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Web sites misleading consumers

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 03 Apr 2012

Online portals offering the new iPad are inadvertently duping consumers, because they do not have conspicuous notices warning the devices are grey imports, and some are not even aware of the legal requirements.

The new iPad, which was launched in the US on 7 March, has yet to be officially launched in SA, although eager consumers can buy the tablet through several online portals, which import them directly.

However, none of the sites ITWeb researched clearly indicated these items are parallel imports, which is a contravention of the Consumer Protection Act (CPA) and Department of Trade and Industry regulations.

As a result, the resellers are “inadvertently” misleading consumers, says Nicholas Hall, an attorney with Michalsons Attorneys. He says although the product is genuine, consumers may believe it is backed up by the official South African channel - Core - when that is not the case.

Sites such as laptop.co.za, bidorbuy, simplicity.co.za and aureustech.co.za are selling the popular device, but are not clearly indicating the tablets have been brought in through unofficial channels, says Hall.

Duty to inform

The CPA requires suppliers of grey imports to display a “conspicuous” notice on the goods, while regulations accompanying the law say sellers must inform consumers on marketing material and wherever the item is advertised.

In addition, the Department of Trade and Industry published a regulation in 2007 that requires that sellers inform consumers they are not the authorised agents, and that the authorised distributor is not obliged to honour the trademark owner's warranties and after-sales service on that product.

Under the CPA, contravention of the law could lead to a R1 million fine, or 10% of turnover, whichever is higher, says Hall. Trade and industry's regulations could see a R200 000 fine or jail time of five years.

Breaching the law

Hall says none of the sites ITWeb referred him to clearly indicate the iPads as grey. He says Aureus Tech is the only one that has taken any steps to comply with the CPA, as it has a special notice page, but still the company does not fully comply.

The CPA allows consumers to claim against all the parties in the supply chain, but this would be difficult to do if the product was brought in from another country and the local retailer has gone bust, says Hall.

Some retailers are reluctant to point out that the products are parallel as they fear they may lose sales if consumers realise the product is not backed up by the official local channel, he notes.

“Consumers might be able to return the goods on the basis that they thought they were receiving 'officially' imported goods, but they are in fact not.”

No idea

At least two site owners were unaware that the notice had to be conspicuous and have vowed to amend the text online.

Simplicity owner Gustav Penny says no one has told him to display the notice, which has never been an issue. He argues the site cannot “fine-tune” every page even though it does not have the biggest range of items.

Penny says customers are aware the iPad has not officially launched in SA, but do not mind as they want to get their hands on the device. The company offers its own backup in the case of failure and will amend its site to indicate the products are grey, he says.

Christopher Riley, MD of The Notebook Company, which owns the laptop.co.za domain, says the site will be changed as he understood that only the physical product had to be labelled, which the company does. “Our intention is definitely not to mislead our customers or break the law.”

Aureus Tech online director Dreyer Smit says the company is aware of the requirement and tells consumers via e-mail, on the quote and when they phone that the products are grey. “We have been looking into effective ways to display this notice on the Web site, without breaking the site aesthetic.”

Bidorbuy CEO Jaco Jonker says the company is not a seller, but allows buyers and sellers to trade online with each other. “Bidorbuy is not the seller of the goods or services” and the seller has to comply with the CPA.

The site established procedures and mechanisms to deal with sellers who contravene any laws and posts articles dealing with the law, says Jonker. He adds the contravention must be brought to its attention.

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