We’re all consumers, which is why in an ideal world, the office of the Consumer Goods and Services Ombudsman (CGSO) would be a bit like an everything app — a catch-all service where you can lay your problems at someone’s feet, and in the words of South Africa’s original consumer champion Isabel Jones, get a fair deal. 

But the world’s hardly fair or ideal, which is why the CGSO is so critical to supporting fair play in South Africa’s consumer goods and services sector. 

On Tuesday, during the release of the CGSO’s annual report — a double celebration this year on the office’s tenth anniversary — it revealed that it had put R12.9-million back in the pockets of consumers over the 2022/23 financial year. 

That’s a fraction of the amount claimed by consumers, some of whom appear to have highly unrealistic expectations. In the period under review, consumers claimed just under R183-million — which is a staggering 176.5% increase on the R66,136,943.20 in the previous year. 

The ombud says this reflects the disconnect between consumer expectations and the Consumer Protection Act (CPA), which does not make provision for consequential damages, which are a type of compensation for losses caused indirectly by a particular event.

In one such case, a complainant claimed R59-million after finding crystals in Coca-Cola (wine often contains harmless tartaric acid crystals). 

In another high-value case, which the ombud was unable to assist with, a homeowner was left out of pocket for R400,000 after the renovation of his apartment was never completed. The builder refused to cooperate, so the office issued a termination notice. 

Wing and a prayer? 

Proof that the ombud does convince its 1,356 members to do the right thing, a consumer received a full refund for a new bed five months after purchasing it. The complainant had contacted the supplier that she could not only feel the springs on the bed, but that it was also too hard for her liking, so she asked for a replacement or refund. At first, the supplier refused, but then countered by offering a 50% refund. 

Section 56(1) of the Consumer Protection Act (CPA) entitles consumers to return faulty goods within six months from delivery, and demand either a repair, replacement or refund. Of the view that the supplier contravened sections 55 and 56 of the CPA, the ombud recommended a full refund, which the supplier complied with.

In another case, a widow had lodged a complaint on behalf of her husband who had bought a gun on lay-by. At the time of his death, he had paid R8,200 towards the firearm with an undisclosed amount still outstanding. The gun shop claimed that the standard cancellation percentage across gun stores is 45%, so would only refund R4,565. The supplier was advised of Regulation 34 of the CPA which provides that “the maximum amount of cancellation penalty for lay-bys shall be reasonable but may not exceed one per cent of the full purchase price of the goods”. 

But here, the supplier refused to cooperate so the complainant was advised to contact the NCC.

The CGSO’s CEO Queen Munyai said that the widow “and millions like her have little to no recourse when dealing with suppliers who are not registered participants in the Ombud scheme, purely because they are aware that the resources to tackle individual cases of fraud and bad practice are not there”.

Top complaints

First among consumers’ top five bugbears related to online transactions — which have sharply increased over the past year — followed by electrical appliances, telecommunication and satellite services, cellphones, and furniture.

The office said complaints about e-commerce accounted for 34% of all complaints (up from 25% last year), significantly outpacing those about appliance manufacturers and retailers (15% in the year under review, a 1% increase), and 14% about satellite and communications (down from 17% in the previous year). 

Most consumer complaints about products and services relate to delivery, cancellation of agreements, and defective goods, specifically that the goods were not 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 service.

Consumers sent 10,562 complaints to the ombud, a 10.7% decrease on the previous year, which is attributed to a return to pre-pandemic trading conditions and a reduction in the cancellations of holidays and events. 

In 55% of cases, rulings were in favour of complainants — 35% fully in favour of the consumer, and 12% resolved directly between supplier and complainant within the first 15 business days. 

Concerningly, 26% of cases were closed due to non-cooperation from suppliers. As an alternate dispute resolution agency, the office has limited powers and influence: it cannot launch investigations, nor can it issue binding rulings and coerce suppliers to do the right thing. If it hits a brick wall, it issues a termination notice; the consumer then needs to take up the matter anew with the National Consumer Commission (NCC), an office not reputed for its efficiencies, which may or may not launch an investigation. Only the NCC can refer the matter to the tribunal. Besides that option, consumers can take matters to the Small Claims Court (for claims valued at under R20,000) or pursue costly legal action. 

Dealing with difficult suppliers

Former CGSO Magauta Mphahlele, who stepped down at the end of March this year to head up the South African Credit and Risk Reporting Association, has long called for more visible enforcement against suppliers who fail to cooperate with the CGSO. 

“The good work carried out by the CGSO is undermined by the lack of consequences for suppliers who ignore our correspondence or our recommendations. Regardless of whether a business subscribes to the (Consumer Goods and Services Industry) Code or pays its participation fees, the CGSO is obliged to deal with any complaints received against that business. In these instances, a significantly high proportion of non-compliant suppliers refuse to cooperate 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.”

Mphahlele told Daily Maverick previously that their role as an ADR agent is defined in section 70 of the CPA and exists to allow a consumer to first try to resolve a complaint amicably with a supplier before lodging a formal complaint with the regulator or pursuing the matter through the courts. 

“As a result, our role is limited to assisting parties to reach a mutually acceptable settlement through making  non-binding recommendations, failing which we must terminate the process and advise the consumer to lodge a fresh complaint with the NCC.”

Speaking at the event, Munyai paid tribute to the first 24 founding members who helped set up the ombud’s office in 2013. Since then, they have helped resolve over 70,000 disputes between businesses and their customers. Critically, it meant not only assisting consumers to access redress, but it also gave suppliers the opportunity to do right by their customers in a non-adversarial way.

“Our case files — all 70,000 plus — tell pretty much the same tales of disappointment, crossed wires, rude staff, dismissive managers and suppliers who disappear, never to be seen again. Fortunately, our participants view the CGSO as a partner who can intervene when their internal systems get it wrong. They also can turn to us to counsel consumers who have unreasonable expectations, like the customer who demanded consequential damages of R59-million after discovering ‘crystal-like’ particles in a popular soft drink.”

The number of paid-up industry participants rose from 1,048 to 1,356 YOY, helping increase revenue by 35% from R20-million to R27.1-million.

Lee Soobrathi, formerly from the Credit Ombudsman, took up office post-year end on 1 July 2023.

This year, the ombud launched a CGSO mobile complaints app, which can be downloaded from the Google or App Store. It’s a free service and allows users to upload and track the status of complaints, as well as submit supporting documentation, such as photos and invoices. Consumers can also call 0860 000 272, mail [email protected], or visit www.cgso.org.za to lodge a claim. DM