The CPA is a law that protects consumers from misleading business practices.
The National Consumer Commission (NCC) has confirmed it is investigating whether Chinese e-commerce giants Shein and Temu are contravening the Consumer Protection Act (CPA).
NCC’s spokesperson Phetho Ntaba told The Citizen they are looking to conclude the investigation by the end of the fourth quarter.
The NCC is a government body that protects consumers by ensuring fair business practices, as outlined in the CPA. The Act was established to protect consumers from misleading business practices.
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Timeline of the investigation
“We intend to finalise the investigation by the end of Q4, depending on whether the investigation does not require more time,” said Ntaba.
She added that they initiated the investigation after picking up concerns online regarding possible violations of the CPA.
While the NCC did not give a detailed explanation of how the two Chinese e-commerce giants might have violated the Act, there are several ways a business can do this. This includes advertising goods or services with false, misleading, or deceptive representations about their nature, properties, advantages, or uses.
How can Shein and Temu violate the Act
The other ways businesses can violate the Act are by advertising goods at a specified price or under terms that are not actually available, with the intent of luring consumers to the store to sell them something else.
Negative option marketing is also a violation of the Act. This is when a business promotes goods or services and automatically creates an agreement unless the consumer specifically declines, which is a prohibited practice.
Violating the Act has several consequences, including administrative fines, compliance orders, referrals to the National Consumer Tribunal (NCT) for hearings, potential imprisonment, class actions by consumers, and orders to refund, repair, or replace goods/services.
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The National Consumer Tribunal to decide
Ntaba said they do not start an investigation with the end in mind when asked what penalties the Chinese e-commerce giants could face.
“The NCC conducts investigations under the CPA, guided by the rules of administrative justice. While the NCC initiates an investigation on suspicion of prohibited conduct, we do not start an investigation with the end in mind,” she said.
“If the suppliers are found to have breached the Act, the NCC may refer the case to the National Consumer Tribunal for Prosecution, enter into a consent agreement with the supplier to address the prohibited conduct, or choose not to refer the matter if no wrongdoing is found.”
Cooperation
A Shein spokesperson told The Citizen they have been cooperating with the national consumer authorities.
“We have been working constructively with national consumer authorities in our markets to demonstrate our commitment to complying with local laws and regulations, and we are continuing to engage in this process to address any concerns,” said the spokesperson.
“Our priority remains ensuring that consumers can have a safe, reliable, and enjoyable online shopping experience.”
The Citizen reached out to Temu. A comment will be added once received.
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