Consumer Law Review_Oct/Nov 2013
Published on: Oct 28, 2013
Dear Consumer Law Review recipient
It has been a busy couple of weeks for consumer law, both in parliament and in the news. Read ‘Consumer Law in Parliament’ for updates on the new credit regulations and amnesty, the ban on alcohol advertising, new regulations on trade metrology and more.
We are waiting for the President to sign the Protection of Personal Information Bill. In the meantime many companies are conducting audits to assess their processing practices in order to get ready for the Bill’s inevitable promulgation. In this edition of ‘Intro to POPI’ we look at trans-border information flow. This will be of interest to companies who send personal information to other countries.
Elizabeth de Stadler is the editor of the Consumer Law Review, a senior associate at Esselaar Attorneys in Cape Town (http://www.esselaar.co.za) and a founding director of Novation Consulting (http://www.novcon.co.za). Her practice consists of general regulatory compliance audits; training and workshops on regulatory compliance; opinion work on the CPA, the National Credit Act, marketing law, data protection and contract law; and plain language drafting. She is also a founding director of Novation Consulting, a company which specialises in designing innovative and effective ways to communicate ‘legal’ documents to consumers.
She conducts regular workshops and training sessions on the CPA and other consumer legislation for businesses and for UCT Law@work, a unit situated within the law faculty at the UCT. She is the co-author of a consumer law textbook and a guide to plain language legal drafting, both of which are to be published by Juta Law.
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IN THIS EDITION OF THE CONSUMER LAW REVIEW
— Consumer law in parliament
— Consumer law in the news
— Intro to PoPI (part 8): Transborder information flow
— Plain language tip
Consumer law in Parliament
Credit amnesty on the cards: The Proposed Removal of Adverse Credit Information Project was published for comment on 30 September 2013. If approved, credit bureaus will have to remove the information of some 1.6 million consumers from their databases. It is a highly contentious issue which affects the credit bureaus (who will have to change their information) and the banking industry, who oppose the amnesty. While the aim of the amnesty is to make access to credit easier for consumers (see the Cabinet’s statement of 4 September 2013, it will affect credit providers’ ability to effectively assess risk, which may lead to a rise in the price of credit.
Alcohol advertising ban: Cabinet has approved the Control of Marketing of Alcohol Beverages Bill which will ban the advertising of alcohol. There are two camps on this issue. On the one hand there are those who allege that alcohol advertising actually influences consumption and on the other hand there is also research that it does not. Surely the impact on the economy and sport organisations should also be taken into account. The Cabinet is divided about whether a Regulatory Impact Assessment must be done before the Bill is published for public comment. Where job loss seems likely, it would be reckless not to study the impact of the Bill and whether it will actually affect consumption.
The Legal Metrology Bill: The Department of Trade and Industry is taking a look at the quality and credibility of product measurements (that is, the way volume or weight is expressed on products). To this end the Legal Metrology Bill has been tabled in parliament. This was previously governed by the Trade Metrology Act which is administered by the National Regulator for Compulsory Specifications.
Here is the Draft Legal Metrology Bill (PDF file) for those of us who work with product labels.
Amendments to the National Credit Act: The National Credit Act Amendment Bill has been introduced for tabling in Parliament. According to the Cabinet ‘[t]he Bill aims to strengthen the capacity of the National Credit Regulator (NCR) to address certain challenges especially around court processes and to strengthen enforcement and implementation of the provisions of the National Credit Act 34 of 2005.’
ICASA to regulate e-commerce: The Department of Communications has recommended that the Independent Communications Authority (ICASA) should also be responsible for e-commerce. This statement was made during the public hearings on the Electronic Communications Amendment and Icasa Amendment Bills. This suggested move has been criticised and rightly so. In addition to the risk that ICASA does not have the capacity (or the independence) to regulate this massive area, e-commerce is not so much a telecommunications issue as it is a retail issue.
Ban on health gap cover: A battle is raging between medical schemes and health gap cover. Treasury has had to revise the draft regulations on the demarcation between health insurance policies and medical schemes which initially scrapped most gap cover products and limited the scope for other health insurance products. The rationale behind the regulation was the fear that gap cover undermines the medical scheme industry. The worry has become that a ban on gap cover would be unconstitutional. It is expected that the new draft regulations will be published for comment later this year.
Movement on the Financial Services Laws General Amendment Bill: We wrote about the FSLGAB and the exemption of financial services from the Consumer Protection Act 68 of 2008 (CPA) in the October 2012 edition of the CLR. The Bill is on the move again. Proposed amendments were published by the National Treasury. The Bill will still exempt the entire financial services industry from complying with the CPA.
Consumer law in the news
National Consumer Commission fails to achieve 13 out of 16 planned targets: The National Consumer Commission has received a qualified audit. Its irregular spending is at R15.6 million (due to lost paper work), wasteful expenditure is at R3.58 million and it failed to achieve 13 of its 16 planned targets. However, Minister Rob Davies defended the consumer watchdog by pointing out that ‘this was mainly due to historical reasons over which the current leadership had no control.’ In other words, the audit is not yet an accurate reflection on the performance of the NCC under its relatively new Chief Commissioner, Ebrahim Mohamed, as he was appointed in May 2013 and the audit reflects the situation as at March 2013. Mr Mohamed has said that he is embarrassed about the audit findings and that the chief financial officer has been suspended.
Franchise Association wants regulatory status: The Franchise Association of SA (FASA) has indicated that it wants to apply for accreditation as an ombudsman for franchising. In terms of the CPA all franchisees are consumers (regardless of their size). As a result they enjoy protection under the Act. If FASA were to apply to be an ombud in terms of the CPA, they will be tasked with enforcing the Act. For more on franchises see Tanya Woker’s The Franchise Relationship under South African Law (Juta 2012).
Time share industry under the spotlight: According to an article in Business Day, the National Consumer Commission has asked the time-share industry to clarify its business model and motivate why it does not have to comply with the CPA by the end of October 2013. The biggest problems with the CPA faced by the industry are the provisions of section 14 which limit the duration of fixed-term agreements to 24 months (unless certain circumstances can be shown) and give consumers the right to cancel the agreement on 20 business days’ notice. This would undermine the time-share business model significantly. The focus on the time-share industry is no surprise given that it is a major source of consumer complaints due to the fact that consumers cannot get out once they have bought in and often do not understand the limitations of the service.
Breach of consumer card data: Local banks have had to fork out tens of millions of rand as a result of ‘one of the worst breaches of customer card data in the country’s history.’ According to this Mail & Guardian Online report ‘the problem is believed to have been widespread in the fast-food industry.’ Once the Protection of Personal Information Bill comes into effect (it currently awaits the signature of the President), the Information Regulator will be tasked with investigating this type of incident.
Privacy hearings on the rise in the UK: The United Kingdom has recorded a sharp rise in the claims being brought for infringements relating to personal information according to this article in The Independent.
Intro to PoPI (part 8): Transborder information flow
Many South African companies collect personal information which has to be transmitted to another country. The most notable reason is when it is necessary in order to fulfil the company’s contract with the consumer. For example, a consumer buys a product online from a South African company who then has to send it to a foreign company in order for the order to be filled. This is an era where e-commerce is fast becoming the norm.
Protecting personal information which is sent overseas is a tough ask. PoPI has specific provisions that are aimed at doing just that. Section 72 provides that personal information cannot be transferred to a third party in another country unless:
the country to which the information is being transferred has a law which provides for substantially the same level of protection;
the third party who is receiving the information is bound by corporate rules or a binding agreement which provides for substantially the same level of protection;
the customer consents to the transfer;
the transfer is necessary for the performance of the contract with the customer;
the transfer is necessary for the conclusion of the contract in the with the third-party interest of the customer;
the transfer is for the benefit of the customer and it was not reasonably practicable to obtain the customer’s consent and the customer would have been likely to give consent if asked.
A list of countries with data protection laws has been compiled by Information Shield or you can go to Forrester’s Global Data Protection and Privacy Heatmap for an instant global overview. Of course, it will not always be easy to assess whether the foreign legislation provides the same level of protection. The UK Data Protection Act contains a similar provision which means that some guidance can be found there. The UK Information Commissioner’s Office has published a guideline on how to assess adequacy, which may be of some assistance.
In many cases the transfer will be necessary for the performance of the contract. However, what is ‘necessary’ is a question of fact and a company will not always be certain that this exception applies. The same goes for transfers in the interest or to the benefit of the consumer.
If a company wants to be certain that it is authorised to transmit the information, the consent of the customer or an agreement with the recipient will probably be the safest route to follow.
Interesting article on PoPI and voice recordings: PoPI will also apply to voice recordings. If you think of the amount of times you have heard the phrase ‘this call is recorded for quality purposes,’ the widespread implications of PoPI for companies who store recordings of calls becomes immediately apparent. Read this article about the implications of PoPI and the Payment Card Industry Data Security Standard. Someday soon the messages will probably say: ‘Please note that all calls are recorded, securely encrypted and stored for the mandatory period, while remaining easily accessible, which not only ensures compliance with South African consumer protection, recordkeeping and data security legislation, but also enhances our call centre effectiveness and agent performance, to offer you the highest levels of customer service.’
Plain language tips
Sometimes it is necessary to listen to the experiences and expertise of other plain language practitioners.
Here is a TED Talk about simplifying legal jargon by Alan Siegel. He provides real life examples of simplified agreements. He links clarity, transparency and empathy which illustrates that the drive for plain language has a human component to it.
The second talk is by Sandra Fisher-Martins. She argues that citizens have 'the right to understand' and that the use of complex language, particularly in countries with low literacy levels, leads to 'information apartheid'. There are four solutions to this problem. The first is to raise literacy levels, but this is slow and difficult. The second is to enact legislation which forces the government and businesses to use understandable language (in comes the CPA, the NCA and the Financial Services Board’s Treating Customers Fairly policy). That only works if these laws are enforced. The third is through marketing. Businesses are incentivised to use plain language, because this enhances their image and is a marketable quality which leads to more sales. This only works in the private sector. The last is through civil society. She refers to the English Plain Language Campaign as an example of this. She also implores individuals to insist on explanations where documents are not clear. This will create the pressure necessary for change.
© Stellenbosch University Language Centre and Elizabeth de Stadler
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