The price you see on goods in a shop or on the menu in a restaurant must be the full price you pay, including VAT and all other charges.
The National Consumer Tribunal has fined restaurant chain Braai Block R1 million for “ripping off consumers” because it charged a service fee that was not disclosed upfront and did not indicate the address of every restaurant on its receipts.
After receiving a tip-off from a consumer, the National Consumer Commission (NCC) investigated Braai Block and found that the restaurant chain’s sales records or receipts did not reflect the address where it supplied its goods or services, that it charged a service fee which varies from one transaction to another, depending on the price of a consumer’s meal and that the advertised cost of goods on the restaurant’s menu did not include applicable fees or charges.
According to the NCC, Braai Block started operating in November 2020 and has 16 restaurants where its products are displayed on a menu. During the investigation, a Braai Block employee told the NCC that the service charge is a fee charged for its services to ensure the best service to the consumer.
Braai Block added that “it is a transparent general practice to disclose cost structures rather than hide behind an exorbitant price model.” The service charge came into effect in 2022 and is applied at all 16 branches.
The restaurant chain believed that it was not contravening the Consumer Protection Act (CPA), that it fully complied with the provisions of the CPA and that there was no need for it to undertake any corrective measures.
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NCC says Braai Block contravened sections in CPA
The NCC said in the hearing that Braai Block contravened these sections of the CPA:
The Tribunal members were satisfied that the NCC proved that Braai Block contravened sections 23(6) and 26(3)(b) of the CPA but did not agree that the restaurant contravened section 26(2). In addition, the Tribunal said that the contravention of sections 23(6)(a) and 26(3)(b) of the CPA is prohibited conduct.
In its consideration of the fine, the Tribunal noted the NCC’s submission that Braai Block is “ripping off” consumers of their hard-earned money by upholding the principle of charging consumers a service fee across all 16 branches.
“This principle is preposterous because consumers only realise later that they must pay more than what was advertised or displayed in the store. Regardless of the NCC’s engagement and advice, Braai Block has shown a blatant disregard for the provisions of the CPA in that it denied that it was contravening the CPA.”
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Consumer Tribunal accepts NCC evidence against Braai Block
The Tribunal said in its judgment that given the evidence submitted by the NCC and in the absence of an answering affidavit opposing its submissions, it is satisfied that Braai Block’s conduct is serious.
“Braai Block used deceptive means to make consumers pay more than the advertised prices. This conduct deprived consumers of the opportunity to compare prices and make informed choices. It surreptitiously took money out of the pockets of the very consumers who financially supported it.
“If the transaction record does not include the address where goods were supplied, vulnerable consumers could find it difficult to institute legal proceedings and enforce their rights.”
Therefore, the Tribunal decided to fine Braai Block R1 million. It must be paid within 90 days.
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NCC welcomes ruling and fine
The NCC welcomed the ruling and the fine for Braai Block.
“This is a major ruling as it affirms that consumers are protected against suppliers that do not disclose accurate information on sales records. This ruling should serve as strong deterrence to other suppliers from engaging in similar conduct,” Hardin Ratshisusu, acting commissioner of the NCC says.
