Many consumers bought the idea of cheap holidays and ended up with points they couldn’t use, vacation properties that are never available to use at a convenient time, or worse, a contract that was signed and they couldn’t get out of. Due to the National Pandemic, COVID-19, consumers are enduring high financial stress and many of them find them in a situation where they want to minimize their financial burden and therefore want to cancel unnecessary expenses. The Consumer Protection Act is there to help and guide consumers to cancel their timeshare or vacation club contracts. The Act comprehensively addresses how you can cancel an agreement that does not provide you with the benefits that you expected.
Unfair and unreasonable practices in the timeshare industry have been in the spotlight for years, with countless complaints about consumers signing contracts with no way to cancel them. Consumers are usually presented with volumes of documentation for them to sign with no reasonable explanation, leaving the consumer often unsophisticated and uninformed about the products and the process.[1]
The Consumer Protection Act (CPA) protects the consumer in the following sections of the Act:[2]
- Section 41 of the CPA indicates that a supplier may not advertise any goods in a manner, by word or conduct, which is likely to mislead a consumer. When a member enters into the timeshare agreement or vacation club agreement based on any false or misleading representation made by the supplier or his representative, the member can cancel the agreement.
- Section 47 of the CPA indicates that if a supplier accepts a booking, the supplier must provide same said reservation or furnish the consumer with alternative accommodation of equal or comparable quality. If the supplier is unable to do so, the supplier must refund the consumer the money paid.[3]
- Section 48 of the CPA indicates that a supplier may not require a consumer to assume any obligation which is unfair, unjust or unreasonable.[4]
- Section 51 of the CPA indicates that a supplier may not enter into an agreement with a consumer on prohibited terms. The agreement that was entered into may not defeat the purpose and policies of the Act, and the supplier may not mislead or deceive the consumer.[5]
- Section 68of the CPAthat indicates that a supplier may not victimise a member by discriminating against them or penalising them if they want to cancel their agreement.[6]
Cancellation and Penalty Fees
Consumers that tried to cancel their timeshare contracts will know that it is a lengthy and sometimes expensive process that may lead to unsatisfying results. The best remedy to justify the cancellation would be to keep Section 68 of CPA in mind which indicates that a supplier can’t victimise a consumer by discriminating against them or penalising them if they want to cancel. The cancellation charge may not have the effect of negating the consumer’s right to cancel.[7]
In terms of Section 41 of the CPA, a supplier may not mislead the consumer in any way and what the supplier promised in the agreement, they must offer. If the consumer can prove they were misled into signing the contract, the contract is void.
If the consumer can prove that the timeshare company had breached the terms of the agreement it will automatically give the consumer the right to cancel in terms of common law. Breach of the contract will include the availability of accommodation – never being able to book accommodation as described in the contract and any defective performance by the supplier.
As indicated by various consumers, the cancellation fee is usually a high amount or in some cases even more than the outstanding amount owed. The Consumer Protection Act makes specific reference to cancellation fees but it does not indicate what will be a “reasonable” fee. [8] When taking into consideration, a cancellation fee that is more than the amount outstanding and reading Section 68 of the CPA, the supplier is breaching the terms of the Act.
The cancellation penalty or fee may not have the effect of negating the consumer’s right to cancel. This means that the supplier must not indirectly circumvent the consumer’s right to cancel the agreement by charging a high cancellation penalty fee[9]. A penalty which negates the consumer’s right to cancel would not be reasonable, and in terms, Section 48 of the CPA be deemed unfair, unjust and unreasonable by enforcing an unreasonable cancellation fee
Also, if the consumer can prove that the supplier was in breach of the contract the supplier cannot levy any penalty fee to the consumer.
Conclusion
Consumers should not feel discouraged when they decide to cancel a timeshare agreement, especial if keeping the agreement only for the sake of not wanting to go through the hassle of cancelling the agreement.
Consumer should state the reason for cancelling and also keep record of suppliers’ response to determine the confirmation of the penalty set out regarding the cancellation.
Should you require assistance to ensure your terms and conditions comply with the Consumer Protection Act, please contact your SEESA Consumer Protection and POPI legal advisor, or SMS the word “SEESA” to 45776 and we will contact you.
About the author
Melinda
van der Merwe is a SEESA Consumer Protection & POPI Legal Advisor. She
obtained her BA (Law) degree in 2015 and her LLB degree in 2017, both from the
North West University Potchefstroom. She was admitted as an Attorney of the
High Court in 2020 and started her career at SEESA in February 2020.
[1] https://www.iol.co.za/dailynews/news/timeshare-probe-report-released-by-consumer-commission- 18420477 ; Accessed on 11 June 2020.
[2] https://www.seesa.co.za/timeshare-and-the-cpa/; Accessed on 11 June 2020.
https://www.iol.co.za/dailynews/news/timeshare-probe-report-released-by-consumer-commission- 18420477 ; Accessed on 11 June 2020.
[3] Section 47 of the CPA.
[4] Section 48 of the CPA.
[5] Section 51 of the CPA.
[6] Section 68 of the CPA.
[7] https://www.golegal.co.za/cancel-fixed-terms-agreements/; Accessed on 11 June 2020.
[8] https://www.legaladviceoffice.co.za/legal-advice-services/consumer-law-in-south-africa/309-what-are-the-factors-that-will-be-considered-when-calculating-the-reasonable-penalty-for-early-termination-of-a-fixed-term-contract; Accessed on 11 June 2020.
[9] https://www.legaladviceoffice.co.za/legal-advice-services/consumer-law-in-south-africa/309-what-are-the-factors-that-will-be-considered-when-calculating-the-reasonable-penalty-for-early-termination-of-a-fixed-term-contract; Accessed on 11 June 2020.