Dealer warranty claims and the CPA consumer's choice
How a manufacturer handles a dealer's warranty claim when the dealer's customer has already chosen a refund or replacement under the CPA.
By Achekam · · 4 min read · For Manufacturing businesses in South Africa
Launching soon. The Industry CRM add-on described in this article is launching soon. This article describes it as it will work at launch.
A dealer in Polokwane sells one of your geysers to a homeowner. Five weeks later it leaks. The homeowner brings it back and asks for her money, not a repair. The dealer refunds her, because it has little choice, and then sends you a warranty claim asking to be made whole.
Your service manager's instinct may be to offer a repair, which costs the factory far less than a credit. But the consumer has already made her choice, and the dealer has already paid for it. A manufacturer that does not understand how the Consumer Protection Act shapes that sequence will end up arguing with its own dealers about decisions the law took out of their hands. This article explains the consumer's rights, where the dealer stands, and how the Manufacturing pack's warranty workflow helps a person make the right call.
The six-month return right
Section 56(2) of the Consumer Protection Act, as published on Acts Online, lets a consumer return goods that fail to meet the Act's section 55 quality standards within six months after delivery. The return is without penalty and at the supplier's risk and expense. The supplier must then, at the consumer's direction, repair or replace the goods or refund the price paid.
"At the consumer's direction" is the phrase that matters. The National Consumer Commission's Explanatory Note 7 of 2023, dated 27 October 2023, says that under section 56(2) it is the consumer, not the supplier, who chooses whether defective goods returned within six months are repaired, replaced or refunded.
A repair offer does not bind the consumer
The same note says a supplier may offer to repair goods when the consumer has chosen a refund, but the consumer is not bound by that offer. It cites the Tribunal's decision in NCC v Neil Reyneke Exclusive Auto, where the consumer was held entitled to cancel and claim a refund.
So in the geyser example, the dealer could offer a repair, but once the homeowner insisted on a refund within the six months, the dealer had to give it.
Where the dealer stands
The consumer's choice is made against the business that supplied her, which is the dealer. The dealer's claim against you is a separate step in the chain, governed by your dealer agreement and your warranty terms.
There is a twist for smaller dealers. The dtic's booklet on the Consumer Protection Act, dated April 2020, says a business with total annual turnover of less than R2 million is also protected as a consumer under the CPA. If a small dealer bought the goods from you and falls under that threshold, it may have rights of its own. Ask your legal adviser how that applies to your dealer network, and check the current threshold with the authority rather than relying on the booklet's date.
The practical point is that a dealer who has refunded a consumer within six months, for a genuine defect, has usually done what the law required. Fighting the dealer over that refund rarely makes commercial sense.
How the pack's warranty workflow handles it
The Manufacturing & distribution pack in Achekam's Industry CRM keeps Dealer accounts, Quote requests with configured lines, and Warranty claims with serial numbers. The warranty workflow runs in three stages:
- Evidence. It requests photographs, serial numbers and proof of purchase from the dealer.
- A check. The claim is checked against the warranty.
- A decision. A person decides to repair, replace, credit or reject.
The pack approves no warranty claim automatically. It also has no configuration rules, sets no prices, runs no credit-bureau check and does no production planning. It gathers the facts and records the decision; a person makes it.
What the person deciding should ask
When a dealer's claim follows a consumer's CPA return, add three questions to the check:
- When was the product delivered to the consumer? The dealer's proof of sale to the consumer shows whether the return fell within six months.
- What did the consumer choose? If she chose a refund and the dealer gave it, the dealer's loss is the refund, not the cost of a repair.
- Is the defect genuine? The photographs and serial number still matter. A unit damaged by poor installation is not a quality failure, and the consumer's choice does not change who caused the damage.
If the defect is genuine and the return was in time, the natural outcome for the dealer is a credit, and the failed unit comes back to you for inspection. A repair offered to the dealer after it has already refunded the consumer solves nothing for the dealer. Where the consumer chose a replacement and the dealer supplied one from its stock, replacing that unit for the dealer may be the better outcome.
Crediting the dealer
Once the remedy is settled, the credit is issued from the invoice on which you sold the unit to the dealer, in full or for the chosen lines, and posted to the ledger. It can be downloaded as a PDF or e-mailed, and any leftover credit is held for the dealer's account. There is no credit note without an invoice, which is why the serial number and the dealer's purchase record matter: they lead you to the right invoice.
For the general warranty workflow, see warranty claims with serial numbers and photos. For returns that are not warranty claims, see dealer returns and credit notes.
Read the Commission's note
The National Consumer Commission's Explanatory Note 7 of 2023 explains who chooses the remedy under section 56(2) and why a supplier's repair offer does not bind the consumer. Share it with your service manager and your dealers, and agree in writing how claims that follow a consumer refund will be settled.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
