Picture: 123RF/LEON SWART
Picture: 123RF/LEON SWART

An attorney who specialises in consumer law has reported several companies in the timeshare and holiday club industry to the Payments Association of SA (Pasa) for alleged abuse of the payment system.

Trudie Broekmann has cancelled more than 440 timeshare contracts on behalf of consumers, yet many continue to have their bank accounts debited months after cancelling their contracts, she says.

"In the absence of a contract, these companies have no right to debit clients' accounts. Intentionally doing so constitutes fraud. We turned to the Pasa, which is mandated by the Reserve Bank to regulate the payment system, rather than reporting these entities to the police, which we feared may be an exercise in futility.

"In this way, consumers who aren't represented by attorneys will also benefit from any action against rogue users of the payment system," Broekmann says.

The companies reported to Pasa are: Quality Vacation Club, Multi Destinations Club, African Club Innovations, Leisure Portfolio Association, Tri-Vision Trust, Quality Time Marketing and Vacation Recreational Services.

Chanel Kritzinger, the head of client services at Vacation Recreational Services (VRS), this week disputed the allegation of unauthorised debit orders, saying it had not received any communication in this regard from vendor banks or Pasa.

VRS manages the administration of the timesharing schemes Quality Vacation Club, Multi Destinations Club and African Club Innovations, and administers the accounts for Tri-Vision Trust and Quality Time Marketing, Kritzinger says.

Leisure Portfolio Association did not respond to a request for comment.

Pasa CEO Pierre Coetzee says the names of these users of the payment system have been referred to the banks where the users' accounts are held for an investigation of the allegations.

"If a sponsoring bank finds that a particular user poses a risk to the payment system due to, for example, a high number of unauthorised withdrawals from a consumer's account, that bank may decide to terminate its relationship with the user."

Coetzee says when a bank terminates its relationship with a user this does not result in the user being barred from the payment system and the user can "enter into a relationship with another bank".

He says that from March 2019 to the end of September 2020, 333 users were removed from the payment system by their banks, which conducted their own investigations.

"Those users would have been responsible for an estimated 40.4-million transactions over a one-year period, representing an estimated value of R5.396bn."

Coetzee says though the actions of Pasa and its members in mitigating debit order abuse in the national payment system have contributed to a decrease in debit orders being disputed, "Pasa's focus in the second half of 2020 strives to create a better balance between the rights of users and payers".

Broekmann says companies that debit consumers' accounts in the absence of a mandate do so to hold consumers hostage.

"We are finding that our clients themselves are able to reverse the unauthorised debit orders but when they register a dispute with their bank and issue a stop-payment instruction, the banks have generally been unresponsive.

"Our clients have even reported that sometimes the timeshare companies have circumvented the stop-payment instruction by changing the debit order amount or the payment reference in breach of Pasa's rules."

In terms of the Consumer Protection Act (CPA), you can cancel any fixed-term contract by giving the service provider 20 business days' notice in writing at any time during the contract. You do not have to provide a reason for cancelling.

The CPA says you can be charged a "reasonable" cancellation fee. Although reasonable is not defined in the act, the cancellation fee cannot have the effect of negating your right to cancel.

If you cancel the contract on the basis of an invalid contract, breach by the timeshare club and their noncompliance with various laws, you do not need to pay any cancellation penalty, Broekmann says.

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