In South Africa, despite a less prevalent use than other countries such as the US, when trade coupons are used as part of a supplier's marketing activities, the Consumer Protection Act (CPA) should be borne in mind.
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In terms of the CPA, an offer or promise of any prize, reward, gift, free good or service, price reduction or concession, enhancement of quality or quantity of goods or services that is expressed in any manner would be a promotional offer, which may only be conducted in accordance with the provisions of the CPA. Loyalty programmes and promotional competitions are regulated separately in the CPA. It is clear that the use of trade coupons as a marketing strategy will fall under the wider definition of a promotional activity.
In line with the overall purpose of the CPA which includes improving consumer awareness and information and encouraging responsible and informed consumer choice and behaviour, the CPA sets out the information that should be set out on a trade coupon (or similar promotional offer). This information includes:
- a description of the prize, reward, gift, free good or service, price reduction etc being offered
- the goods or services to which the offer relates
- how a consumer can redeem the trade coupon
- where, when and under which circumstances the consumer can redeem the trade coupon
The provision of such information is clearly for the benefit of the consumer to give the consumer better insight prior to accepting an offer. The CPA provides further protection to the consumer by prohibiting bait marketing using trade coupons by requiring suppliers to use trade coupons only where they intend to fulfil the offer in the exact manner stated on the trade coupon.
Main duties
The CPA places four main duties on a supplier making use of a trade coupon for marketing purposes:
- The supplier must ensure that it has sufficient capacity to satisfy the reasonably anticipated demand for the benefit offered in terms of the trade coupon. This does not mean that a supplier must have an unlimited supply of the benefit but that the supplier should have sufficient supply based on what it anticipates the uptake of the benefit would be by consumers. Where a supplier does not ensure that it has enough of the benefit to supply to consumers, its conduct may be considered to constitute a form of bait marketing, which is illegal. Where a supplier does not have sufficient stock to ensure the anticipated demand is satisfied, the supplier should offer to supply or arrange another person to supply the consumer with comparable goods or services in terms of the accepted promotional offer. Nevertheless, should the consumer unreasonably refuse to accept the replacement goods or services a supplier would not be acting in contravention of this provision.
- The supplier must not make the redemption of the trade coupon subject to any requirement other than would apply where the consumer would be paying for the benefit.
- The supplier must also make sure that the consumer is given goods or services offered that are of the same quality as those goods and services that are generally available to any other consumer who purchases the goods or services on the same day.
- The supplier may not charge the consumer anything for the use of the trade coupon.
