The Consumer Commission – off to a poor start

Since the passing into law of the Consumer Protection Act, many consumers, businesses and legal professionals have been waiting for the new Act to be tested in reported cases, to provide practical guidance for the future.

One such case came before the National Consumer Tribunal just a fortnight ago. The case was brought by Kia Motors, against the National Consumer Commission. The Commission had earlier issued a compliance notice against Kia, under the CPA. Kia challenged the lawfulness of the compliance notice on a number of grounds. The Commission failed to defend the challenge, neither filing papers nor appearing at the hearing of the matter.

By way of background, in 2010 a Mrs J brought her two-year old Tata car to Kia for servicing. While her car was at Kia’s premises, another car reversed into it, causing damage to the fender. Kia provided and installed a replacement fender to Mrs J’s vehicle, at its own cost. Several months later, Mrs J indicated that she was not satisfied with these repairs. She was invited to bring in her vehicle to discuss her unhappiness but she elected not to. Instead she approached Commission, and lodged a complaint against Tata, the original retailer of her vehicle. Tata clearly had nothing whatsoever to do with the dispute, and after filing papers indicating as much, the complaint was directed against Kia instead.

After Kia filed its response to the complaint, the Commission went ahead and issued a compliance notice against Kia. Remarkably, that notice required Kia to “replace the vehicle or refund the deposit, all instalments and repair costs”.

Not surprisingly, Kia was unwilling to accept this notice, and challenged it on a number of grounds before the Tribunal. These included that the incident took place before the CPA became law, that there were no grounds on such which a notice could be issued, and there had been no investigation as required by the Act before the notice was issued.

The Tribunal agreed that Kia had genuine cause for complaint. The incident had indeed occurred before the CPA came into effect. The damages were also delictual in nature – arising from a collision of vehicles – which was not the subject-matter of the CPA at all. The Commission had issued the notice without undertaking the necessary investigation. The Commission also lacked the power to order a party to repay amounts received – only the Tribunal enjoyed that power.

In the end, the compliance notice was set aside, however without any order holding Mrs J or the Commission liable for Kia’s costs. Effectively, Kia was compelled to go to great trouble and expense to undo the Commission’s bungling, and restore the original position with no benefit to itself (or Mrs J for that matter).

A review of other reported cases emerging from the Tribunal sitting in review of notices issued by the Commission, suggests that this is not an isolated instance. A number of notices have been issued concerning matters outside the scope of the Commission’s powers, without proper investigation. The Commission is not engaging with the Tribunal’s processes to defend its actions, but is simply allowing hearings to proceed in its absence, with the effect of reversing what it has done. This is a worrying early trend for such a new institution.

A recent Auditor-General’s report had much criticism for the management of the Commission, and an acting Commissioner currently holds the reins pending a new appointment by Trade and Industry.

Consumer website is replete with overwhelmingly negative feedback from the public concerning the Commission’s performance thus far.

While the CPA is generally looked upon as a positive and exciting development for consumers, without an effective and credible mechanism for enforcement, the Act will not live up to its promise. It is hoped that new leadership will soon be appointed who will breathe life into the Commission and enable it to fulfil its mandate to the public in an efficient and sensible manner.

Persons wanting to refer complaints under the CPA to the Commission may download the necessary form at their website