The Digital Business Landscape in South Africa

It’s late at night and you can’t sleep. You have already binged watched your favourite show on Netflix and you’re lying awake watching the hours tick by. Tick tock. Tick tock. 

Before you begin to cyberstalk your ex, you know just to see how they’re doing, an email pops into your inbox – early access to the Yuppiechef sale and you have your eye on some homeware that you just cannot live without. So, you jump on your laptop – early access is everything – and begin shopping to your hearts content. 

Sleep? Who needs sleep when there’s online shopping to be done?

But as you checkout and plug in your credit card details you think to yourself – you’re a studious person you see – what legislation is applicable here? How are you, as a customer, protected – from fraud, from data breaches, from having your personal information stolen? What is there to safeguard you from all the “nastiness” that exists on the web? 

You note your hesitancy, something you wouldn’t necessarily feel had you have bought the same items from a bricks and mortar store. But you’re not alone as you close your laptop and hunker down for the rest of the evening. With 2.64 billion online buyers in the world as of 2023, making up more than 33% of the world’s total population and with a staggering figure of $6,310 billion (2023) spent online worldwide, you are talking about a lot of people spending a lot of money online. 

And as a studious law firm, it has made us stand up and take notice. 

What legislation applies to online transactions?

There are 5 main pieces of legislation that apply to online transactions, they include – 

1.The Electronic Communications and Transactions Act 25 of 2002 (“ECTA”) - ECTA acts as the primary legislation in the regulation of eCommerce in South Africa.  ECTA facilitates and regulates electronic communications and transactions, including issues relating to consumer protection, electronic signatures, electronic evidence, and cybercrime. In the same vein, South African law further governs what information needs to be displayed on an eCommerce website. ECTA also sets out that it’s imperative to have proper terms and conditions available on all websites setting out the sales, products, and services information.

2.Consumer Protection Act 68 of 2008 (CPA), read with the Consumer Protection Act Regulations 2011 -the CPA (and its regulations) apply to every transaction, subject to certain exemptions, for the supply of goods and services within South Africa; the promotion of any goods or services, or the supplier of any goods or services.  Key areas regulated by the CPA include restrictions on unwanted direct marketing; consumers' rights to a cooling-off period after direct marketing; consumers' rights to fair value; good quality and safety; strict liability for harm caused by defective products; an implied warranty of quality; and consumers' rights to fair, just and reasonable terms and conditions.

3.Protection of Personal Information Act 4 of 2013 (POPIA) – POPIA applies to and regulates the processing (collection, holding, use, modification, disclosure, or transferal) of personal data of data subjects (including website users) recorded by or for a data controller ("responsible party") who is domiciled in South Africa or uses automated or non-automated means in South Africa to process the personal data. POPIA imposes duties on data controllers in deciding how and why such personal data is processed. It also governs direct marketing (both solicited and unsolicited) by any form of electronic communications.

4.Regulation of Interception and Monitoring of Communications and Provision of Communication-Related Information Act 70 of 2002 (RICA) – RICA regulates the interception of any direct or indirect communication through an electronic communications system in South Africa (that is, traffic on network infrastructure). The interception of communications is, generally, prohibited (including by the government) unless an interception direction is obtained from a designated judge in accordance with the procedures set out in the RICA. 

5.The Cybercrimes Act, 19 of 2020 (“Cybercrimes Act”) -  the Cybercrimes Act governs offences such as cyber fraud, forgery and extortion.  In the context of e-commerce, the Cybercrimes Act protects consumers from fraud, forgery and extortion in digital transactions whilst establishing the offences in relation to those digital transactions.

Important notes for online shoppers

As we know with every product that we purchase, VAT is applied to the goods on checkout. The same applies to online shopping.

The only difference here is that when you purchase items that are imported from vendors that are across South African borders, customs (and other) duties become applicable.

As extracted from the SARS website, the following duties are levied on imported goods – 

Three kinds of duties are levied on imported goods:

• Customs duties (including additional ad      valorem duties on certain luxury or non-essential items) – to work out      customs duties you can utilise this handy tool by Trade Logistics. 
• Anti-dumping and countervailing duties - anti-dumping      and countervailing duties are levied on goods considered to be “dumped” in      South Africa, and on subsidised imported goods. The rate imposed will      depend on the result of the investigations. These duties are either levied      on an ad valorem basis (as a percentage of the value of the goods) or as a      specific duty (as cents per unit).   The amount and type of duty      imposed on a product is determined by the following main criteria: the      value of the goods (the customs value); the volume or quantity of the      goods or the tariff classification of the goods (the tariff      heading). 
• VAT (which is also collected on goods imported      and cleared for home consumption) - the VAT rate in South Africa is      currently 15%. To calculate VAT on imported goods, the ATV (added tax      value) needs to be determined first. This is done as follows: [(Customs      Value + 10% thereof) + (any non-rebated duties levied on the goods)] x 15%      = [ATV] x 15% = VAT payable. The 10% mark-up on the customs value in this      calculation is applicable when goods are imported from a country outside      the Customs Union. Therefore, if goods have their origin in any of the      BLNS countries (Botswana, Lesotho, Namibia, or Swaziland), the 10% will      not be added to the calculation. When goods are exported to any of the      BLNS countries, the same applies (no mark-up on the customs value to      determine ATV).

With the legislation out the way, it’s our duty to inform you that while online shopping is a convenient, often fun, and easy way to do your shopping it does come with its own risks. To ensure that you are safe while shopping online, we thought we would list some tips on how to keep yourself safe – courtesy of Kapersky – 

1.Stay away from deals that seem too good to be true – you know the age-old adage. And if you do, then you should really stick to it. If you see Louis Vuitton’s for sale at half the price (LV never has a sale) with complementary Louboutin shoes for a quarter of the price (LB’s also never have a sale) – check yourself. You’re either buying stone cold fakes or you’re being scammed out of your hard-earned money. 

2.Look for an address and phone number - legitimate retailers will have a contact number and physical address visible available on their website. If you’re not sure whether an online shop is genuine, copy and paste their address details into Google to see if their location is verifiable. Fake sellers will either not provide an address or use a fake one – duh they don’t want to be found. Obviously.

3.Look out for spelling and grammar mistakes – this should be an obvious one. A reputable brand that spends money on their image, on their brand awareness and what they put out into the world will ensure that what is on their website is of the best quality. If a website is shoddy, is poorly written and contains numerous spelling or grammatical mistakes, you can probably bet that the seller is fake. Other red flags might include low-quality images, a no returns policy, and the inability to leave reviews.

4.Always use your credit card - credit cards are considered to be one of the safest methods of making online transactions. Why? It’s easier for credit card issuers to refund money lost to fraud. Websites that don't accept credit card payments should be a cause for concern. They also cannot be verified by credit card companies and that should be one of the things that you look out for when you’re shopping online. 

5.Type the URL directly into the address bar - scammers who send phishing emails need you to make the next move. You need to click on the link to be taken to the scammer’s “website”. Those links then lead you to cleverly designed copycat websites. So, when you think you are putting your username and details into Amazon’s website, you are actually giving it to a cybercriminal. To make sure you are visiting the actual, authentic retailer's website, it's much safer to type the retailer's URL into the address bar on your web browser. It may take a little more effort, but this simple action can help to prevent you from visiting a fake or malicious website. And in the end save you a lot of money.

6.Stick to reputable brands and websites you know – what could be more obvious? Forget the newbie on the block and fly by nights, in a world that is thwart with identity and credit card theft you have got to be more cautious. Have fun shopping in your pj’s with Chardonnay (looking for a fantastic Chardonnay, why not head over to Bacco Estate, a winery taking Paarl – and the world - by storm) in one hand and stay safe. 

That said – happy shopping. Although we do hope you will get some rest in between your shopping sprees. And remember excise sound financial sense.

If you have any questions about the information we have set out above or have a personal issue which you want to discuss with us, please don’t hesitate to contact us at NVDB Attorneys. 

We are a law firm that considers honesty to be core to our business. We are a law firm that will provide you with clear advice and smart strategies - always keeping your best interests at heart!

(Sources used and to whom we give thanks – Yaguara; Payflex: Thomson Reuters, SARS; Trade Logistics; Kapersky   ).