The National Consumer Commission (‘NCC’) has delivered a significant decision which can only have wide-ranging implications for suppliers in the pre-owned motor vehicle industry. In a landmark enforcement action, the NCC has imposed sanctions against We Buy Cars (‘WBC’) for various contraventions of the Consumer Protection Act 68 of 2008 (‘CPA), reinforcing the limitation of the supplier’s ability to contract out of statutory provisions which seek to protect consumers and their rights.
The NCC’s investigation originated from several consumer complaints relating to WBC’s sale agreements. Consumers alleged that the agreements unfairly restricted WBC’s liability as it pertains to defects found after purchase. Subsequent to its investigation, the NCC found that several terms in the sale agreement were in direct violation of the CPA.
Amongst other provisions, the sale agreements required the consumer to acknowledge having reviewed WBC’s Dekra Used Vehicle Report which does not encompass an assessment of the mechanical condition of the motor vehicle, thus effectively transferring the risk of mechanical defects to the consumer. The agreement further sought to absolve WBC from undisclosed faults, imposed levies on refunds following cancellation and indemnified WBC against any odometer discrepancies by assigning sole responsibility to the previous owner of the motor vehicle.
The NCC found that these provisions violated the following sections of the CPA:
- Section 48 which prohibits unfair, unreasonable or unjust contractual terms;
- Section 49 which requires the clauses which limit the supplier’s liability and/or imposes risk on the consumer to be brought to the attention of the consumer in a clear and conspicuous manner using plain language;
- Section 55 which provides for the right of a consumer to receive safe, good quality goods; and
- Section 56 being the six-month warranty imposed by statutory law.
The matter was resolved by way of a settlement agreement turned consent order between the NCC and WBC wherein WBC undertook to:
- Amend its contract so as to be fully compliant with the CPA;
- Provide consumer redress in the amount of R3.4 million;
- Payment of an administrative fee of R2.5 million;
- Create a Consumer Awareness Programme; and
- Employment creation initiatives
This decision serves as a cautionary tale to suppliers that seek to rely on terms in a contract to escape liability and force consumers to waive their statutory rights. Businesses operating in the pre-owned vehicle industry should seek to review their contractual terms to ensure compliance with the CPA.
For assistance with compliance with the CPA, please contact the Commercial Department at KISCH IP at comsec@kisch-ip.com or MakhosazanaM@kisch-ip.com 011-3324300.
The content does not constitute legal advice, is not intended to be a substitute for legal advice and should not be relied upon as such.
