“The secret of life is honesty and fair dealing… If you can fake that, you’ve got it made.” (Groucho Marx)
We’ve all had this experience – meal over, relaxed and happy, you call for the bill and decide to reward your friendly and helpful waitron with a good tip. Only to find, on checking the bill when you get home, that the restaurant had already added a “compulsory service charge” (perhaps 10% or 15% – sometimes even more). When you challenge it, the manager points to the small print on the menu which says something like “service charge applies to tables of six or more”, or “discretionary service charge may be levied”.
And it’s not only restaurants that engage in such shenanigans. Perhaps it’s a builder or any other service provider adding on bits and pieces to an invoice that you hadn’t noticed when you signed up with them.
Is this kind of behaviour allowed?
The devil, as always, is in the details. If the add-on was properly disclosed to you upfront, you have no legal leg to stand on. It’s up to you to check the menu, or the supplier’s website and Ts and Cs, before ordering.
But it’s a very different story if the add-on was not properly disclosed upfront by the supplier. As a recent judgment of the National Consumer Tribunal (“the Tribunal”) shows, heavy penalties await any “supplier” (widely defined to include not only restaurants and retailers, but anyone who markets or supplies any goods or services to consumers) who breaches any of their many obligations under the CPA (Consumer Protection Act). And that includes “no hidden charges allowed”.
Being found guilty of “prohibited conduct” will be an expensive exercise. Witness the R1m administrative fine imposed recently on a fast-food chain specialising in that beloved South African tradition – braaivleis.
The braai fast-food chain and the disgruntled customer
Acting on a tip-off from a customer, the NCC (National Consumer Commission) found that a fast-food chain, specialising in “organic braai fast food” (chew on that description for a moment) with 16 outlets across Gauteng was adding a service fee over and above its advertised prices. No mention of this was advertised in its branches, on its menus, or on its website.
Unabashed, the chain argued before the Tribunal that it was fully compliant with the CPA, that the charge was a fee “to ensure the best service to the consumer” and that there is “a transparent general practice to disclose cost structures rather than hide behind an exorbitant price model.”
The Tribunal, deeply unimpressed with this (frankly baffling) line of reasoning, found the chain guilty of prohibited conduct and gave it 90 days to pay a R1m administrative fine.
Two breaches of the CPA
The chain was found guilty of two contraventions of the CPA:
1. That as a supplier it “must not require a consumer to pay a price for any goods or services higher than the displayed price for those goods or services.”
2. It must also “provide a written record of each transaction to the consumer to whom any goods or services are supplied.” This record “must include at least the following information: the address of the premises at which, or from which, the goods or services were supplied.” Without that, as the Tribunal put it, “vulnerable consumers could find it difficult to institute legal proceedings and enforce their rights.”
A R1m fine for “preying on unwitting customers for selfish financial gains”
The chain, said the Tribunal, had “acted deceitfully towards its customers and contravened the CPA’s significant provisions. It acted contemptuously towards the very consumers who supported it.
Accordingly: “the Tribunal considers it appropriate to impose an administrative fine that will deter it and other suppliers from preying on unwitting consumers for selfish financial gains.”
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