of going to court over an infringement of their rights, they now have a range of options, including the National Consumer Tribunal, an ombudsman or the new consumer courts currently being set up countrywide. Consumers with product liability claims now also don’t have to prove the supplier was negligent.
Says Charter: “This Act is great news for harassed consumers but not good news for the direct marketing industry, as it will seriously impede the whole model of direct marketing.” The Act stipulates consumers will have the right to pre-emptively block any direct marketing attempts, which includes adding your email address or cellphone number to a registry or putting up a “No junk mail” sign on your postbox. However, the Act takes it a step further by requiring marketers to assume a consumer has opted out of receiving anything until the registry has confirmed in writing the consumer in question hasn’t acted to block it.
The Act places the power firmly in the hands of consumers who bought something as a result of direct marketing. It entrenches “the right to cool off” for consumers. The cooling-off period will allow consumers to cancel a sale in writing up until five business days after the goods have been delivered.
“It’s a matter of great concern for developers how property sales that took place due to direct marketing will be handled under the Act,’’ says Trudie Broekmann, of Webber Wentzel. If ownership of a house is taken before registration (the moment when possession of the property legally takes place and which, in many cases, may take months) then in reality the new homeowner will have months to “cool off”.
Under the Act, the consumer is entitled to a refund if he cancels the contract within five days of delivery in writing. A report released by Cliffe Dekker Hofmeyr says that regulation will present a few difficulties. For example, if a mortgage needs to be cancelled, who will pay the attendant costs? However, Charter is sceptical that it can be proved a flyer or email directly resulted in a property sale months down the line. “There needs to be a close link between the direct marketing and the sale of the product or property – such as a salesman approaching you in a shopping centre and you making the payment right there and then.”
Companies using promotional competitions to market their goods also need to scrutinise the Act. Under the new regulations a consumer mustn’t pay to enter a promotional competition: that’s tantamount to running an illegal lottery. Effectively, it means if a consumer enters a competition via an SMS, the SMS can’t cost more than what an average SMS costs – 75c.
Those pesky letters claiming you’ve won a prize when in fact you have not will also be illegal: the Act encompasses both the organisers and the sponsors of the competition.
So do marketers need to start shaking in their boots? Eventually, yes, say lawyers. Although it will be very difficult to enforce the restraints against direct marketing the Consumer Commission will be looking to make a few examples of the industry to get everyone else to toe the line. “It will take a while for society to get to grips with their new rights, but the Act will go a long way in creating a culture of consumer activism,” says Charter.
The Act definitely has teeth, says Broekmann. Where consumers previously only had the expensive and time-consuming option of going to court over an infringement of their rights, they now have a range of options, including the National Consumer Tribunal, an ombudsman or the new consumer courts currently being set up countrywide. Consumers with product liability claims now also don’t have to prove the supplier was negligent.
