COL3704- Study Guide

© 2020 University of South Africa All rights reserved Printed and published by the University of South Africa Muckleneuk, Pretoria COL3704/501/3/2021 Downloaded by jeremy ziegelaar () lOMoARcPSD| CONTENTS 1. INTRODUCTION .......................................................................................................................... ix 2. PRESCRIBED READING MATERIAL .......................................................................................... ix 2.1 Section A: The National Credit Act 34 of 2005 .............................................................................. ix 2.2 Section B: The Debt Collectors Act 114 of 1998 ........................................................................... ix 2.3 Section C: The Consumer Protection Act 68 of 2008 .................................................................... ix 2.4 Section D: Stokvels ....................................................................................................................... ix 2.5 Section E: Insurance ..................................................................................................................... x 3. THE STRUCTURE OF THE TUTORIAL LETTER........................................................................ x 4. THE STRUCTURE OF EACH STUDY UNIT ................................................................................ xi 5. SUGGESTED LEARNING SCHEDULE FOR THIS MODULE ....................................................xii SECTION A: The National Credit Act 34 of 2005 ...............................................................................xiii UNIT 1: SCOPE AND APPLICATION OF THE NATIONAL CREDIT ACT ............................................ .1 1. INTRODUCTION ........................................................................................................................ ..1 2. THE PURPOSE OF THE NCA.................................................................................................... ..2 3. APPLICATION OF THE ACT ..................................................................................................... ..2 3.1 Credit agreements ...................................................................................................................... ..2 3.1.1 Credit facility ............................................................................................................................... ..3 3.1.2 Credit transaction ........................................................................................................................ ..3 3.1.3 A credit guarantee....................................................................................................................... ..5 3.2 Parties ........................................................................................................................................ ..6 3.2.1 The consumer ............................................................................................................................. ..6 3.2.2 The credit provider ...................................................................................................................... ..7 3.3 Dealing at arm’s length ............................................................................................................... ..9 3.4 Exclusions .................................................................................................................................. ..9 4. SIZE OF THE AGREEMENT ...................................................................................................... 10 4.1 Small credit agreements ............................................................................................................. 10 4.2 Intermediate credit agreements................................................................................................... 10 4.3 Large agreements ....................................................................................................................... 10 5. CONCLUSION ............................................................................................................................ 11 UNIT 2: CONSUMER RIGHTS ............................................................................................................... 13 1. INTRODUCTION ........................................................................................................................ 13 2. CONSUMER RIGHTS ................................................................................................................ 13 iii Downloaded by jeremy ziegelaar () lOMoARcPSD| COL3704/501/3/2021 2.1 Right to apply for credit ............................................................................................................... 14 2.2 Protection against unfair discrimination regarding credit ............................................................. 14 2.3 Right to be provided with reasons when credit is refused ............................................................ 15 2.4 Right to information in an official language .................................................................................. 15 2.5 Right to information in plain and understandable language ......................................................... 16 2.6 Right to confidentiality ................................................................................................................. 16 2.7 Right to have a record of debt adjustment or judgment removed ................................................ 16 2.8 Right to access and challenge credit records and information ..................................................... 17 2.9 Right to be protected against certain marketing practises ........................................................... 17 2.9.1 Negative option marketing .......................................................................................................... 17 2.9.2 Opting out ................................................................................................................................... 18 2.9.3 Door-to-door marketing ............................................................................................................... 18 2.9.4 Advertising practises ................................................................................................................... 18 2.10 Right to terminate the contract .................................................................................................... 18 3. CONCLUSION ............................................................................................................................ 19 UNIT 3: OVER-INDEBTEDNESS, RECKLESS CREDIT, DEBT COUNSELLING AND DEBT REVIEW ........20 1. INTRODUCTION ........................................................................................................................ 20 2. OVER-INDEBTEDNESS............................................................................................................. 20 3. RECKLESS CREDIT .................................................................................................................. 21 4. DEBT COUNSELLING AND DEBT REVIEW ............................................................................. 22 4.1 Who may be a debt counsellor? .................................................................................................. 22 4.2 The debt counselling process ..................................................................................................... 22 5. INSTITUTION OF LEGAL PROCEEDINGS ............................................................................... 23 6. CONCLUSION ............................................................................................................................ 23 UNIT 4: THE REGULATORY FRAMEWORK ........................................................................................ 24 1. INTRODUCTION ........................................................................................................................ 24 2. NATIONAL CREDIT REGULATOR ............................................................................................ 24 3. PROVINCIAL CREDIT REGULATORS ...................................................................................... 25 4. NATIONAL CONSUMER TRIBUNAL ......................................................................................... 25 SECTION B: THE DEBT COLLECTORS ACT 114 of 1998 .................................................................. 27 1. INTRODUCTION ........................................................................................................................ 28 2. WHO MAY ACTS AS A DEBT COLLECTOR? .......................................................................... 29 2.1 The definition of a debt collector ................................................................................................. 29 2.2 Registration as a debt collector ................................................................................................... 29 2.3 Disqualification as a debt collector .............................................................................................. 29 3. IMPROPER CONDUCT .............................................................................................................. 30 iv Downloaded by jeremy ziegelaar () lOMoARcPSD| 4. WITHDRAWAL OF REGISTRATION ......................................................................................... 31 4.1 Withdrawal of registration by the Council .................................................................................... 31 4.2 Withdrawal of registration by court .............................................................................................. 31 4.3 Cancellation of registration as debt collector ............................................................................... 32 5. THE COUNCIL FOR DEBT COLLECTORS ............................................................................... 32 6. CONCLUSION ............................................................................................................................ 33 SECTION C: CONSUMER PROTECTION ACT 68 OF 2008 ................................................................. 34 UNIT 1: INTERPRETATION, PURPOSE AND APPLICATION OF THE CONSUMER PROTECTION ACT ............................................................................................................................................ 35 1. INTRODUCTION ........................................................................................................................ 35 2. PURPOSE OF THE ACT ............................................................................................................ 36 3. INTERPRETATION OF THE ACT .............................................................................................. 37 3.1 Important definitions .................................................................................................................... 37 3.1.1 ‘Advertisement’ ........................................................................................................................... 37 3.1.2 ‘Agreement’................................................................................................................................. 37 3.1.3 ‘Consumer’ ................................................................................................................................. 37 3.1.4 ‘Goods’ ....................................................................................................................................... 37 3.1.5 ‘Service’ ......................................................................................................................................38 3.1.6 ‘Retailer’ ...................................................................................................................................... 38 3.1.7 ‘Supplier’ ..................................................................................................................................... 38 3.1.8 ‘Market’ ....................................................................................................................................... 38 3.1.9 ‘Promote’ .................................................................................................................................... 38 3.2 Interpretation ............................................................................................................................... 38 4. APPLICATION OF THE ACT ..................................................................................................... 39 5. CONCLUSION ............................................................................................................................ 40 UNIT 2: FUNDAMENTAL CONSUMER RIGHTS ................................................................................... 42 1. INTRODUCTION ........................................................................................................................ 42 2. THE RIGHT OF EQUALITY (SS 8-10) ........................................................................................ 42 2.1 Protection against discriminatory marketing ................................................................................ 43 2.2 Section 9 of the Act allows for differential treatment on reasonable grounds ............................... 43 2.3 Equality Court jurisdiction ............................................................................................................ 44 3. THE RIGHT TO PRIVACY .......................................................................................................... 44 3.1 Right to restrict unwanted direct marketing ................................................................................. 45 4. THE RIGHT TO CHOOSE .......................................................................................................... 46 4.1 The consumer’s right to select suppliers ..................................................................................... 46 4.2 Expiry and renewal of fixed-term agreements ............................................................................. 46 4.3 Pre-authorisation of repair and maintenance service .................................................................. 47 v Downloaded by jeremy ziegelaar () lOMoARcPSD| COL3704/501/3/2021 4.4 The consumer’s right to cancel advance reservations, bookings or orders .................................. 48 4.5 Consumer’s right to choose or examine goods ........................................................................... 49 4.6 The consumer’s right with respect to delivery of goods or supply of service ................................ 49 4.7 The consumer’s right to return goods .......................................................................................... 50 4.8 Unsolicited goods or services ..................................................................................................... 50 5. THE RIGHT TO DISCLOSURE AND INFORMATION ................................................................ 51 5.1 The right to information in plain and understandable language ................................................... 51 5.2 Disclosure of price of goods and service ..................................................................................... 52 5.3 Disclosure of reconditioned and grey market goods .................................................................... 52 6. CONCLUSION ............................................................................................................................ 52 UNIT 3: FUNDAMENTAL CONSUMER RIGHTS ................................................................................... 54 1. INTRODUCTION ........................................................................................................................ 54 2. RIGHT TO FAIR AND RESPONSIBLE MARKETING ................................................................ 54 2.1 General standards for marketing of goods or services ................................................................ 55 2.2 Bait marketing ............................................................................................................................. 55 2.3 Negative option marketing .......................................................................................................... 55 2.4 Direct marketing to consumers.................................................................................................... 55 2.5 Catalogue marketing ................................................................................................................... 56 2.6 Trade coupons and similar promotions ....................................................................................... 56 2.7 Customer royalty programmes .................................................................................................... 56 2.8 Promotional competitions ............................................................................................................ 57 2.9 Alternative work schemes ........................................................................................................... 57 2.10 Referral selling ............................................................................................................................ 58 3. RIGHT TO FAIR AND HONEST DEALING ................................................................................ 58 3.1 Unconscionable conduct ............................................................................................................. 58 3.2 False, misleading or deceptive representations .......................................................................... 58 3.3 Fraudulent schemes and offers ................................................................................................... 59 3.4 Pyramid and related schemes ..................................................................................................... 59 3.5 A consumer’s right to assume supplier is entitled to sell goods ................................................... 59 3.6 Auctions ...................................................................................................................................... 59 3.7 Over-selling and over booking .................................................................................................... 60 4. RIGHT TO FAIR, JUST AND REASONABLE TERM AND CONDITIONS ................................. 60 4.1 Unfair, unreasonable or unjust contract terms ............................................................................. 60 4.2 Notice required for certain terms and conditions ......................................................................... 61 4.3 Written consumer agreements ....................................................................................................62 4.4 Prohibited transaction, agreements terms or conditions .............................................................. 62 vi Downloaded by jeremy ziegelaar () lOMoARcPSD| 4.5 Powers of court to ensure fair and just conduct, terms and conditions ....................................... 62 5. RIGHT TO FAIR VALUE, GOOD QUALITY AND SAFETY ........................................................63 5.1 Applicable definitions .................................................................................................................. 63 5.2 Consumer’s right to demand quality service ................................................................................63 5.3 Consumer’s rights to safe, good quality goods ............................................................................ 63 5.4 Implied warranty of quality .......................................................................................................... 64 5.5 Warranty on repaired goods ........................................................................................................64 5.6 Warning concerning fact and nature of risk ................................................................................. 65 5.7 Recovery and safe disposal of designated products or components. ..........................................65 5.8 Liability for damage caused by goods. ........................................................................................ 65 6. PART I OF THE ACT DEALS WITH THE SUPPLIER’S ACCOUNTABILITY TO CONSUMERS.......66 6.1 Lay-buys ..................................................................................................................................... 66 6.2 Prepaid certificates, credits and vouchers ................................................................................... 66 6.3 Supplier to hold an account for consumer’s property ................................................................... 66 7. ENFORCEMENT OF RIGHTS .................................................................................................... 66 7.1 Enforcement of rights by consumer ............................................................................................. 67 7.2 Compliance notice ...................................................................................................................... 67 7.3 National Consumer Commission ................................................................................................. 67 8. CONCLUSION ............................................................................................................................ 67 SECTION D: CONSUMER GROUPINGS .............................................................................................. 70 UNIT 1: STOKVELS .......................................................................................................................... 71 1. INTRODUCTION ........................................................................................................................ 71 2. STOKVELS ................................................................................................................................ 72 2.1 Legal nature of stokvels .............................................................................................................. 73 2.2 Stokvels as credit-rotating associations ...................................................................................... 74 2.2.1 Stokvel membership ......................................................................................................................74 2.3 Different types of stokvels ........................................................................................................... 74 2.3.1 Categories of stokvels ................................................................................................................. 74 2.4 Stokvels as a form of insurance .................................................................................................. 76 UNIT 2: BURIAL SOCIETIES ............................................................................................................ 77 1. INTRODUCTION ........................................................................................................................ 77 2. LEGAL NATURE OF A BURIAL SOCIETY ................................................................................78 3. MEMBERSHIP ........................................................................................................................... 79 4. DIFFERENT TYPES OF BURIAL SOCIETIES ........................................................................... 79 5. CONCLUSION: .......................................................................................................................... 81 SECTION E: INSURANCE ..................................................................................................................... 83 vii Downloaded by jeremy ziegelaar () lOMoARcPSD| COL3704/501/3/2021 1. INTRODUCTION ........................................................................................................................ 84 2. HISTORICAL DEVELOPMENT .................................................................................................. 85 3. DIFFERENT TYPES OF INSURANCE ....................................................................................... 86 3.1 Indemnity and capital insurance .................................................................................................. 86 3.2 Property and liability insurance ................................................................................................... 86 3.3 Classification according to the nature of the event insured against ............................................. 86 3.4 Short-term and long-term insurance ............................................................................................ 87 3.5 Mutual and profit insurance ......................................................................................................... 87 3.6 Valued and unvalued policies ..................................................................................................... 87 4. SOURCES OF SOUTH AFRICAN INSURANCE LAW ...............................................................88 4.1 Common law ............................................................................................................................... 88 4.1.1 Roman-Dutch insurance law ....................................................................................................... 88 4.1.2 English insurance law ................................................................................................................. 88 4.2 Legislation ..................................................................................................................................88 4.3 The Constitution ..........................................................................................................................89 5. CONTRACT OF INSURANCE .................................................................................................... 89 5.1 Essentialia of an insurance contract ............................................................................................ 90 5.1.1 Insurable interest ........................................................................................................................ 90 5.1.2 Contract of good faith .................................................................................................................. 91 5.1.3 Payment of a premium ................................................................................................................ 91 5.1.4 Compensation of the insured for loss .......................................................................................... 92 5.1.5 Independent and principal contract ............................................................................................. 92 6. CONCLUSION ......................................................................................................................... ... 93 viii Downloaded by jeremy ziegelaar () lOMoARcPSD| 1. INTRODUCTION Welcome to COL3704. We hope that you will find the material covered in this module challenging, thought-provoking, and personally and professionally relevant. Although this module is generically termed Consumer Law, in it you will be exposed to five very different and challenging areas of law:  First, we will discuss certain provisions relating to the National Credit Act 34 of 2005.  Next, you will be exposed to the rules regarding debt collection in terms of the Debt Collectors Act 114 of 1998.  The third area of law provides you with a broad overview of the Consumer Protection Act 68 of 2008.  The second last section focuses on consumer groupings.  Last, but definitely not least, we will explain the rules regarding insurance. 2. PRESCRIBED READING MATERIAL The prescribed material for this module is the following: 2.1 Section A: The National Credit Act 34 of 2005 None. 2.2 Section B: The Debt Collectors Act 114 of 1998 None. 2.3 Section C: The Consumer Protection Act 68 of 2008 The Consumer Protection Act 68 of 2008. 2.4 Section D: Stokvels Articles: DGRV SA Burial Societies in South Africa: History, Function and Scope, Working Paper Series No. 2, September 2003 Lukhele AK "Stokvels in South Africa: Informal Savings Schemes by Blacks for the Black Community", 1990 Schulze WG "Origins and Legal Nature of Stokvel (Part 1)", SA Merc Law Journal, 1997, vol 9, 18 Schulze WG "Origins and Legal Nature of Stokvel (Part 2)" SA Merc Law Journal, 1997, vol 9, 153–167