What regulator must do for timeshare victims
When the panel of inquiry into the misdeeds of the holiday club and timeshare industry released its long-awaited report last week, the news that captured headlines centred on the main recommendations such as a new law and regulator to deal with the industry.
However, the panel also made recommendations for the National Consumer Commission (NCC) to implement in the short term to provide immediate relief to consumers.
At the release of the report, NCC commissioner Ebrahim Mohamed said he had approved the report and accepted its recommendations.
The report presents a picture of an industry with apparently no regard for ethics or the interests of their clients, says attorney and consumer law expert Trudie Broekmann.
It indicates myriad contraventions of not only the Consumer Protection Act (CPA), but also the common law, Property Time-Sharing Control Act, the National Credit Act, the Competition Act and the Companies Act, Broekmann says.
Coming out strongly in favour of the consumer, the 135-page report offers a long list of "insightful recommendations", most of which need to be initiated by the NCC, which is set up in terms of the CPA as the body that must investigate and prosecute breaches of the CPA, she says.
"Much will turn on whether the NCC finds the will, manpower, expertise and incorruptibility to implement the recommendations aimed at it," Broekmann says.
The report recommends that over the short term the NCC "prioritises and urgently engages the industry on a club-to-club basis" on all the commitments and concessions made by them in relation to complaints lodged against them at the public hearings held in November 2017 and February this year.
"This will hopefully ensure speedy recourse for consumers who currently have complaints lodged with the NCC," the report says.
Complaints that require urgent interventions include those in which: consumers seek cancellation of their contracts, especially where questionable marketing practices were allegedly used to "hoodwink consumers into signing timeshare contracts"; there was misrepresentation to consumers prior to conclusion of the contracts; there was nondisclosure; manipulation of the running of the cooling-off period; and failure to conduct affordability assessment.
The NCC should collaborate with the National Credit Regulator in this regard, the report says. It adds that since the industry had suggested a maximum tenure of three years for timeshare agreements, any complaints concerning contracts which have been running for more than the three years should also be treated as urgent.
And where sales were made to vulnerable groups of consumers, such complaints should be handled "with a view to immediately and unconditionally releasing" consumers from these contracts.
"There is a wealth of provisions in the CPA to address many, if not most, of the problems consumers raised in connection with the timeshare industry," the report says.
"It appears to the panel that the sheer volumes of complaints led to an asymmetry between the resources required to deal with them and the resources available within the NCC to effectively deal with these and complaints from other industries and sectors of the economy."
However, the report says the CPA provides for the NCC to be an overarching body that draws on resources from other regulators, such as the provincial consumer affairs offices, the ombuds offices and other industry self-regulatory bodies.
The report also says the NCC and other regulators are empowered by the CPA to deal with the following problems in the timeshare industry:
• Contracts that do not expire;
• The refusal of suppliers to allow consumers to exercise their rights to cancel a contract during the cooling-off period after direct marketing;
• The failure to provide information in plain and understandable language;
• The failure to disclose the price of goods or services;
• The failure of intermediaries to make pertinent disclosure to consumers; and
• Unfair, unreasonable or unjust contract terms.
The panel recommends that where vulnerable consumers have been sold contracts and have allegedly been prejudiced, they should be released from their contracts and the NCC should facilitate this.
Trevor Hattingh, the spokesperson for the NCC, said: "The NCC has already begun to give effect to the recommendations of the report and will intensify efforts when the office reopens on January 7." He added that a "dedicated team" will work closely with the office of the consumer goods and services ombudsman (CGSO).
The panel also recommends that the NCC together with the CGSO, in consultation with the industry, "develop and produce a detailed statement of practice outlining the types of behaviour which should be regarded as pressure selling". This should be incorporated into proposed regulations, the panel says.
"In order to disincentive the industry from either using unethical selling methods or benefiting from them, the regulations should further provide for a stiff penalty for crossing the ethical line," the report says.
The panel also recommends that the NCC investigate and act in cases where the CPA has been contravened and refer matters relating to nondisclosure regulated under other laws to the relevant regulators for investigation.
Complaints of alleged reckless lending and refusal to cancel credit agreements should be referred to the National Credit Regulator to investigate, the panel says.
Couple's eight years of hell
At public hearings held nationwide, the inquiry panel into the holiday ownership and timeshare industry heard countless accounts of abuse of consumers by the industry.
Their stories resonated with a reader who was targeted, while on honeymoon, by an agent of a holiday club that peddles points.
"We were walking on the beach when we were approached by a man who told us we looked like 'a great couple'," says the husband, who asked not to be named.
It was all downhill from there. They were invited to take part in a lucky draw and, of course, won a prize. To redeem it they had to accompany the man to an office where they were subjected to an aggressive sales pitch.
They were lied to and told that points were like "shares" in an investment that keeps growing and that the club would buy them back if they ever wanted to sell.
Before long, the couple had R15,000 in credit card debt and a bottle of cheap champagne. Three days later, the husband decided to cancel but wasn't able to trace the agent who sold them the points.
In the ensuing eight years, the couple tried in vain to sell their points on the open market and back to the club.
Membership of the club was a major source of emotional and financial stress owing to ever-increasing fees and levies.
In 2014, after they stopped paying, the club threatened legal action. They were told the only way to prevent it was to pay no less than R1,500 a month. A call centre agent rather naively told them that if they offered less the club would have to settle the account with a one-off fee.
So they offered the club R500 a month. Since this was not enough the club came up with a penalty fee. "It was a few thousand rand, but I accepted it. Getting rid of them was a relief," says the husband.
In eight years, they got four weekends out of the club: two in hotels in Cape Town; a two-night stay at a campsite in Hartbeespoort; and a two-night stay at a hotel in the Strand. With each of these, they had to chip in a few grand.