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Will we see change in laws governing the time share industry?

Jul 23 2017 06:54
Angelique Ruzicka

The head of the National Consumer Commission (NCC), Ebrahim Mohamed, has appealed to consumers to actively participate in the ongoing public inquiry that is looking into the time share industry.

Ahead of the public hearings in the Western Cape, which ended last week, he quoted Mahatma Gandhi when he said: “You must be the change you wish to see in the world.”

Some say the time share industry has seen few changes in terms of the typical structure of the packages on offer.

While short-term contracts are available, consumers are still offered contracts that can result in them being locked in for life, and which may also force them to pay potentially high levies.

What’s more, in perpetuity contracts result in family members inheriting them, which means the next generation could get stuck with a contract they may not want and may struggle to get rid of. 

READ: Consumers hit out at points, broken promises at timeshare hearings

Mohamed said some of the key challenges that were identified during the hearings in Pretoria earlier this month included the refusal by holiday clubs to cancel time share contracts, the overselling of limited accommodation – which leads to unavailability of accommodation when consumers attempt to make bookings – and the charging of exorbitant levies for upkeep and maintenance of facilities owned by holiday clubs in spite of a 2014 SA Revenue Service directive stating that levies cannot be charged to people who do not have a title deed and who do not own a property.

The marketing tactics that some in the industry use have also been criticised.

Some people are roped in to attend presentations under the guise of having “won a prize”, at which stage they are shown a video of all the positive aspects of the deal.

Lights are dimmed, limiting the time to peruse the terms and conditions in the paperwork, and, in some instances, people are put under pressure by being told that they can only get the deal if they “sign today”.

The NCC is not the only body that has weighed in on some of the time share industry’s questionable practices.

Rosalind Lake, director in competition practice at Norton Rose Fulbright SA, says: “There have been numerous complaints about time share.

"It got to a point where there was a standard letter issued by the Freedom Front Plus that was used by consumers who were being chased for payment by time share suppliers. They also set up a system to facilitate consumer complaints.”

Part of the problem is that, to date, there has been scant regulation within the time share industry, despite the introduction of the Consumer Protection Act (CPA).

“The time share industry argues that it doesn’t fall within the CPA because the services are regulated by property laws, the contracts constitute credit agreements regulated by the National Credit Act or because the contracts with consumers predate the CPA,” says Lake.

She says that, while the CPA came into effect on April 1 in 2011, the time share industry is regulated within the property industry to some extent through the Share Blocks Control Act and the Property Time-Sharing Control Act. Part of the role of the inquiry is to determine the extent to which the CPA is applicable to time share providers.

Mohamed argues that the Property Time-Sharing Control Act, the Share Blocks Control Act and the Sectional Titles Act hold old legislation that is most likely outdated.

“As a scholar of the law, it is my belief that the law is not static – that it is always changing, and that, in a democracy in particular, it should respond to change in society to remain relevant and effective,” says Mohamed.

There’s a not so subtle tussle going on between the NCC and the Vacation Ownership Association of Southern Africa, which is the trade association for the time share industry.

When City Press approached the association for comment regarding the inquiry, a spokesperson said it had not yet been given a date from the NCC for the industry to present its case.

However, the association pledged to issue a release that would cover the matters raised in the public hearings.

It certainly did so in May after the NCC launched the inquiry, pointing out “its utter dismay at the inaccurate statement that the industry captains have turned a blind eye to the plight of consumers for such a long time”.

It said that, in 2008, representatives of the Vacation Ownership Association met with the NCC, which was then called the Unfair Business Practices Committee, on numerous occasions to propose amendments to legislation to assist consumers.

READ: Consumer commissioner opens up about timeshare inquiry

While the association has been critical of past investigations conducted by the NCC – in 2014, it cautioned the NCC that the investigation into three major holiday clubs was being handled incorrectly and would ultimately lead to a waste of the consumers’ time and taxpayers’ money – it has committed its support to this inquiry and has pledged to fully comply with all requests made for information.

Mohamed says that chief among the things the NCC hopes to see come out of the public inquiry is the creation of a single piece of legislation that will be used to effectively and comprehensively regulate the time share industry, and which will create a means for consumers to participate and have a voice in the affairs of holiday club schemes.

While new legislation will most likely affect the industry going forward, it’s unlikely that it will affect the industry retrospectively.

In other words, consumers will probably not get their money back, but they might be given the opportunity to cancel the deal.

Lake says: “I would certainly consider it to be inconsistent with the Consumer Protection Act to not have the ability to get out of the contract at all.

"If a supplier can cancel but a consumer cannot, that is an unfair term. Therefore, if a consumer entered a contract after 2011, they should be able to get out because of the act.

"Historical cases after this inquiry may be referred to the tribunal for contravening the act, but people will struggle to get money back unless a supplier is found to have contravened the act. It depends what the findings are.”

. Have you bought time share? Do you think it was a good investment or a rip-off? Share your story by emailing us at personalfinance@citypress.co.za

. To contact the NCC during the inquiry to share your story, email timeshareinquiry@thencc.org.za

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