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Many consumers have welcomed the introduction of the Consumer Protection Act (CPA), 2008 (Act 68 of 2008) and the National Credit Act (NCA), 2005 (Act 34 of 2005) as they protect them against unfair business practices - NSC Business Studies - Question 7 - 2018 - Paper 1
Question 7
Many consumers have welcomed the introduction of the Consumer Protection Act (CPA), 2008 (Act 68 of 2008) and the National Credit Act (NCA), 2005 (Act 34 of 2005) as... show full transcript
Worked Solution & Example Answer:Many consumers have welcomed the introduction of the Consumer Protection Act (CPA), 2008 (Act 68 of 2008) and the National Credit Act (NCA), 2005 (Act 34 of 2005) as they protect them against unfair business practices - NSC Business Studies - Question 7 - 2018 - Paper 1
Step 1
Outline the purpose of the CPA.
Answer
The Consumer Protection Act (CPA) was introduced to address the economic inequalities of the past and to promote consumer welfare in South Africa. It safeguards consumers by ensuring they have access to fair business practices, enables them to make informed decisions, and provides recourse against unfair treatment. The main purpose of the CPA is to empower consumers, ensuring they can participate in the market safely and effectively.
Step 2
Discuss the impact of the CPA on businesses.
Answer
The impact of the CPA on businesses can be both positive and negative:
Positives:
- Businesses can resolve disputes fairly through the National Consumer Commission, enhancing their public image.
- It may foster consumer loyalty when businesses adhere to CPA principles, as satisfied customers are likely to return.
Negatives:
- Businesses may face increased operational costs to comply with the CPA, such as adapting practices to meet the new requirements.
- Firms may need to insure against claims from consumers, resulting in additional financial burdens.
Step 3
Recommend ways in which businesses could promote the following consumer rights, as stipulated in the CPA: Right to privacy and confidentiality.
Answer
To promote the right to privacy and confidentiality, businesses should:
- Adopt clear policies that restrict unsolicited marketing practices.
- Ensure secure mechanisms for handling customer data and complaints, allowing customers to opt out of targeted promotions.
Step 4
Recommend ways in which businesses could promote the following consumer rights, as stipulated in the CPA: Right to information about products and agreements.
Answer
To foster the right to information, businesses should:
- Ensure that all contracts and agreements are clear, concise, and in plain language, making it easy for consumers to understand.
- Provide full transparency about product pricing and specifications, including any ongoing costs associated with purchases.
Step 5
Recommend ways in which businesses could promote the following consumer rights, as stipulated in the CPA: Right to fair value/good quality and safety.
Answer
To uphold the right to fair value and quality, businesses should:
- Implement rigorous quality assurance practices to ensure all products meet safety standards.
- Establish clear return policies for faulty items, allowing consumers to seek redress without hassle.
Step 6
Advise businesses on penalties/consequences that may be imposed for non-compliance with the NCA.
Answer
Non-compliance with the NCA can lead to serious consequences:
- Businesses may be declared reckless if they fail to undertake the required affordability assessments, nullifying contracts.
- They could face heavy fines imposed by the National Credit Regulator, potentially damaging both reputation and profitability.