The Consumer Protection Act can help you exit a lifetime membership to a club — holiday or otherwise.
The act comprehensively addresses how you can cancel a contract that doesn't provide you with the benefits you expect. Yet consumers are still finding themselves bound to holiday clubs and stuck in rental-pool contracts.
Jeffreys Bay policeman Mzwamadoda Grootboom has been struggling for a year to cancel a lifetime contract with Vacation Hub International, a Cape Town-based travel club. Grootboom and his wife bought into the club after being lured to a presentation on the pretext they had won a prize.
The Grootbooms are members of another club — The Holiday Club — and were told at the Vacation Hub presentation that the two clubs had an agreement which entitled Vacation Hub to market The Holiday Club's "points" to international holidaymakers.
They paid Vacation Hub an activation fee of R14,000, a documentation fee of R400 and signed up for a monthly service fee of R2,333 plus a "reliance benefit" contribution of R710 a month.
The day after signing they realised that although membership of Vacation Hub had been sold to them as offering discounts on holidays, they were in fact paying for this every month. Then they googled Vacation Hub International and came across a warning issued by The Holiday Club entitled "Vacation Hub International is no friend of ours", refuting any association with Vacation Hub.
"And on Hello Peter I found bad stories of pensioners saying they were hooked in for years. So I decided to cancel," said Mzwamadoda Grootboom.
But when he called to cancel the contract, he was told that "field workers" were not in the office and, without the hard-copy contracts, the cancellation could not be processed. He was asked to call back in two weeks. When he did so, he was told the five-day cooling-off period, applicable to transactions arising from direct marketing, had expired and he was not entitled to cancel without incurring a cancellation penalty.
When he objected, saying he had cancelled telephonically, he was told it was invalid and ought to have been done in
Hannelie Jacobs, the member service manager for Vacation Hub International, responded, saying: "The Consumer Protection Act states in general that you must submit your notice in writing and our agreement specifies how to send it in writing.
"If you adhere to the process as agreed to by both parties, you will have a tracking number and proof of delivery within the cooling-off period. Nothing and no-one can stop you from sending your notice within the cooling-off period. We have refunded every member who has delivered their notice as per the terms and conditions."
Any agreement that reduces the methods by which reversal can happen … is a breach of the actTrudie Broekman, attorney
Cancel in writing
But another Vacation Hub member, who asked not to be named, sent notice of cancellation by fax, e-mail and registered mail within the five-day cooling-off period. Vacation Hub collected the registered letter six days after the contract had been signed and refused to cancel the contract.
Questions relating to this case and others were put to Vacation Hub International, but after two working days, Jacobs said she was able to provide only "a general response".
The Grootbooms' attorney, Trudie Broekmann, who is representing six other Vacation Hub members who have been refused refunds or cancellations, says the act is clear: a contract can be rescinded by notice in writing "or another recorded manner or form".
"Any agreement that reduces the methods by which reversal can happen is a term which directly or indirectly waives or deprives a consumer of a right in terms of the act, which is a breach of the act," she says.
On the levying of a cancellation penalty, Broekmann says no cancellation fee applies when the supplier is in breach or has misled a consumer.
Trevor Hattingh, spokesperson for the National Consumer Commission (NCC), said the activities of Vacation Hub International were "part of an ongoing investigation by the NCC".
Meanwhile, last week, five owners of units in a rental pool in Cape Town launched an application in the Cape Town high court to have their contracts with Hollow on the Square Hotel terminated and possession of their units restored to them.
The owners have been prevented from terminating their rental-pool contracts with the hotel and its management company, which, they argue, is a breach of the Consumer Protection Act, according to their court papers.
A rental pool is similar to a time-share arrangement in that the use of property, as well as rental income and expenses associated with ownership and maintenance of the property, are shared among owners.
Rental pools commonly exist in hotels. The upside for the property investor or owner is that the property is managed by a hotel management company and owners share in the net rental income generated by the hotel from letting to guests.
But they can be risky when the sale and rental-pool agreements are structured to the advantage of a developer, rental-pool company or management company at the expense of the owners.
According to papers filed in court, in terms of the Hollow on the Square owners' rental-pool agreements, owners are liable for losses suffered by the pool and it has suffered an accumulated loss of R11.9m to date.
The act entitles you to cancel a fixed-term agreement at any time by giving the supplier 20 business days' notice in writing or other recorded manner and form, and despite any agreement to the contrary.
Court papers reveal that the hotel is relying on a clause in the agreement that binds owners for at least 10 years and thereafter indefinitely until 80% of the owners, who collectively own 80% of units in the rental pool, agree to terminate the agreement.
Duncan Hodge, owner of a unit in the hotel, says in his founding affidavit that the protection afforded to consumers by the act cannot lawfully be avoided by including provisions in consumer contracts drafted specifically to evade or circumvent consumers' rights.
Willem du Toit, the general manager of the hotel, said Jack Brotherton, the director of the hotel and rental pool company, was out of the country and that the hotel had not had sight of the application.
NCC timeshare enquiry update
The release of the long-awaited report by the National Consumer Commission (NCC) into the misdeeds of the timeshare and holiday-club industry may be weeks away.
The spokesman for the NCC, Trevor Hattingh, says the report will be released as soon as consultations with all relevant regulatory entities have been concluded, which is expected to be by the end of the month.
It has been almost one year since the last of the public hearings held by the NCC, which gave consumers a forum to air their grievances about the industry. But Hattingh says conclusion of the nationwide public hearings was not the end of the inquiry.
“A lot of work needed to be done thereafter, including amongst others, transcription of hearing recordings, research, inspections in loco, consultations on more than one occasion with the industry, as well as the drafting and publishing of the report.
“We respectfully request consumers to bear with us for just a few more weeks.”
According to insiders, the report is critical of the NCC for its failure to deal properly with complaints by consumers trapped in unlawful contracts with timeshare clubs and holiday clubs that peddle points.