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Lecture 4. Consumer Protection

Online Auctions

The Consumer Protection Act extensively regulates auctions in section 45. This section does not provide a comprehensive definition of auction. It merely provides that an auction “includes a sale in execution of or pursuant to a court order, to the extent that the order contemplates that the sale is to be conducted by an auction” (section 45(1)).

Section 45(2) provides that when goods are put up for sale by auction in lots, each lot is, unless there is evidence to the contrary, regarded to be the subject of a separate transaction.

Section 45 (3) provides that a sale by auction is complete when the auctioneer announces its completion by the fall of the hammer, or in any other customary manner, and until that announcement is made, a bid may be retracted.

Section 45 (4) provides that notice must be given in advance that a sale by auction is subject to—

(a) a reserved or upset price; or

(b) a right to bid by or on behalf of the owner or auctioneer, in which case the owner or auctioneer, or any one person on behalf of the owner or auctioneer, as the case may be, may bid at the auction.

Section 45 (5) provides that if notice is not given in advance that the owner or auctioneer has a right to bid, they are not allowed to bid at that auction, either in person or by employing someone else to bid on their behalf. If they do, a consumer may approach a court to declare the transaction fraudulent.

Section 45 (6) provides that the Minister may prescribe requirements to be complied with by an auctioneer, or different categories of auctioneer, in respect of—

(a) the conduct of an auction;

(b) the records to be maintained with respect to property placed for auction; and

(c) the sale of any such property by auction.

Regulation 30(1) provides that auctions may be conducted via the internet or other electronic medium or platform, irrespective of where the server or other electronic medium or platform is situated, only if—

(a) it meets all requirements in respect of an auction provided for in these regulations or other applicable law, but with the necessary changes, if any, to suit an electronic medium or platform;

(b) the relevant internet website or electronic medium or platform is generally available to anyone over the age of 18 years at any time of the day;

(c) the relevant internet website or electronic medium or platform provides high standards of security for electronic transactions;

(d) the relevant internet website or electronic medium or platform provides for easy access to all records prescribed in these regulations in a generally used or accepted medium or format;

(e) the internet auction provider keeps the information contemplated in regulation 28 (4).

Regulation 28 (4) requires an auctioneer to create a vendor’s roll in which all details of the auction are recorded, which must, as a minimum, include—

(a) the advertising of the auction;

(b) the rules of auction;

(c) the bidders’ record;

(d) the declarations contemplated in regulation 21 (2) (h) and 27;

(e) a list of all goods on auction, including goods which were withdrawn from auction;

(f) the names of the successful bidders, the goods or lots bought and the prices paid in respect thereof;

(g) the details of any challenges to the validity of the auction or the conduct thereof, and the particulars of the persons making such challenges, if available;

(h) any items or lots not sold;

(i) the details of any reserved price or any matter contemplated in subsections (4) and (5) of section 45 of the Act.

Regulation 30(2) provides that to create the bidder’s record required by Regulation 26(2) a prospective bidder in an auction to be held via the internet or other electronic medium or platform must register by providing—

(a) his or her full names, identification or passport number, age, physical address, internet protocol address, and where applicable, login code or name, and password; and

(b) the details of the means by which payment will be effected.

Regulation 30(3) provides that an auctioneer conducting an auction via the internet or other electronic medium or platform may not exclude liability if any goods purchased by auction are not delivered to the purchaser thereof.

SOME RELEVANT INTERNATIONAL STANDARDS

Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts

Recommendation of the OECD Council concerning guidelines for consumer protection in the context of electronic commerce, 1999

Recommendation of the OECD Council concerning guidelines for consumer protection in the context of electronic commerce, 2002

OECD Policy Guidance for addressing emerging consumer protection and empowerment issues in mobile commerce, 2008