SA’s outgoing consumer champion Magauta Mphahlele reflects on major victories of her two terms in office

15 Jan 2023

Consumer Goods and Services Ombudsman Magauta Mphahlele will leave the organisation at the end of March to take up a position in the private sector.

By taking on the big guns and speaking out against injustices, Magauta Mphahlele and her team at the Consumer Goods and Services Ombud (CGSO) have leveraged every resource at their disposal to fight on behalf of consumers and suppliers.

With no enforcement powers, they have resorted to naming and shaming rogue suppliers, educating the public, issuing strongly worded guidelines and scoring a few key victories. Through it all, they have grown their profile and membership in the goods and services sector, while advocating for legislative change to strengthen their arm.

At the end of March, Mphahlele will be leaving the ombud, to take up a position in the private sector. With extensive experience in complaints handling, mediation and adjudication, having served on the National Consumer Tribunal, the Gauteng Rental Tribunal and the Gauteng Consumer Court, Mphahlele has played a leading role in steering two of the country’s most critical pieces of consumer legislation, the Consumer Protection Act (CPA) and the National Credit Act, through Parliament while at the Department of Trade and Industry.

She will be taking on a senior role in one of the industry associations in the credit space, saying credit is also her strong point. “It’s also a consumer protection issue, because I’m passionate about credit access and reckless lending.”

Her replacement will have big shoes to fill: Mphahlele had replaced Neville Melville, who developed the industry code and ombud’s procedures for the Consumer Goods Council, and the role is demanding.

As an independent and accredited alternative dispute resolution scheme, the CGSO has signed up 1,380 organisations, including most of South Africa’s major retailers, manufacturers, wholesalers and distributors. Since its inception in 2012, the CGSO has received more than 148,000 calls, opened more than 64,000 complaints and closed about 62,000.

Finishing strong

Notably, on 26 March last year, the ombud scored a major victory, compelling all qualifying non-members to join the scheme. In this matter, the Pretoria High Court ruled against electrical wholesaler Voltex, thereby confirming the Consumer Goods and Services Industry Code of Conduct and the powers of the office to levy annual participation fees.

The case had dragged on since 2017, when Melville approached the high court for the declarator to resolve an impasse with the Bidvest subsidiary after the company demanded a refund of its R285,000 annual fees. After the public interest matter was advertised in the media, chicken producer Astral, which is not a member of the scheme, joined the application, challenging the validity of the code and asking that it be struck down.

Attorney Janusz Luterek from Hahn & Hahn, for the ombud, told Business Maverick at the time that Astral, which felt overregulated, argued it had already complied with the Department of Agriculture and other regulations and paid for inspections, so why must it join and contribute to the ombud scheme?

“However, the Department of Agriculture provides no redress for consumers, and if a consumer buys a bad chicken and has a claim, that complaint would have to go to the ombud and not the Department of Agriculture for resolution and compensation.”

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The application was triggered by Voltex’s demand for a refund; it was not about taking the company to court, since the ombud wanted its legal standing to be clarified, he said.

Mphahlele told Business Maverick Voltex had forced their hand because the only way to make the ombud a working scheme was to ensure that every entity in South Africa that qualifies as a participant in terms of the code, had to subscribe to it and pay fees because they are not government-funded.

The matter was taken on appeal but subsequently withdrawn. Now they have certainty, she says, which strengthens their hand.

“The office is funded by industry and those that qualify to belong to the CGSO. It’s important, because if we have all the entities [participating] we are able to create confidence in the market for consumers that they can access redress. If someone has signed up and is paying the fees, then they will do the right thing. And from the organisational side, we will be able to provide a dispute resolution service.”

She said that to a large extent, they had been successful in driving the recruitment of companies to participate in the scheme voluntarily.

The greatest difficulty is with the smaller operators — especially online sellers, who crop up on Instagram and Facebook and shut up shop as soon as things get too hot.

“Our challenge is the smaller guys: the one-man operators. Although they don’t have to pay because of the categories they are in, they are the ones that give us the most headaches.”

The pandemic was a huge challenge for the office, as an organisation, and complaints skyrocketed, because of cancelled flights, accommodation and other bookings; issues with deliveries; and online shopping.

“I think we were very successful in giving direction to the market in terms of how we think service providers should deal with the issues. Our view was that consumers must be refunded, given vouchers and so on. We navigated the pandemic successfully.”

Things have stabilised: last year, complaint numbers went down to pre-pandemic levels, and their caseload went back to normal. But the office has enhanced its capabilities, by bringing in external independent adjudicators and law graduates, giving them an opportunity to gain experience.

It’s not about the numbers, Mphahlele said: it’s about the office’s attitude to stakeholders and consumers.

“We might be a small team, but I believe you can have a small, high-impact team, and one of our strategic imperatives and performance measures is that we have to be responsive, available, transparent and care about the consumer, so we aim to respond within 24 hours.”

No cakewalk

Unsurprisingly, the job has attracted considerable frustration and criticism. Mphahlele said the biggest frustration for consumers was that ombuds are mediators and do not have binding decision-making power.

“The structure within the CPA is ADR [alternate dispute resolution], the National Consumer Commission [NCC], then National Consumer Tribunal — if the NCC decides to take up the matter.”

In terms of the code, the ombud has 60 business days within which to resolve a complaint, but if the supplier refuses to cooperate, a fresh complaint has to be lodged with the NCC, thereby prolonging access to redress. The CGSO is advocating for greater powers, which will require amendments to the CPA.

“The NCC doesn’t have the capacity to deal with all the complaints, so consumers get quite frustrated, and there are issues around enforcement because we haven’t seen enough visible enforcement taking place.”

One obvious starting point would be to clamp down on online retail. Mphahlele said that unlike other countries, where agencies have been established to monitor and take down online retailers; in South Africa, anyone can create websites and trade without any oversight.

It’s something that the enforcement agencies here need to look at because scams are rife, and while they warn consumers to trade only with sellers who are known and registered with relevant entities, such as the CGSO, which guarantees a response and redress, they still see far too many complaints on social media about consumers being taken in by individuals selling goods and services on Instagram and Facebook.

“There’s a lot of fraud and unfortunately even involving established retailers, which we have named and shamed because they have been greedy in terms of taking money when they know that they don’t have the capacity to deliver at the time.”

Bad press works, she acknowledges, because consumers are wisening up to the importance of doing research. A simple Google search can go a long way, to caution against doing business with an entity with a bad review. DM/BM

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Finishing strong

No cakewalk