Reasons to look forward to future Timeshare agreements

Reasons to look forward to future Timeshare agreements

Reasons to look forward to future Timeshare agreements

Timeshare agreements are contentious and has been, for a while, in the media for all the wrong reasons.

Cancelling timeshare agreements that are structured to be in perpetuity often leaves consumers frustrated, in debt and with a feeling of hopelessness and despair. Unfortunately, many consumers entered into these agreements before the Consumer Protection Act (CPA) came into effect (31 March 2011), meaning that the CPA offers them almost no protection.

Consumers who wish to cancel such agreements that are entered into prior to the CPA must demonstrate that the supplier had been in breach of contract. This will not always provide a viable outcome because in many instances debit orders will still go off at the end of the month or debt collectors will be out harassing consumers.

Protection for consumers who entered timeshare agreements after the CPA effective date

The timeshare and vacation ownership industry report released by the National Consumer Commission (NCC) at the end of 2018 will hopefully provide proper guidance on how to improve timeshare agreements in future. The report made it clear that the inquiry was launched due to an increase in consumer complaints specifically regarding timeshare. The Consumer Goods and Services Ombud (CGSO) said they had received 427 timeshare-related complaints for the year 2018, 54% of which were resolved in favour of the consumer.

The NCC recommended that the regulatory framework be revised to include the following:

  • All timeshare contracts should be defined as fixed-term agreements, which will automatically eliminate the “in-perpetuity” agreements often found in this industry (for more information on fixed-term agreements visit: LINK TO FIXED TERM BLOG); and
  • The Minister of Trade and Industry should prescribe certain information to be provided to consumers before such transactions are concluded.

The report encouraged consumers, in the meantime, to respond to any timeshare challenges by–

  • lodging complaints with the CGSO, who will assess the agreements entered into and assist consumers as far as possible. The CGSO will push for cancellation of an agreement should it be in contravention of the Consumer Protection Act (CPA). However, if the supplier refuses to cancel an agreement, the CGSO will have to escalate the matter to the NCC as the CGSO has limited decision-making power;
  • following the steps for escalation to the NCC, which will then determine whether the supplier had broken the law and, if necessary, further escalate the matter to the National Consumer Tribunal (NCT);
  • following the steps for escalation to the NCT whose rulings carry the weight of a high court judgement.

In conclusion

Because of the urgency relating to existing consumer complaints, we hope that with the implementation of the report, we see clear guidelines on how to relieve the pressure on consumers.

The Deputy NCC Commissioner, Thezi Mabuza, advised consumers to be “sober-minded when signing timeshare agreements”.  She also urged consumers to go to these meetings as the sole decision-maker and to leave the family at home in order to avoid being influenced emotionally into any agreement.

Whilst the main focus of the CPA is on compliance, our approach at SERR Synergy is to implement compliance in such a way that it provides business value to our clients and allows for improvement in efficiency and effectiveness by meeting compliance requirements within the broader context of consumer law. We assist enterprises to conduct business in an ethical manner and to promote and protect the reputation of their businesses (link to CPA service page).

About the Author: Monique van der Merwe completed her B.Consumer Science degree at the University of Pretoria. She joined our team in July 2018 and currently holds the title of “Information Compliance Advisor”. She specialises in compliance with the Consumer Protection Act (CPA) as well as POPI and PAIA. This includes compiling legal compliance reports and developing policies along with the other assessment aspects relating to consumer protection legislation. She drafts and submits PAIA manuals to the Human Rights Commission and also compiles and implements Data and Information Protection Reports to identify risks associated with information security in each department of an organisation.

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