Deposits and Your Property in a Supplier's Hands: The Duty in Section 65
You leave a 50% deposit on a kitchen. You pay a year's gym membership up front. You drop a car at a workshop, a laptop at a repair shop, a suit at the dry cleaner.
In every one of those cases a business is holding something of yours. Section 65 of the Consumer Protection Act 68 of 2008 says what that means, and it says it in terms that are considerably stronger than the receipt you were given.
The duty
Section 65 applies where
"a supplier has possession of any prepayment, deposit, membership fee, or other money, or any other property belonging to or ordinarily under the control of a consumer"
and it then imposes three things.
It is not the supplier's money. The supplier
"must not treat that property as being the property of the supplier"
A defined standard of care applies. The supplier must exercise
"the degree of care, diligence and skill that can reasonably be expected of a person responsible for managing any property belonging to another person"
And there is liability for getting it wrong. The supplier
"is liable to the owner of the property for any loss resulting from a failure to comply with paragraph (a) or (b)"
Note how wide the trigger is. Money or any other property, belonging to or ordinarily under the control of a consumer. The deposit is obvious. The car in the workshop is the half that is almost never cited.
"Not the property of the supplier" is the operative phrase
Most disputes about deposits come down to a business having spent the money.
A deposit taken for a kitchen and used to pay last month's wages. A year's gym membership taken in January and consumed by February's rent. A prepayment for goods on order, spent on other stock.
Section 65(a) addresses that directly: the supplier must not treat the money as its own. It is held, not earned. It becomes the supplier's when the supplier has performed, not when it clears the account.
That reframing matters when a business pleads cash flow. "We cannot refund you because we have spent it" is not a defence to a refund obligation. It is a description of the breach.
The standard of care on your goods
The care standard — that of a person responsible for managing property belonging to another — is a recognisable one, and it is higher than "we did our best".
It answers the everyday disputes:
- the panelbeater whose yard was broken into
- the repair shop that lost the device
- the dry cleaner that damaged a garment
- the storage business whose unit flooded
- the workshop that let an unlicensed employee move your car
In each, the question is not whether the business meant well. It is whether it exercised the care, diligence and skill reasonably expected of someone managing another person's property, and if it did not, section 65 makes it liable for the resulting loss.
Disclaimers meet a different section
The immediate response is always the sign: goods left at owner's risk.
Two provisions bear on that, and neither is friendly to a blanket disclaimer.
A term that limits the supplier's liability, or under which the consumer assumes risk, must have been brought to your attention conspicuously before the transaction, and for unusual risks must have been separately assented to. And a term limiting liability for the supplier's gross negligence is prohibited outright, with the consequence that a contravening provision is void to the extent of the contravention — including where it appears in a notice rather than a signed contract.
So the sign is not the end of the argument. It is the start of a different one, and the supplier is on weaker ground than it looks.
The insolvency limb
Section 65 does something unusual and worth knowing: it reaches past the supplier.
Where a person assumes control of the supplier as an administrator, executor or liquidator, that person must investigate the supplier's circumstances to identify consumer property and ensure it is dealt with for the consumer's benefit.
That is directly relevant to the situation South Africans meet most painfully — a business that takes deposits and then fails. Your claim is not simply one unsecured claim among many; the section requires the person taking control to look for consumer property and account for it. Whether that produces money in a given insolvency is another matter, but it is a duty on the person in control and it is worth raising in writing early.
On interest, and what section 65 does not say
Section 65 sets out non-appropriation, a standard of care, and liability. It does not, as we read it, impose an obligation to pay interest on money held.
That is worth stating plainly, because a good deal of consumer advice assumes any deposit must earn interest. Interest obligations in South African law arise in specific places rather than generally:
- a residential rental deposit is governed by the rental housing legislation, which has its own interest rule
- a lay-by refund, where the supplier cannot deliver, carries interest at the prescribed rate under its own section
- an overbooking refund carries interest at the prescribed rate from the date you paid
- a contract may simply agree interest
If you want interest on a deposit, find the provision or the clause that gives it. Do not assume section 65 does.
A worked case
A couple pays a 60% deposit on a bedroom suite in March, for delivery in May. In June the retailer is still promising, in July it stops answering, and in August the shop is closed.
Section 65(a) is the first question, not the last. The money was never the retailer's. It was held pending performance. Whether the business "needed it for cash flow" is the breach described, not a defence to it.
The care standard applies to the furniture too, if any of it was ever set aside or held for them. Property belonging to or ordinarily under the control of a consumer, in the supplier's possession, is inside the section.
The insolvency limb is where this case is actually won or lost. When a liquidator or administrator takes control, the section requires that person to investigate the supplier's circumstances to identify consumer property and ensure it benefits the consumer. A written claim to the liquidator, early, identifying the prepayment and attaching the proof, is a materially better position than a claim lodged late among the general creditors.
Interest is not automatic. Section 65 says nothing about it. If the couple want interest they need a contractual term, or a different provision that supplies one.
Change one fact — the deposit was paid into an account the retailer described as a trust or holding account — and the section 65(a) argument becomes much easier to run, because the money was identifiably not treated as the supplier's.
The question to ask before paying a large deposit
There is one sentence that costs nothing and tells you a great deal: "Where will my deposit be held until delivery?"
A business that ring-fences customer prepayments will answer immediately, because it is a thing it does deliberately and often a thing it advertises. A business that has never thought about it will hesitate, and a business that treats deposits as working capital will change the subject.
The answer does not change your rights. Section 65 applies either way. It changes your odds of ever seeing the money if things go wrong, which is a different and more useful thing to know before you pay.
What to do
Get the receipt to say what the money is. "Deposit on order 4471, refundable if not delivered by 30 November" is a different document from "paid R8,000".
Photograph goods at drop-off. Condition, serial numbers, existing damage. Section 65 liability is proved with a comparison.
Ask where the money is held for anything substantial and forward-dated. A business that ring-fences deposits will say so readily.
Write, do not phone. "You are holding R8,000 of my money. Under section 65 of the Consumer Protection Act you may not treat it as your own." That sentence changes the tone of a recovery conversation.
If the business fails, write to the administrator, executor or liquidator immediately, identify your property or prepayment, and refer to the duty to investigate and account for consumer property.
Escalate. The National Consumer Commission or a provincial consumer affairs office, and for financial-sector suppliers, where to complain about a bank, insurer or credit provider.
Where the business advertised something it could not supply, that is a separate provision — see bait marketing. Suppliers will find their obligations in Consumer Protection Act obligations for a small business.
Frequently asked
The business spent my deposit and says it cannot refund me. Section 65 says the supplier must not treat the money as its own. Having spent it describes the breach rather than excusing the refund.
My car was stolen from the workshop's yard. Section 65 requires the care, diligence and skill reasonably expected of a person managing another person's property, and makes the supplier liable for loss resulting from a failure to meet it.
They have a sign saying goods are left at owner's risk. A notice purporting to limit liability has to satisfy the notice requirements in the Act, and a term limiting liability for gross negligence is prohibited outright and void to the extent it contravenes.
Must a supplier pay interest on my deposit? Section 65 does not say so. Interest arises in specific contexts — residential rental deposits, lay-by refunds, overbooking refunds — or by agreement. Identify the source rather than assuming.
The company is being liquidated and they have my prepayment. Section 65 requires a person who assumes control as administrator, executor or liquidator to investigate and identify consumer property and ensure it benefits the consumer. Write to them promptly with proof.
Does this cover a membership fee? Yes. The section names prepayments, deposits, membership fees, other money, and any other property of the consumer.
Does it cover goods I have not paid for yet? It covers property "belonging to or ordinarily under the control of a consumer" in the supplier's possession — so your own goods left with a business are covered regardless of what you have paid.
