Aggrieved consumers recover nearly R13m as ombud orders refunds
Ombud says 1,356 more businesses, many of them large groups, have signed up — an almost 30% increase year on year
R12.9m. That’s the total amount refunded to consumers by companies in the year ended February, thanks to arbitration of their disputes by the office of the consumer goods and services ombudsman (CGSO).
The ombud’s office revealed this figure at a two-in-one event in Johannesburg on Tuesday — the release of its annual report for 2022/3 and its 10th birthday.
The most common consumer complaints in 2022/3 related to items not being delivered on time; cancellation of agreements; goods becoming defective within six months; and poor service in either the handling of the complaint, or the after sales.
The top five complaint categories were online transactions, electrical appliances, telecommunication and satellite services, cellphones and furniture.
The almost R13m was an increase of 12.5% on the previous year’s total sum recovered for aggrieved consumers. It’s a significant amount of financial relief, but quite a bit below what the consumers in those 10,000-odd cases felt they were due — almost R183m collectively.
“This reflects the disconnect between consumer expectations and the Consumer Protection Act, which does not make provision for consequential damages,” said Magauta Mphahlele, who stepped down as ombudsman at the end of March this year.
The R183m includes R59m claimed by one complainant who purchased a Coca-Cola cooldrink containing crystal-like particles, she said.
The huge gap between what consumers collectively got back in the year in question, and what they claimed, is also the result of a high number of suppliers refusing to comply with the ombud’s code.
A bed not fit for sleep, says shopper — who wins refund after 5 months
The CGSO report includes the case of a woman denied a full refund for her faulty bed.
Within five months of purchasing the bed, she contacted the supplier to inform it she could feel the springs on the bed, which was also too hard for her liking. She asked for a refund but the supplier refused; both a full refund and the customer’s suggestion it refund her 80% of what she’d paid for the bed, keeping 20% as a “handling fee”.
The company’s counter offer was a 50% refund, given she’d used the bed for five months.
She refused and took the matter to the CGSO. The office referred the bed supplier to the Consumer Protection Act, which gives consumers the right to receive goods that are fit for purpose and free of any defects for at least six months, failing which they are entitled to their choice of a refund, replacement or repair.
“We therefore made a recommendation against the supplier in those terms and recommended that the supplier refund the complainant as she was seeking a refund.”
She was refunded in full.
While the ombud’s office was able to facilitate a positive outcome for consumers in 55% of cases, a whopping 20% of cases had to be closed because suppliers refused to engage. That left adjudicators with no choice but to close their files and advise the consumer to lodge a fresh complaint with the National Consumer Commission which may refer the matter to the National Consumer Tribunal or the courts. But that rarely happens due to limited resources and capacity on the part of the commission, Mphahelele said.
The good work carried out by the CGSO is undermined by the lack of consequences for suppliers who ignore our correspondence or our recommendationsFormer ombud Magauta Mphahlele
“The good work carried out by the CGSO is undermined by the lack of consequences for suppliers who ignore our correspondence or our recommendations,” Mphahlele said. Tuesday's event was also scheduled to be attended by the CGSO’s first ombud, advocate Neville Melville, and Lee Soobrathi, who took over as ombud last month, having previously served as head of complaints and dispute resolution at the office of the Credit Ombud.
“Regardless of whether a business subscribes to the code or pays its participation fees, the CGSO is obliged to deal with any complaints received against that business,” Mphahlele said.
“In these instances, a significantly high proportion of non-compliant suppliers refuse to co-operate with this office. This is unsurprising as many complaints against them tend to rest on unethical and unlawful conduct.
“When this happens, we are obliged to issue a termination notice resulting in frustrated consumers, who tend to blame the ombud for the outcome.”
Among those cases was that of a consumer who paid R400,000 to a supplier for the full renovation of his apartment which was never completed. The CGSO couldn’t resolve the matter and was forced to close that file because that supplier refused to co-operate.
On the plus side, a five-year legal challenge by two companies to the CGSO’s right to levy and collect fees from all eligible suppliers ended in December 2022, a high court order requiring all eligible businesses to pay fees as a contribution to the costs of operating the CGSO.
More companies are signing up
“More participants means a better outcome for more consumers,” said CGSO CEO Queen Munyai. “And it distributes the funding burden more equitably.”
By the end of the financial year, 1,356 businesses, many of them large groups, had signed up — an almost 30% increase year on year.
With regard to the proposed amendments to the Consumer Goods and Services Code of Conduct, Mphahlele said she hoped that the restating of the requirement to submit a list of non-compliant suppliers to the NCC was a sign that “enforcement action will finally be taken against non-compliant and unco-operative suppliers in the consumer goods and services sector”.
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