Consumers to return poor quality goods, seek refunds in new Bill

Consumers will have enhanced legal rights to protect themselves from defective or poorly packaged goods if proposed changes to the Consumer Protection Act become law.

The Consumer Protection (Amendment) Bill 2023, by Vihiga Woman Representative Beatrice Adagala, seeks to grant consumers the right to reject goods and obtain refunds, or seek repairs or replacements if the goods are deemed defective, unsafe and unsuitable for sale, or were not examined by the supplier before delivery.

The Bill has already been approved by the Budget and Appropriations Committee (BAC) of the National Assembly, which gauged its financial and economic implications, meaning it is now headed to the Government Printer for publication and introduction in the House.

Fiscal experts at the Parliamentary Budget Office (PBO), who are attached to the committee, however, estimate that if the Bill becomes law in its current form, the government will lose in the region of Sh211.1 million in taxable sales on rejected and returned goods in the first year of its implementation.

They say Sh229.2 million will be lost in the second year and Sh243.3 million in year three.

This is because businesses may be able to claim a tax deduction or credit for the cost of goods returned hence reducing the amount of taxable income due to the government and therefore reducing the tax bill.

Huge gains anticipated

Ms Adagala says, however, that the gains once the Bill becomes law far outweigh the losses.

She also notes that her proposal is in line with the rights of the consumers and the need to protect them from “unscrupulous suppliers.”

“There are businesspeople who often supply substandard goods. What I am saying is that consumers need to be protected. Customer satisfaction should be the hallmark of any business transaction,” Ms Adagala says, adding that “in any transaction, there should be value for money”.

Ms Adagala cites Nigeria, India, New Zealand and the US as the best case scenarios for consumer protection against substandard, faulty and poorly packaged goods, among others.

The budget experts say losses in taxes may impact the country’s revenue but advise that the government has a duty to ensure consumer rights are protected.

“The committee may propose any changes to the Bill that it may deem suitable to minimise revenue losses but addresses the need to protect the consumer rights,” a PBO brief to the committee reads.

Businesses are required to charge and collect VAT on their sales, which is the largest amount of taxes collected by the government from the sale of goods.

“When goods are returned, the business may be required to issue a refund to the customer for the amount of tax that was paid on the original sale,” the fiscal experts say.

Article 46 of the Constitution provides for consumer protection and prohibitions against unfair or dishonest advertising.

Under this Article, consumer protection rights include the right to reasonable quality goods and services, access to necessary information about goods and services, protection of health, safety and economic interests and compensation for any loss or injury caused by defects in goods or services.

Although section 5 of the Consumer Protection Act states that the supplier is deemed to warrant that the goods or services supplied under the consumer agreement are of reasonably saleable quality, the burden of proof will now rest on the supplier, according to the Bill.

The consumer will have seven days of delivery to return the goods to the supplier if they are adjudged as not-compliant with the law.

The proposed law allows the consumers to receive a refund and the right to charge for goods that are not in their original packaging or have been used, except for goods ordinarily consumed or depleted by use at the time the consumer is seeking the refund.

If the consumer chooses repair or replacement of goods, the proposed law gives the right to do so within 14 days of delivery, adding “the costs will be borne by the supplier”.

“The supplier will be required to repair or replace the goods within a reasonable time and without causing significant inconvenience to the consumer,” the proposed law reads.

In this case, the reasonable time or significant inconvenience is to be determined by taking into account the nature of goods and the purpose for which they were acquired.

Online deception

Ms Adagala noted that plenty of deception happens on social media and online portals against unsuspecting consumers.

“They demand that you pay first before the goods are supplied but when they are delivered, you find that they don’t meet the requirements of the law. Some consumers also get harassed by these suppliers along the way. I am saying this must stop and that the time is now,” she said.

Teso South MP Mary Emaase, the BAC vice chairperson, noted that the biggest threat to consumer freedom is online fraud.

“I have lost money before. I bought an item that was never delivered,” Ms Emaase said.

Her Suba North colleague Millie Odhiambo added; “There are a lot of deliveries which don’t conform to the required standards.”

The Sale of Goods Act in Kenya deals with implied conditions in contracts of sale of goods, which, according to fiscal analysts, are guarantees that are not explicitly stated in the contract but are still considered part of the agreement.

The Competition Act provides for liability for defective goods.

“If goods have a defect that causes someone to suffer loss or injury, the supplier is responsible for compensating the affected person,” the law says, adding “the affected person has the right to seek compensation through court action”.

Currently, various government agencies carry the responsibility of consumer protection.

The Competition Authority of Kenya (CAK) has the power to initiate investigations into consumer violations and impose administrative remedies.

The others are Energy Petroleum Regulatory Authority (EPRA), Pharmacy and Poisons Board (PPB) and the Kenya Bureau of Standards (KeBS).

The CAK, for instance, has handled more than 100 complaints from consumers since 2017, with some already closed and others still under investigations.

An example of a case resolved by the CAK is Rosebel Vs Jumia, an online supplier.

The complainant alleged she bought a fridge from Jumia but upon delivery, she found it was faulty since it was not cooling.

She was not given redress despite her complaints but when the CAK intervened, she was refunded.

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