Wed, 20 Mar 2019

Consumers who were looking forward to the report into vacation clubs commissioned by the National Consumer Commission, feel a bit cheated.

They wanted the report to solve all their vacation club problems, such as not finding accommodation or cancelling their contracts.

Instead, the report recommends what must be done to protect consumers in the future.

To get all this done will take many years, and what is done will not apply to consumers who already have contracts.

The commission struggled for years to resolve consumer disputes with this industry and explored various other options provided by the Consumer Protection Act, which included sending complaints to the National Consumer Tribunal. The timeshare vacation industry is a legal and structural minefield.

Consumers do not stand a chance to protect themselves in an industry with a structure they do not understand.

Dream vacations, nightmare stories

The report includes written submissions as well as the verbal submissions at the public hearings all over the country.

The panel was especially touched by the submission of a pensioner who said she contemplated suicide just to get away from her vacation club contract which she had been unable to cancel. Her story was echoed by many consumers who were sent from pillar to post and still got no relief.

READ: 10 things that need to change in the timeshare industry

According to the report, consumers complained mostly about not being able to cancel their contracts, forfeiture of points, unavailable or unacceptable accommodation, misrepresentations, value of points, membership fees, levies, annual increases, inaccessibility of club AGMs and inadequate complaint handling.

Resolution

The Vacation Ownership Association of Southern Africa (VOASA) pledged its cooperation to resolve existing complaints.

Which begs the question: the inquiry started 18 months ago, and these existing complaints have not been resolved?

The short-term recommendations include dealing with existing consumer complaints and urgently engaging with the industry on a club-to-club basis about the commitments and concessions they made regarding existing complaints to ensure speedy recourse for consumers.

Let's hope this happens.

Regulation

Another question which needs urgent attention is whether the industry should be left to regulate itself. The answer is a resounding no, if one looks at the number of complaints that spurred the investigation.

Consumers who cannot afford vacation club membership also cannot afford to go to court to challenge contracts they signed due to misrepresentation, non-disclosure, inability to cancel during the cooling-off period and failure on the side of the club to check if consumers can afford the club membership.

Vulnerable consumers have already been let down by the industry, and although VOASA mooted self-regulation, the panel recommends that an independent arbitrator or industry ombudsman be established to resolve consumer problems.

Consumers also do not trust the VOASA-driven self-regulation entity, and regards it as biased and ineffective, the report states.

Why are we not surprised?

Vacation clubs pay lip service to the law by swamping consumers with documents, but few consumers really grasp what it all means.

According to the report the panel was left with an impression that clubs complied with the letter of the law, but not the spirit of the law. Therefore the panel concluded that the timeshare industry is not an industry that should be responsible for its own regulation.

Proposals to regulate themselves, contrary to laws of the country - such as the attempt to gain regulatory assent to a cancellation policy that may be collusive and anti-competitive - were cited as examples.

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

The recommendation of the panel to define all timeshare contracts, including Purchase of Points and Membership Applications, as fixed term contracts, could level the playing field for consumers to a large extent.

According to the regulations made in terms of Section 14 of the Consumer Protection Act, a fixed term agreement can only run for 24 months.

The club would have to notify consumers in writing 40 to 80 business days before the agreement expires if the price will stay the same if the agreement is renewed. Consumers would have the option to continue on a month-to-month basis, subject to any important changes, such as price.

However, consumers can cancel on the expiry date without paying a penalty.

READ: Timeshare hearings: Next stop - Cape Town

The club would be able to charge a cancellation penalty fee, but only for accommodation already supplied, and the consumer must get back all the money paid in advance for accommodation not used yet.

The club would also have the right to cancel the agreement 20 business days after giving the consumer written notice if the consumer did not pay the agreed amount or does not comply with the terms, unless the consumer pays or complies within that time.

The club would have to consider the amount the consumer still owes, the value of the transaction so far, the duration of the agreement initially agreed on, the consumer's losses or benefits, the nature of the goods or services booked, the length of notice of cancellation and the chance of selling the membership to another consumer.

However, the club would not be allowed to charge a fee which would stop consumers from using their right to cancel.

Will we ever see the end of vacation club problems? Time will tell.

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