A consumer, who lodged a complaint with the National Consumer Commission (NCC) after having spent more than R1 million on a penny auction site, has lost out after the authority was found to have overstepped its powers.
According to a ruling handed down by the National Consumer Tribunal (NCT), the NCC did not follow the procedures set out in the Act, its compliance notice was "defective" and it exceeded the bounds of its powers. The notice was cancelled and the NCC now has to do a complete investigation into Dynabidz's business.
The anonymous consumer complained to the authority, which ensures implementation of the Consumer Protection Act (CPA), that she spent more than R1 million bidding on goods on Dynabidz but, while she received some items, had spent far more than she could afford, or what the goods were worth.
The complainant wanted her money back, but Dynabidz refused, arguing that she was an active user of the site - one of the top three buyers - and that she used her bids to buy items. The NCC tried to solve the issue, but failed, and then issued a compliance notice demanding that the R1 million be refunded, or else it would seek to have the site fined R3 million.
The money was spent bidding on 119 different products between April and mid-July last year. Even when the consumer bid successfully, she did not always get the goods because, argued Dynabidz, she wanted to have her account credited with bids instead.
Faulty order
Online retail business CJ Digital SMS Marketing, which trades as Dynabidz, lodged an application with the NCT to overturn the compliance notice.
Dynabidz sells watches, handbags, computer accessories, mobile phones, iPads, iPods, kitchen and dining equipment, perfume and holiday packages to consumers through its Web site, notes the ruling. However, the site seems to be down and the most recent registration fee has not been paid.
The online retailer started trading last January and sells its items through a bidding process. "The idea appears to be that consumers bid small amounts for goods and that if they are successful, they receive the goods at a fraction of their retail cost," notes the NCT.
The NCC also believed Dynabidz could be committing a crime and queried the legality of the way the site operates.
However, the NCT ruled that the NCC's compliance notice did not direct Dynabidz to stop its alleged prohibited conduct, but only to refund the consumer. The tribunal says, as a result, it seems that as long as the site refunds the money, it can carry on with conduct that the NCC argues is prohibited.
The recent ruling follows a hearing held on 27 September, which only looked into the compliance notice, and not Dynabidz's business practices.
The tribunal also said the commission does not have the power to order a party to refund consumers. Instead, there must first be a finding that the conduct is prohibited, which would then form the basis for a civil case.
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