Technology · August 6, 2022

Online retailers in South Africa have a problem

A sharp rise in consumer complaints about online shopping in 2020-21 reflects the inability of many retailers to cope with the surge in demand during the Covid-19 pandemic, law firm Webber Wentzel notes.

The Consumer Protection Act (CPA) empowers the Consumer Goods and Services Ombudsman (the Ombudsman) to arbitrate disputes between consumers and businesses that provide goods and services. The Ombudsman was set up to ensure businesses treat consumers fairly and fairly.

In successful cases, the Ombudsman can secure reimbursements from suppliers for consumers. The consumer can also contact the National Consumer Commission, which has the power to initiate a formal investigation into a complaint.

In addition, the CPA allows a third party who is not concerned but is acting in the public interest to bring legal proceedings before a court or the National Consumer Court for breaching a consumer right.

The Ombud examines trends in the consumer market and identifies the sectors responsible for most consumer complaints. The Ombudsman recently reported a sharp rise in consumer complaints about online shopping.

In March 2020, complaints related to online shopping accounted for just 6% of all complaints received by the Ombudsman, but that number rose sharply to 27% of all complaints in FY2021.

The Covid-19 pandemic has resulted in unprecedented demand for online goods and services from South African consumers. Due to the unexpected increase in demand, many companies are struggling to cope. In particular, consumers complain that online shops do not deliver goods and services on time and in certain cases not at all.

Another category of complaints received by the Ombudsman relates to fraudulent online transactions. Anyone can build an online business through various social media platforms with little to no verification. As a result, consumers’ trust in online shopping has created an easy way for the creation of fake online stores that accept payments with no intention of delivering the goods or services.

The CPA provides that a consumer has the right to receive goods that are in good condition and free from defects. It provides that a supplier is responsible for the delivery of goods on the agreed date and time and, if that is not possible, within a reasonable time after the deal has been completed.

According to Section 46 of the Electronic Communications and Transactions Act, the supplier must notify the consumer and refund all payments within 30 days of notification if online goods are unavailable.

Consumers have multiple avenues to enforce their rights in the CPA and are increasingly exercising these rights. Even online businesses operating within the law may engage in certain practices that fall short of the standard expected of suppliers in the CPA.

Businesses should be aware of this risk and take steps to mitigate it. You should also keep in mind that while it’s easy to set up an online store, it’s just as easy to suffer reputational damage from bad and unfair business practices.

  • By Wendy Tembedza, Partner & Qaasim Ganey, Webber Wentzel’s paralegal

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