Consumer Protection Act Brief – 30/04/2012

30 April 2012|In Consumer Protection Act Briefs

In this issue:

  • Banks found guilty of misleading advertising
  • Questions raised about exemption clauses

Banks found guilty of misleading advertising

The Advertising Standards Authority (ASA) has found both Standard Bank and First National Bank (FNB) guilty of misleading advertising after both banks accused each other of ambiguous and unsubstantiated marketing.

FNB claimed that its Smart Zero account was the “first bank account in SA with a zero monthly fee”, however the ASA found that other banks (including Standard Bank) had offered this in the past.

Meanwhile, Standard Bank’s posters advertised “free cellphone banking, free telephone banking, and free internet banking”, yet they did not inform consumers about other costs such as subscription fee.

According to section 29 of the Consumer Protection Act, a service provider will be prohibited from marketing any goods or services in a manner that is misleading, fraudulent or deceptive in any way.

Questions raised about exemption clauses

The recent case of RP Naidoo v Birchwood Hotels has raised serious questions about the proper approach to be taken to exemption clauses under new constitutional dispensation, as well as whether exclaimers exempt hotel from liability, and whether disclaimers are contractually binding.

Naidoo, a coach driver, stayed at the Birchwood Hotel near OR Tambo International Airport in October 2008. While there, a gate at one of the hotel entrances fell on Naidoo causing serious bodily injuries.

Naidoo pleaded that the hotel had been negligent in maintaining the gate, while the hotel argued that Naidoo had caused the accident by interfering with the operation of the gate. The hotel further argued a disclaimer was prominently displayed at the entrance where the gate was located and in other locations around the premises. It argued that by signing the hotel register, Naidoo bound himself to the terms and conditions appearing on the reverse thereof which included an exemption clause.

Referencing the Constitutional Court ruling in Barkhuizen v Napier, the court gave clear indication that a term in a contract that seeks to deprive a party of judicial redress is prima facie contrary to public policy and inimical to values enshrined in Constitution, even if freely and voluntarily entered into by consenting parties.

The court found that neither the disclaimer notices nor the exemption clauses were a good defence to the claim and ordered the hotel to pay Naidoo’s damages as well as the costs of suits.

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