A tale of two prices

The much-lauded Consumer Protection Act was ushered into legislation several years ago, but how effective has it been?

The first annual report of the Consumer Goods and Services Ombudsman, Neville Melville, provides a bird’s-eye view of how consumers are becoming more educated about their rights while suppliers are realising the importance of putting the customer first.

During the year under review, Melville’s office finalised 2 192 complaints. A total of 1 715 complaints fell under Melville’s jurisdiction and, of those, 69% were settled in favour of the complainant.

Although he says it is too early to make recommendations for amendments to the act, Melville says there are certain issues that have arisen and need to be monitored closely. These include:

. How cases are dismissed due to a lack of cooperation from suppliers; and

. The National Consumer Commission referral process.

With reference to the commission process, Melville explains that his office, when appropriate, informs the complainant that they have the right to approach the commission if the supplier is refusing to cooperate.

“It is not known what becomes of these cases,” he says.

The office’s call centre was the main point of contact, taking almost 15 000 calls during the past year. The highest number of complaints (951) related to cellphones, followed closely by services (795) and furniture (523).

CASE STUDIES

A tale of two prices: A sleeper couch was advertised for sale by a supplier and the price was displayed
as R2 199.

However, after the couch had been paid for, the manager refused to hand it over to the customer, saying that the wrong price had been displayed and the customer needed to pay in an additional R800.

The Consumer Protection Act states that a supplier should not require you to pay a price higher than the price displayed, unless the displayed price contains an obvious and inadvertent error.

Melville’s office concluded that the display price was not that much lower than R2 999 and the agreement had already been concluded by the time the error was detected, so the supplier was bound by the incorrect price.

ADVERTISED PRICE NOT ALWAYS BINDING

In another case, the complainant came across a website and, over the course of four days, purchased several items for a total of R10 530. The actual value of the goods purchased was R415 500.

The supplier, however, refused to deliver the goods on the grounds that the consumer had bought the goods from a testing site that was not supposed to be visible to the public. The advertised specials were for illustrative purposes only.

The supplier further argued that the prices were significantly lower than the normal selling prices and a reasonable person would have noticed that there was a pricing error.

Under the Electronic Communications and Transactions Act, the general rule is that an advertisement does not constitute a binding offer and is merely an announcement of the intention to sell.

Melville’s office took that into account and then concluded that the difference between the actual price and the advertised price was so large that a reasonable consumer would have realised there was an error and would not have been misled.

As such, the supplier in this case was not bound to supply the goods at the incorrectly advertised price.