ANALYSIS: How the timeshare report affects you
The National Consumer Commission has drawn up a list of ways to wipe the dazzlingly fake smile off the industry's face
“Will we be able to cancel without penalty?”
That’s pretty much all the thousands of SA timeshare “victims” were interested in as an outcome to the year-long National Consumer Commission’s (NCC) inquiry into the timeshare/holiday points industry.
These are people who were lured to timeshare presentations by the promise of free holidays or gifts, where, seduced by dazzling audio-visual holiday presentations and subjected to dodgy high-pressure sales tactics, they signed contracts that “sentenced” them to a lifetime of hefty annual levies – whether they chose to or were able to go on a week’s holiday in a self-catering resort or not.
“It was most disturbing and sad to see elderly, vulnerable pensioners sob and plead with government for help and relief at the public hearings,” said National Consumer Commissioner Ebrahim Mohamed last week at the eagerly awaited release of the inquiry report.
About 4,000 complaints in all were received by the inquiry panel, and of those 1,270 were analysed. It would have come as no surprise to anyone working in the consumer protection space that “refusal to cancel” was by far the main complaint, followed by misleading representations and unaffordable levies.
The clubs’ “we don’t care, just keep paying” attitude applied even in the case where the members were too old or disabled to go on holiday, or were forced to “forgo essential living needs” such as medical cover in order to keep paying their timeshare levies, under threat of legal action.
Sadly for them, the commissioner didn’t announce that with immediate effect, pensioners’ timeshare contracts were null and void, or that they no longer owed any holiday scheme entity a cent.
What Mohamed said, after listing several “let’s clean up the industry” recommendations (see below), was: “Because of the urgency related to existing consumer complaints, in the short term I have instructed my team to immediately begin engagements with the Consumer Goods and Services Ombud (CGSO) in order to assess the extent to which industry is willing in the meanwhile to allow consumers to exit contracts without penalty – in particular the nefarious in-perpetuity contracts.
“I hereby call on, and encourage individual clubs to resolve club-specific complaints without any further delay. These must be resolved speedily.”
The report reveals that in terms of complaint numbers, Flexi Club is in a league of its own, being named in almost 500 of those 1,270 analysed complaints.
Consumer goods ombud Magauta Mphahlele said her office had been in talks with the industry’s self-regulatory body, the Vocation Ownership Association of SA (VOASA), for some time, but needed some time to engage with the body on the “nitty gritties” of the process and cancellation criteria, after digesting the 150-page report.
The report recommended that cancellations be considered where: The consumers are considered to be “vulnerable”;
Consumers were subjected to questionable marketing practices;
The cooling-off period was manipulated so they couldn’t cancel;
Consumers were made to sign a contract of more than three years;
The club failed to conduct an affordability assessment; and
Contracts of more than three years were entered into. If your circumstances put you into one or more of those categories, contact the CGSO: Sharecall 0860 000 272 or e-mail firstname.lastname@example.org
In mid-2015 VOASA proposed a revised code of conduct for the industry, including a commitment to allow pensioners to exit “lifetime contracts” and establishing an alternative dispute resolution mechanism.
“But from the overwhelming complaints received ... it’s clear that the industry needs an independent regulator who can license their operations, be informed of the sale and re-sale of points and the use of management fees and levies,” Mphahlele said.
“The CPA does provide for an alternative dispute resolution process and that process can be done through CGSO and other co-regulators, including the NCC.”
The inquiry panel’s recommendations include: That all timeshare contracts, including Purchase of Points and Membership Application Agreements, be defined as fixed-term contracts, running for a fixed, shorter period, subject to renewal by agreement between the club or developer and the member. And in terms of the CPA, as with a cellphone or gym contract, members can cancel with a month’s notice during that fixed period, and pay a “reasonable” cancellation fee;
That the practice of luring consumers to presentations with promises of free holidays or vouchers be outlawed and anyone who entered into a contract as a result of such “unfair marketing practices” be released from their contracts;
That the practice of using scratch cards to reveal what consumers have won be outlawed;
That all audio-visual presentations be documented and archived and then produced in the event of a dispute;
That the practice of forcing consumers to take their credit cards to such presentations be outlawed;
That marketers may be forbidden from saying “offer only valid today” or “bonus points to be given today only” or referring to the deal as an “investment”;
To stop industry players from playing “hide and seek” and preventing consumers from cancelling the agreement within the cooling-off period, clubs be legally required to disclose, on payment receipts, the e-mail address to which cancellations must be sent (within five business days);
That a platform be created for cashing in, exchange and re-sale of points; and
That those who are unable to make a holiday booking are not made to forfeit their points after three years. The points must either be carried over until they are able to make a booking or their admin fees for the period they were unable to make a booking should be refunded.