Mistreated consumers score refunds as ombud mediates with retailers

The Consumer Goods and Services Ombud (CGSO) has resolved 60% of the almost 14,000 cases the office mediated in favour of mistreated consumers. As a result, the companies concerned refunded them a total of R11.5m.

By far the biggest category of complaints in 2021/2022 related to online shopping at 25%, followed by satellite and telecommunications (17.5%), retail appliances (14%) and furniture (12%), according to the ombud's latest annual report released on Wednesday.

The CGSO also received complaints relating to civil unrest in the wake of the riots in parts of Gauteng and KwaZulu-Natal in July 2021.

“These included cases of goods that were left at a supplier for repairs and were subsequently stolen during the looting, or where transport services were cancelled as a result of the violence and goods were not delivered or not delivered on time.”

Ombud Magauta Mphahlele drew a distinction between online shopping complaints relating to inefficiencies and poor customer service and “those operators deliberately misleading consumers, either through bait marketing or because they are engaged in cyber fraud and other criminal activity”.

She quoted a TransUnion report revealing a 4.2% rise in attempted online fraudulent activities year-on-year in SA, compared to the global average increase of 3.7%.

“Cases of cyberfraud involving identity theft, phishing and vishing tend to fall outside our jurisdiction, but we are increasingly dealing with rogue e-commerce sites which deliberately set out to defraud consumers, taking their hard-earned cash and then vanishing,” Mphahlele said.

The money which the CGSO recovered for complainants in 2021/2022 was only about a sixth of what those complainants jointly requested.

“This disparity is because consumers tend to include consequential damages, including pain and suffering, which we have to dismiss as only the courts can adjudicate such claims.”

The R11.5m includes a refund to a customer who made an error with an online subscription payment and entered the incorrect amount, overpaying by a whopping R84,000, which the company was intent on keeping until the CGSO got involved.

Rogue operators

The report revealed that 22% of the cases the CGSO handled in 2021/2022 had to be closed without a result because the companies failed to co-operate with the ombud’s office — in other words, they simply ignored the mediators' attempts to engage.

In such cases, said Mphahlele, “we are obliged to close the case and issue the complainant with a termination notice”.

A total of 2,176 consumers got those termination notices in 2021/2022.

“In terms of Consumer Protection Act, the onus is on the consumer to lodge a fresh complaint with the National Consumer Commission (NCC). We have no way of tracking how many consumers elect to lodge their complaints with the NCC — complainants may choose to go the legal route if the amount involved warrants it or simply lose patience with the process and give up.”

Only the NCC can refer matters to the National Consumer Tribunal, which has powers to sanction suppliers and issue fines.

“We continue to flag our inability to make a binding ruling as a policy issue that requires review by the department of trade, industry and competition,” she said.

“Unfortunately, in the absence of any sanction, it is all too easy for these suppliers to reinvent themselves by opening new websites under another name.

“The CGSO may not have the power of enforcement or the right to issue binding decisions on suppliers, but it does have the right and the power to name and shame to warn consumers. And that it does fairly often.

“When we become aware of clusters of complaints around sectors or specific e-commerce suppliers who accepted payment from consumers with no clear intention to supply the goods or services, we issue alerts, harnessing the power of traditional and social media to warn consumers against these entities.”

Extent of consumer protection

The 1,048 companies which have signed up with the CGSO — 8.8% more than the previous year — represent 228 subsidiaries and 21,546 retail outlets. Their fees are based on annual turnover and they fund the workings of the CGSO. Six years ago, only 189 companies were paying fees to the ombud’s office.

Between the Electronic Communications and Transactions Act (ECTA) and the Consumer Protection Act, consumers are covered for “just about everything that can go wrong in the ordinary course of online business”.

But few consumers are aware, for example, that in terms of the ECTA all vendors must, by law, supply comprehensive information regarding:

• the trader’s identity and contact details;
• membership of any self-regulatory or accreditation bodies and the contact details of that body;
• any code of conduct to which that supplier subscribes and how that code of conduct may be accessed electronically by the consumer; 
• the physical address where the supplier will receive legal service of documents;
• the manner and period within which consumers can access and maintain a full record of the transaction;
• the return, exchange and refund policy of the supplier;
• any alternative dispute resolution code to which the supplier subscribes and how the wording of that code may be accessed electronically by the consumer; as well as
• the security procedures and privacy policy of the supplier in respect of payment, payment information and personal information.

“Failure to supply this information gives the consumer a right to cancel the agreement within 14 days of receiving the goods or services,” Mphahlele said.

“This is in addition to the cooling-off period which gives the consumer the opportunity to cancel the agreement lawfully in certain circumstances.”

Plus, the CPA regulates misleading advertising, misrepresentation of goods or services and the issues of refunds, including deposits of on and offline transactions.

“We firmly believe that stricter sanctions against those who flout the code, the CPA and the ECTA are in the best interests of consumers and the industry.”

• GET IN TOUCH: You can contact Wendy Knowler for advice with your consumer issues via e-mail: consumer@knowler.co.za or on Twitter: @wendyknowler.

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