New case deals with ‘non-refundable’ deposits in South Africa

The Consumer Goods and Services Ombudsman (CGSO) recently dealt with the issue of ‘non-refundable’ deposits and whether such a concept even exists in South Africa.

The case centred on a couple who had to repeatedly put their wedding plans on hold due to the impact of the Coivd-19 pandemic.

After three failed attempts to have the wedding of their dreams, only to have their plans scrapped by Covid-19, the couple decided to cancel their wedding entirely. Having booked and put down a deposit on the venue in December 2019, the happy day was initially scheduled for 30 May 2020, then March 2021 and finally, set for 26 November 2021.

In January 2021, when uncertainty dogged the vaccine rollout in South Africa, the couple informed the supplier that they would rather cancel than risk another postponement.

Believing that 11 months’ notice was reasonable and fair, the couple requested a refund of the R30,674 they had paid to the supplier. The supplier refused and the couple subsequently turned to the CGSO for help in getting a reasonable refund.

“We engaged with the supplier, who shared their calculations, explaining that they would only consider a refund if the couple rebooked the venue,” the ombudsman said.

“We referred the supplier to section 17 of the Consumer Protection Act (CPA), which states that consumers have the right to cancel advance bookings subject to the payment of a reasonable cancellation fee and that the circumstances must be considered, including whether the notice period is sufficient for the service provider, acting diligently, to find a replacement booking.”

Accordingly, the CGSO advised the supplier that their cancellation policies were contrary to the CPA and recommended an amount of R22,580.04 as a fair refund. However, the supplier refused to pay the amount because it included a non-refundable deposit of R5,000.

Section 51 of the CPA

The CGSO subsequently referred the supplier to section 51 of the Consumer Protection Act which states that contracts drawn up may not contain terms and conditions that are contrary to the provision of the CPA as the Act will prevail.

“In simple terms, you cannot contract out of the statute. Even if the client signed the agreement, the Act prohibits the contracting out of or waiver of certain consumer protections under that legislation

The supplier eventually agreed with our recommendation and paid the recommended amount of R22,580.04 in full,” the ombudsman said.


Read: What South Africa’s new Covid rules mean for masks at work

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New case deals with ‘non-refundable’ deposits in South Africa