Many local companies may need to rework their Web site terms and conditions, before the new Consumer Protection Act comes into effect in just over a week. This change could prove to be a costly exercise.
The Consumer Protection Act (CPA) has far-reaching consequences and will impact every area of contact with consumers. One of its many requirements is that terms and conditions comply with the new law.
Terms and conditions regulate a site's relationships with its visitors, and failing to comply with the way the Act says the agreement should be written will see Web site owners in violation of the Act, and facing hefty penalties.
However, many of SA's Web sites simply cut-and-paste terms and conditions from other portals, and the companies running these sites may not even be aware of the amount of protection the CPA gives consumers.
In addition, many do not even comply with bare minimum requirements of the Electronic Communications and Transactions (ECT) Act, which will now have to be read in parallel with the CPA.
The real effect of the new law is, however, only likely to be felt when it is put to the test - and Web site owners who are unaware of the consequences will have to scramble to avoid hefty penalties.
Shifting burden
The CPA requires service providers to put terms and conditions in plain language, as well as to clearly highlight any conditions that limit suppliers' liability, or could pose a risk to the consumer.
In addition, the Act regulates the contents of agreements, and the way they are displayed. It also gives courts the power to rule that an agreement between the supplier and the consumer is unjust.
Breaching the CPA could see offenders fined 10% of their turnover, or R1 million. In addition, offenders could also face a year behind bars. Consumers can also institute a civil claim for damages.
Paul Jacobson, an attorney with Jacobson Attorneys, points out that Web site terms are contracts between Web site visitors and the Web site owner. He says, however, terms and conditions can be difficult to get right.
“The bottom line is that these terms and conditions are important, and it has to be done properly,” says Jacobson. He explains that the agreements manage Web sites' risk.
Companies will be in violation of the Act if the conditions aren't written correctly, says Jacobson. The biggest issue facing Web sites is the need to use plain language, he adds.
Many Web site terms and conditions don't seem to be well-drafted, Jacobson comments. To comply with the Act, many sites may hire lawyers, who will first have to understand the portal's business before being able to draw up proper agreements, he explains.
Almost ready
Kalahari.net CEO Gary Novitzkas says the company will update its terms and conditions to comply with the law, but he doesn't expect too many changes.
Novitzkas explains that the online retailer has always aimed to disclose all relevant information to the consumer in plain and understandable language, and make sure that certain important clauses, such as disclaimers, are brought to the customer's attention in a noticeable manner.
WantItAll.co.za founder Justin Drennan says, as far as he is aware, the portal's terms and conditions comply with the Act, but it will be difficult to tell until the law is tested in a real-life situation.
Drennan says the cost of complying with the law will depend on whether a site's terms and conditions were properly drafted to start off with, as that will determine how much work will have to go into fixing the contract.
The Act will force companies to take a serious look at their terms and conditions, comments Drennan. He says, however, that many Web site owners may not even be aware of the new requirements.
Loot.co.za CEO Gary Hadfield says the company is still finalising its compliance with the new law.
Useless
World Wide Worx MD Arthur Goldstuck says current terms and conditions on SA's Web sites are generally “appalling”. He points out that the Act will apply mostly to retailers, which are already governed by the ECT Act.
Goldstuck says there are a few thousand online retailers in SA, all of which will be affected by the need to change their terms and conditions. However, says Goldstuck, while larger companies generally comply with legislation, many smaller Web sites don't.
“The fact that you can't contact many Web sites is already a violation of the ECT Act.” He notes that non-compliance with even basic tenets of the law is “fairly common”.
Goldstuck says the CPA will require a widespread change to terms and conditions across South African Web sites, forcing companies to stop cutting and pasting agreements taken off other Web sites.
Although the ECT Act has not been effective, the CPA will affect far more people and has been better publicised, says Goldstuck. As a consequence, complying with both pieces of legislation will become far more important when the CPA comes into effect on 1 April.
Goldstuck says complying with the CPA could be an expensive exercise if Web site owners approach lawyers to help draft new terms and conditions.
He expects a few test cases under the law, which will embarrass companies that haven't correctly worded their consumer agreements.
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