The government needs to crack down on foreign online vendors that are beyond the jurisdiction of South African consumer protection bodies, says Queen Munyai, CEO of the consumer goods & services ombud (CGSO).
“If they don’t comply with our consumer laws they must be barred from accessing our market,” she says. “Compliance must be a condition of access.”
Allowing noncompliant suppliers into the market and then trying to get them to comply is a losing battle for the ombud. By far the highest number of consumer complaints to her office are related to online transactions, says Munyai, who has held the CGSO post for seven years.
“That number keeps growing year by year, so we should as soon as possible try and make sure that the online area is legislated properly. Our laws should be able to accommodate redress for consumers and hold suppliers accountable. There’s a serious mismatch between consumer expectations in terms of protection from online scams and what the law allows.”
Much more can be done in terms of education and legislation to improve e-commerce safety for consumers, she says.
The job of the CGSO is to maintain a fair marketplace. But online marketplaces deny responsibility for transactions between third-party sellers and consumers.
This means that although contractual liability lies with the third party it can decide whether to refund consumers for defective goods, repair them, replace them or walk away, and there is little the CGSO in South Africa can do about it.
“We are seeing by the rising number of complaints that more online suppliers are taking the gap,” she says.
A recent report by research firm BMA, which says e-commerce sales climbed from just 2.4% of the South African market in 2015 to nearly 10% last year, calls for stronger compliance and consumer protection.
The Consumer Protection Act (CPA) is only applicable where the consumer and supplier are both in South Africa, says Munyai.
“As soon as the supplier is inside South Africa they are required to comply. But we find that trying to enforce it, use it to make suppliers outside South Africa accountable for their behaviour inside South Africa, is a big challenge.”
Local laws such as the CPA and Electronic Communications & Transactions Act need to be updated so they apply to suppliers outside South Africa and offer more protection to local consumers.
“There is definitely room for improvement of these acts.”
Government must make it more difficult. If South African suppliers want to do business in other countries it’s not that easy. There are a lot of hoops you must go through. It should be the same here
— Queen Munyai, CEO of the consumer goods & services ombud
The CGSO has no jurisdiction over platforms such as Chinese online giants Shein and Temu, which according BMA are rapidly swallowing the market share of local retailers and manufacturers and taking billions in consumer spending away from domestic value chains. In 2024 alone, according to BMA, they raked in an estimated R7.3bn in South African sales, more than a third of all online clothing purchases in South Africa.
Temu has just opened a warehouse in South Africa, which Munyai says makes it “more eligible to comply” with the CPA and ECTA.
“But it’s not a clear-cut process to enforce the law inside South Africa. We are engaging with them. They are co-operating, but it’s low. It’s not happening the way we would like to see.”
When push comes to shove the CGSO cannot force Temu or Shein to comply with either the CPA or ECTA.
“If those laws were strengthened it would help us to enforce consumer protection better,” she says. “Government must make it more difficult. If South African suppliers want to do business in other countries it’s not that easy. There are a lot of hoops you must go through. It should be the same here.”
There must be more enforcement and consumer bodies must have more teeth to hold both local and offshore suppliers accountable.
Why has the government not already acted? “There are things that are happening,” Munyai says. “It’s just that it takes long for government to finalise the processes even though we’ve made submissions and have been advising them on necessary changes to strengthen the CPA and make it more enforceable against offshore suppliers.
“We don’t know when that process will be completed and when it will be enforced. But there is a conversation going on and the process is under way.”
It has been speculated that there may be political reasons why the government is moving so slowly, given South Africa’s close relationship with its Brics partner China.
“Perhaps I may have limited access to knowledge of exactly what is the delay, but I am seeing that there are efforts in place from a regulators’ point of view for government to try and do this,” Munyai says. “I’m just not sure of issues that may be in the background.”
As e-commerce in South Africa balloons, local consumers are increasingly exposed to the unaccountability of suppliers. The CGSO closed about 12,400 cases against suppliers in the last financial year, which Munyai says is “the tip of the iceberg”. The ombud received claims over transactions totalling more than R1.4bn from aggrieved consumers but was able to secure refunds of only R11.9m, she says.
“In many cases we can’t deal with complaints because suppliers are not co-operative or can’t be reached. That is a big percentage of complaints we receive.”
The problem goes even deeper than the numbers suggest, says Munyai. In the goods and services industry only about 2,000 suppliers, or about half, are registered with the CGSO. This means they are willing to resolve complaints and uphold the CPA, and acknowledge that consumers are entitled to redress.
“The majority are not interested. They run away and we have to struggle to find them, to trace them through different platforms.”
The CGSO has dispute resolution schemes but many suppliers refuse to sign up. “They tell us straight that they’re not going to sign up because they feel they’re not covered under the CPA.”
Many of them use this as an excuse to dodge accountability, she says.
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