Businesses that add a surcharge are in breach of Section 23 of the Consumer Protection Act.
The consumer goods and services ombud (CGSO) has warned store owners that add a surcharge when customers choose to pay using a bank card, instead of cash.
This often happens with informal businesses. For example, if a customer buys goods worth R80, the vendor might add R10 because the customer is paying with a card. Vendors usually say the extra charge covers their bank fees.
However, the Ombudsman said this is against the law, and anyone who adds a surcharge because a customer pays using card can be fined.
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Contravention on the Consumer act
CGSO is an independent body in South Africa that protects shoppers by resolving complaints between consumers and businesses in the consumer goods and services industry. The Consumer Protection Act (CPA) protect consumers, by ensuring businesses treat customers fairly and honestly.
The Ombudsman told The Citizen that businesses that add a surcharge are in breach of Section 23 of the CPA. Section 23 of the Act protects consumers from being overcharged or misled about prices.
The section outlines that businesses can’t charge more than the displayed price. In addition, all products must have a clearly displayed price so customers know what they’re paying, and if two different prices are shown, the lower price must be charged.
“If the supplier is found to have breached S23 of the CPA which relates to pricing this will be considered as prohibited conduct. Should the complaint be referred by the National Consumer Commission (NCC) to the National Consumer Tribunal (NCT), the supplier could face a fine in terms of section 112 of the CPA,” said the Ombudsman.
Education is key
The NCC is an independent body that ensures businesses obey the CPA. It will investigate the complaint, take action based on findings or refer the case to the NCT. The Tribunal is like a court for consumers, it will hear the case and issue a ruling.
When asked what measures have been put in place to ensure businesses do not contravene the act, the Ombudsman said most businesses need to be educated so that they understand the law.
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“The CPA and related as consumer protection legislation serves this purpose, however education is key so that suppliers understand what is expected and what consequences await those who do not comply,” it said.
Consumers must not pay
The Ombudsman added that shoppers who find themselves in a situation where they are asked to buy a surcharge must not proceed with the transaction and must report the business to the Payment Association of South Africa (PASA).
It said consumers must “cite Section 23 of the CPA as a consumer is expected to pay the displayed price and cannot be penalized for choosing an alternative method of payment. Do not proceed with transaction.”
“Consumers who encounter this behaviour may report the supplier to the PASA.” The association is responsible for overseeing payment systems in the country.
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