The National Consumer Commission (NCC) has released a new report on South Africa’s timeshare industry – which is estimated to contribute as much as R3.5 billion to South Africa’s GDP.
In 2017 the NCC launched an inquiry into the vacation ownership or timeshare industry after a lengthy struggle to resolve consumer disputes with this industry.
According to its commissioner, Ebrahim Mohamed, the NCC resorted to an inquiry after exploring various other options provided by the Consumer Protection Act, which included filing matters for adjudication with the National Consumer Tribunal.
“The vacation ownership industry in its current state has been a source of frustration and anger to many consumers,” he said.
“As the NCC we witnessed this when consumers made oral submissions during public hearings that were held in the nine provinces of our country. It was most disturbing and sad to see elderly, vulnerable, pensioners sob and plea with government for help and relief at the public hearings.”
“The greatest discomfort I experienced though, was when a Free State-based consumer related a blow-by-blow account during her oral submission, of how she had planned to take her own life to escape her debt-stricken circumstances, which were occasioned by a mistake she made when she signed up for a lifelong timeshare trap.”
According to consumer Goods and Services Ombud’s (CGSO) Magauta Mphahlele, over 400 complaints were received relating to the timeshare industry of which 68% were on cancellations.
The report – among other things – details findings on industry-wide and club-specific issues and outlines a number of recommendations to remedy them.
BusinessTech looked at five of the far-reaching recommendations below.
Management of clubs
- The clubs should ensure that members can attend meetings, including AGMs;
- In all dealings between the clubs and members, provision should be made for customer satisfaction surveys, which should be fed to the proposed industry regulator;
- The minister (of trade and industry) must establish a regulator to enforce the Property Time-Sharing Control Act in terms of the proposed regulations;
- The NCC will consult with the relevant regulator/s to ensure that club members can influence decisions affecting their rights.
- The practice of enticing or seducing consumers through purported freebies e.g. holiday vouchers, motor vehicles, free flights and similar items should be discontinued;
- The technique of hoodwinking consumers using scratch cards to represent to them that they won holidays or prizes should also be prescribed/outlawed;
- All presentations made to consumers in the course of marketing should be recorded (visual/audio) and copies be kept and archived, in accordance with the Archives Act.
- The practice of requiring consumers to bring along credit cards to venues for marketing presentations should be outlawed and discontinued.
- The commission recommends that any consumers who have already fallen for these unfair marketing practices should be released from their contracts;
- The practice of inducing consumers into signing contracts under pressure, using ‘offers are valid for only today’ type threats should be discontinued;
- The industry should as an interim measure, develop a code of conduct for the timeshare Inquiry regulating the conduct of sales consultants/agents and the clubs they represent.
- All timeshare contracts be deemed as fixed-term contracts – subject to renewal by agreement between the club/developer and the member;
- It should be obligatory that all consumers are provided with the concluded contract (signed by both parties) on the day of the sale.
- At the point of sale, the seller should provide a clear and concise statement as part of its standard disclosures of the points’ value and the calculation behind it;
- The disclosure should reflect precisely the number of points required for an interval at the resorts consumers may access holiday accommodation at;
- The clubs should provide consumers with an annual valuation certificate for their points relative to the type of accommodation and the time of the year they can access that accommodation;
- Consumers should be notified of the imminent lapse of their points and should be refunded the money they paid towards the maintenance of the holiday accommodation the points are associated with;
- In instances where a consumer could not secure holiday accommodation during any year, the consumer should pay a reduced levy/management fee;
- Where a consumer is faced with the potential forfeiture of points due to non-availability of accommodation, those points should be carried forward;
- A platform should be created for cashing in, exchange and resale of points.
Quality of accommodation
- The regulator should conduct periodic audits into vacational accommodation stock available, and ensure that the clubs always have the available holiday accommodation to service the points they sell or resell;
- The property subject to timeshare should be periodically evaluated and graded in order to ensure value for money.