There is hope for consumers holding expensive, useless timeshare contracts, writes Georgina Crouth.
Ever been contacted by a “holiday club”, told you’ve won a prize but needed to attend a short presentation? Lured with the promise of a 5-star holiday abroad? A weekend to a nearby resort? A summer holiday at the coast?
Too many of those who bought the idea of cheap holidays ended up with points they couldn’t use, properties never available at a convenient time, or worse, a contract signed into perpetuity that they couldn’t get rid of. I have yet to receive a glowing report about timeshare but I do get dozens of complaints each week - most of which are complaints about not being able to get out of a timeshare contract. Imagine if you’re unemployed, retired, can’t afford the “luxury” of such a contract?
What’s the point?
Jocelyn Curtis wrote last month: “(I have timeshare which) I am trying to get out of as it has become too pricey for me. They are allocating me more points for 2017 (apparently worth about R258000) and I just cannot afford to pay the fees or use the timeshare any longer. Not that I ever used it much.”
Nazeema Solomon said: “In May 2004, I bought timeshare together with my husband at the time. We got divorced three months later. I paid for holidays while paying the capital off as there was never any availability at 3-star resorts, let alone the five-star ones! I contacted the company years ago trying to sell or get out of the contract only to learn I bought into a perpetual contract and was told I am locked in for life and no lawyer can get me out.
“I am unemployed, with funds fast depleting (and I told them) I can no longer afford the expensive monthly management fee. It’s 12 years later and I still cannot believe how I’ve been manipulated into signing this contract.”
Solomon is on the button because hard-sell tactics are employed. “There were promises of free holidays, that the offer is only valid for the next 30 minutes.
“I cannot afford this. I have paid for this mistake for 12 years; why should I be punished for life. Have my consumer rights not been violated? Nothing in life is perpetual, how can contracts be?”
Damp squib
The National Consumer Commission (NCC) announced in 2013 that it was launching an investigation into holiday club abuses. Last year, it vowed to fight the holiday club matter “until the end” because it was inundated with complaints from consumers - mostly related to the points system. NCC spokesman Trevor Hattingh said people were paying levies for properties they didn’t have title deeds for. If only the investigation went off smoothly, because it then became a jurisdictional issue as the National Consumer Tribunal is limited to the Consumer Protection Act (CPA) and National Credit Act - it does not have jurisdiction over the Property Timesharing Control Act or the Share Blocks Control Act.
Not so easy
Hattingh explained: “A variety of allegations were made by consumers and some cannot be addressed through the CPA (the CPA regulates fixed-term contracts and not contracts in perpetuity), taking into account the type of relief that consumers requested/sought and the fact that the allegations would be better addressed through a different piece of legislation.
“This means that the NCC would have to go back and forth to court and run up a high legal bill, only to address one matter at a time. With an investigation each case is adjudicated on its own merits. A public inquiry report on the other hand will provide a holistic view of all the challenges in the industry, across all legislative boundaries. The report will have findings and recommendations on how best to regulate the entire industry and thus address all the issues that consumers currently have.
“The report can be used as a basis for legislative reform, meaning either amendments to existing legislation, or promulgation of new legislation to adequately regulate the entire industry. But we don’t want to put the cart before the horse. Let’s see what the experts find and recommend and then take that to Parliament.”
It’s cold comfort for consumers currently sitting with expensive contracts they cannot use - but are forced to pay.
You can get out of it
CPA specialist Trudie Broekmann says the act has been very useful in helping consumers get out of their timeshare contracts.
“Some of my clients have been able to get themselves released - but it’s a small minority because you really need to get a CPA lawyer involved.
“What the timeshare companies do is that they limit the time in the year when you can cancel and they charge hectic cancellation fees.
“It’s a lot of wasted money. That’s a breach of section 68 of CPA which says you can’t victimise a consumer by discriminating against them or penalising them if they want to cancel. The CPA trumps any contract. The behaviour of the company has to be in line with the CPA, whether or not the contract has been signed before 2011. The CPA might not be retrospective but it places duties on them to comply with the act.
“The easier way to cancel is to identify the breach of contract by the timeshare company - whether they have breached the contract and then you have an automatic right to cancel in terms of common law. In every matter I’ve looked at is that there’s been a breach in some way.”
And the breaches are very often relating to availability of accommodation: there is always insufficient accommodation. You cannot get accommodation in high season in Cape Town, for instance. You also have to book far in advance, in a first-come-first-serve basis.
“They put consumers in a bind when they try to book far in advance because they haven’t ‘released their booking schedules yet for the next year’. That is a formal breach of contract.”
Broekmann says they don’t comply with section 64 of the act - the CPA requires every supplier who takes prepayment to keep that prepayment in a separate, interest-bearing account. “And because they require you to pay upfront in terms of management fees, they are in breach.”
Another issue Broekmann has with these contracts is that they are one-sided: They place obligations of the consumer - but nothing about the supplier.
“The CPA says you need to deliver according to what you promise in your marketing. You are not allowed to mislead and what you promise you must offer - either to the same quality or better. If you can prove you were misled into signing, the contract is void and then you don’t need to pay any penalties or anything.”
* Georgina Crouth is a consumer watchdog with serious bite. Write to her at [email protected]
Follow her on Twitter: @askgeorgie
The Star