Consumer Watch: Private schools refuse to refund ‘acceptance deposit’
Share this article:
Johannesburg - Private schools, insisting on non-refundable “acceptance fees” or deposits, which run into tens of thousands of rands, could be breaking the law and getting away with it, because most parents don’t challenge them or dare make waves.
It’s become a gratifying income stream for some of the country’s best resourced and already expensive schools.
Last week, after a parent complained about a prominent private school in Cape Town’s southern suburbs insisting on a R15000 “acceptance deposit”, which was non-refundable and not allocated towards school fees, I turned to parents of the 34000-strong The Village Facebook group, asking how rife the practice was.
Judging by the comments, it’s ubiquitous. Complaints streamed in from South Africa, parts of southern Africa, Ireland, and Australia.
In South Africa, some prominent private schools are charging deposits of up to R80000 per child, on acceptance, which are not refunded should the family change their mind, or once the child leaves the school.
Here’s a sample of some of the more than 300 complaints received (direct messaging included, but names withheld as The Village is a private group): “It is illegal for public schools to charge. Private schools can charge whatever they wish to on the other hand. Most schools (private anyway) do this... deposits were refundable a few years ago, but no longer.”
“It’s normal; it’s securing your child’s place at the school... Imagine there was no deposit anyone could change their mind last minute and that school would lose out...”
“A lot of schools do this. I think the wording they use is incorrect ... it’s not a deposit , it’s an acceptance fee.”
“Most private schools now charge what they term an acceptance fee if your application is successful. This fee is not refundable, does not count towards fees and can be as high as R40k per child, depending on the school. My daughter’s school moved from refundable deposit to non-refundable acceptance fee two years ago. Bearing in mind that most Jozi private schools charge every pupil a development levy (some annually, some termly) the acceptance fee is an additional financial outrage. I dare not publish my personal feelings on this subject here.”
“R12000 non-refundable enrolment fee for a private school in Blouberg, Cape Town. Our child is 4 If we decide on another school at any point we won’t get anything back.”
“I’m having to pay a R17000 deposit non-refundable to a private remedial school in JHB. It’s really a huge amount of money to have available in one shot.”
“Our daughter was accepted to a private school in JHB and in order to secure her place we had to pay a R36000 deposit WITHIN 48 HOURS of receiving the letter”
“I’m in Australia (Brisbane) and it’s commonplace here at the private and Catholic schools.
“It is done to combat parents putting their kids’ names down at loads of schools and then withdrawing at the eleventh hour. Schools need to manage enrolments, so I get it.
“Our school refunds the ‘deposit’ at the end of year 12. The ‘deposits’ are generally non-refundable if the place at the school is forfeited.”
Whether or not those deposits should be viewed as upfront payments, donations, or simply an elitist practice to discourage the less wealthy who might be able to afford the fees but not the additional fees, is moot.
Rosalind Lake, a competition and consumer lawyer at Norton Rose Fulbright, says she believes it’s the latter. But schools cannot simply withhold deposits because the Consumer Protection Act (CPA) applies. “If it’s a deposit to reserve a place, that would be considered an advance booking and if it’s cancelled prematurely, they would be entitled to deduct a reasonable cancellation penalty,” Lake explains.
Withholding a deposit could also be viewed as unjust enrichment, under the common law. “You would certainly be able to challenge a refusal to refund. You have to ask, what are they keeping the money for?”
Section 17 of the CPA says a service provider (in this case, a school) may take a reasonable deposit and deduct a reasonable cancellation penalty for a cancelled booking. They may not deduct anything in the case of death or hospitalisation.
The deduction has to be reasonable: dependant on the length of the notice period, the potential of the service provider to find a replacement, and whether or not they have incurred any provable damages.
And in most cases, there are lengthy waiting lists for private schools.
Consumer Goods and Services Ombudsman, Magauta Mphahlele, says independent schools must comply with the CPA.
“This means that they have to be transparent in terms of what it costs to administer an application and enrolment, and what the true loss to them is in the case of cancellation,” Mphahlele explains.
“They would also have to prove that they failed to find a replacement after taking reasonable steps to find one. This is where the existence of waiting lists would become relevant because if they are able to find a replacement within a reasonable time after the cancellation then it could be considered unreasonable for them to retain the full deposit.”
She says blanket “no refund” policies do not treat each case on its merits, and that a parent who cancels before the term starts or very early in the beginning of the term, and one who cancels in the middle cannot be treated the same and be charged the same penalty.
I asked the Independent Schools’ Association of Southern Africa’s (Isasa) executive director, Lebogang Montjane, about their position.
He says they don’t view these acceptance fees as problematic because they are viewed as “upfront payments”, payable for children taking up places in a school.
“As such, they are part of income. Once a place is secured for a child, the school is notionally increasing its risk burden in the allocation of a place and consequently turning away others.”
But each case must be evaluated on its own merits. He says if the cancellation is made well in advance and there is a high demand for a particular school, then a refund (minus reasonable expenses and administrative costs) could be expected.
If the cancellation occurs late in the year, then finding a child to fill that space for the new academic year might be difficult.
Isasa, he says, regards the “non-refundable deposit, properly incorporated in the first term’s fees and clearly explained as being part of a fair fee in respect of the school’s acceptance of the risk of loss if the booking is not taken up, as a reasonable practice”.
That’s not necessarily the case. Lake says schools should not couch “donations” as “deposits”, but however it’s couched, the CPA would still apply.
“Section 65 of the CPA says when a supplier has possession of any prepayment, they must not treat the property as their own property. People use the term deposit loosely, which creates the expectation that you’ll get your money back - or that you’ll see some value in it.”
* Georgina Crouth is a consumer watchdog with serious bite. Write to her at [email protected], tweet her @georginacrouth and follow her on Facebook.
** Receive IOL's top stories via Whatsapp by sending your name to 0745573535