Firms warned on Act

COMPANIES must ensure they have measures in place that will quickly detect product defects ahead of the Consumer Protection Act, an expert warned.

The Consumer Protection Act (CPA), scheduled to become operational on April next year, is likely to have far-reaching effects when it comes to product recalls, an expert says.

The Department of Trade and Industry has said that the CPA will introduce general principles of consumer protection and serve as an overarching governing statement on consumer protection.

Mercedez-Benz SA recently recalled 3085 vehicles, including C-Class and E-Class models, as part of the worldwide effort to fix more than 85000 cars with faulty steering mechanisms.

Other recent recalls have included BMW and Toyota's Lexus vehicles.

Eric Levenstein, director at Werksman Attorneys, said it was crucial for suppliers to be aware of the coming changes as there was a strong probability that product recall would increase and companies needed to be prepared.

He said a National Consumer Commission would be formed and would be responsible for the development and implementation of industry-wide systems to receive notice of faulty products and provide for their effective removal from the marketplace by way of product recall.

Levenstein said it was probable that product recalls would increase substantially with the implementation of the new act due to the fact that the CPA now introduces the concept of "strict liability" for suppliers.

"This means that there will be no requirement for the consumer to prove negligence on the part of the supplier; rather, all that is the consumer is required to show is a causal link between the defective product and the resultant harm suffered," Levenstein said.

According to insurance firm Chartis South Africa: "One of the biggest threats to a company's bottom line is product recall.

"The cost of recalling a product can be astronomical and, in addition to reputational damage, could force a business to close its doors."

"So suppliers should be strongly advised to ensure they have adequate monitoring measures in place to quickly become aware of any defect in their product.

"In addition, suppliers should ensure that they have systems in place that will govern product recall and which they must be able to implement at the earliest opportunity.

"Once a company is aware of a fault in their product, the longer they wait before instituting a recall, the more they expose themselves to further liability and eventual claims for damages," Levenstein said.