South Africa’s consumer protection framework is lagging the rapid evolution of e-commerce, exposing consumers – and by extension financial services providers – to risks that are not adequately addressed by current legislation.
This emerges from a joint position paper released by the National Consumer Commission (NCC) and the Consumer Goods and Services Ombud (CGSO), which examines how online trade is reshaping consumer risk and regulatory oversight.
CGSO chief executive Queen Munyai said the report reflects the growing concern that laws designed to address unfair business practices have not kept pace with how consumers transact.
She noted that e-commerce has accounted for more than 20% of complaints received by the CGSO over the past five years, covering issues such as misleading advertising, non-delivery, refund failures, damaged or unsafe goods, and counterfeit products sold via third-party sellers.
Limited enforcement and fragmented oversight
Munyai indicated that the Ombud’s ability to resolve disputes is constrained by its mandate. As a mediation body, it cannot enforce outcomes. Where suppliers refuse to engage or reject recommendations, consumers must approach the NCC or pursue legal action, both of which can be costly and protracted.
She also pointed to fragmentation across regulatory bodies. Complaints falling outside the CGSO’s jurisdiction are referred elsewhere, which can result in gaps in oversight and an incomplete view of the scale of consumer harm.
The joint paper similarly highlights that South Africa’s e-commerce regulatory framework is split across multiple statutes, including the Consumer Protection Act (CPA), the Electronic Communications and Transactions Act (ECTA), and the Protection of Personal Information Act (POPIA), with overlapping and sometimes inconsistent application.
Accountability gap on digital platforms
The NCC’s acting commissioner, Hardin Ratshisusu, said the growth of the digital marketplace has introduced new vulnerabilities that require coordinated regulatory action.
He indicated that platforms facilitating transactions between sellers and consumers should not be able to disclaim responsibility when harm occurs. This position aligns with concerns raised in the paper that platforms often prioritise scale – by onboarding large numbers of third-party sellers – without sufficient vetting, increasing the risk of counterfeit or unsafe goods entering the market.
Currently, consumers with complaints are often redirected to third-party sellers, shifting the burden of dispute resolution and compliance.
Key risk areas for consumers – and advisers
The paper identifies several areas where consumer risk is most acute:
- Marketing practices: The rise of influencer-driven and social media advertising has increased exposure to misleading or deceptive promotions.
- Returns, refunds, and delivery: Uncertainty persists around cooling-off rights, return costs, and refund processes, despite existing legal provisions.
- Data protection: Weak enforcement of POPIA in some contexts continues to raise concerns about how consumer data is collected and used.
- Third-party sellers: The proliferation of sellers on online marketplaces has created accountability gaps, particularly where goods are defective, unsafe or never delivered.
For FSPs, these risks are increasingly relevant as clients engage more frequently in digital transactions, including cross-border purchases.
Reform proposals target legislative gaps
The paper sets out a range of short-, medium- and long-term measures aimed at strengthening consumer protection in e-commerce.
These include:
- Amendments to the CPA and ECTA to address gaps in cooling-off periods, return costs and online trade descriptions, to ensure consistent protection across in-store and online transactions.
- The mandatory appointment of local representatives for offshore e-commerce retailers operating in South Africa, providing a clear point of contact for complaints and regulatory compliance.
- The introduction of joint liability for platforms hosting third-party sellers, aligning South Africa more closely with international precedent, including a 2020 California ruling that held Amazon liable for harm caused by third-party products.
- The development of a central complaints handling platform to improve coordination between regulators and ombud schemes.
- The exploration of a RAPEX-style product safety alert system, enabling real-time information sharing on hazardous goods sold online.
The paper also highlights the need to strengthen enforcement of POPIA, particularly in relation to consumer consent and the handling of personal data.
Implications for FSPs
The findings point to a shifting risk landscape that extends beyond retail into financial advice and client protection.
FSPs may need to place greater emphasis on digital transaction risk when advising clients, particularly where online purchases, platform-based trading or cross-border transactions form part of a client’s financial activity.
In addition, due diligence on service providers and platforms is likely to become more important as regulatory expectations evolve.
The NCC indicated that it will continue to use existing enforcement mechanisms while advocating for legislative reform and closer co-ordination across regulatory bodies.
The full joint paper is available on the CGSO and NCC websites. Research Reports – The National Consumer Commission and Consumer Protection in e-Commerce – CGSO.
