Grey market and the Consumer Protection Act


The South African grey market is – well – a grey area: it is legal, but poorly regulated.

That is set to change with the new Consumer Protection Act, which comes into force on 1 April 2011. The bidorbuy sellers who rely on grey imports would do well to sit up and take note.

The grey market mainly consists of imported high-value electronic goods. Such goods reach South African shores faster through grey imports than through official channels (witness the case of iPads). And when the official imports are available, the grey ones are always cheaper. But the grey market has one huge pitfall: very elusive warranties and guaranties.

According to the new Consumer Protection Act, the retailers must:

  • Label grey products,
  • Make it easier for shoppers to return faulty goods;
  • Make it easier for shoppers to get refunds.

The new Act includes an implied warranty of quality on all goods, allowing consumers to return faulty goods, get the seller to repair it, or get a full refund. The requirement to clearly label gray product is nothing new – but now it will have to be respected. The monitoring of the implementation of the new Act it is expected to be much stricter, and the fines are much higher: businesses found flouting the law face a R1 million fine or 10 percent of turnover, depending on which is the greater amount.

Analysts say that the new Consumer Protection Act will make grey market products more expensive and less attractive. Some go as far as to claim that the law is the final nail in the coffin of grey market.

Also see: The Consumer Protection Act and bidorbuy Buyers and Sellers