Is there really no refund on deposit?
But things don’t always go according to plan, which is why the issue of deposit repayments - or not - has yet again come under the spotlight.
The Consumer Protection Act (CPA) has made blanket “non-refundable deposit” policies illegal, yet there’s rampant abuse by service providers.
The act allows consumers to cancel advance bookings - of any kind - and get their refund, less a “reasonable” cancellation fee, which is meant to be calculated fairly, factoring in administration and other provable costs.
Service providers cannot estimate their calculations (although the CPA isn’t clear on how those “reasonable” penalties should be calculated), nor can they refuse any compensation. Yet many are flouting the provisions of the act, either wilfully or due to ignorance. And they’re getting away with it.
Ken Randell, though, wasn’t prepared to let a friend’s issue with a service provider slide. He contacted me last week about a cattery in Joburg’s northern suburbs which refused to repay any portion of a deposit on a stay for a cat’s boarding over the holidays. (I’ve decided to withhold the name of the business since it’s a small operation and it has come to light that many of its competitors are just as guilty of refusing refunds.)
“The deposit required is R1000, payable at the time of booking for the ‘high season’. A 50% portion is refundable if the booking is cancelled before October 31. Thereafter no refund is made. However, bookings are open after that time and presumably would be taken if any opening exists even at the 11th hour,” he said.
“I find this policy regarding refunds very restrictive and one-sided, and from my reading of the CPA, possibly illegal. The correspondence I have had with the cattery involved shows there is no intention to pay any refund. What do you feel is the correct position and is it worth pursuing, at least on principle?”
Randell’s friend Annalize had cancelled two weeks before her cat was booked in to stay and, given what the CPA says about deposits and the fact the cattery is positioned in a prime location, felt the likelihood of Oreo’s quarters being resold was not only high but certain. She asked about a refund, either in full if another boarder was found, or in part with a reasonable deduction.
“I do believe that the ability to ‘fill a gap’ is a salient point as it could be construed as ‘double-dipping’ if a replacement boarder is found, regardless of the constraints set out in the Ts & Cs, and could be considered in some degree as unjust enrichment if the full deposit is retained, with no services being provided. In addition, Ts & Cs do need to operate within legal parameters and cannot simply be constructed to potentially favour or prejudice one party over the other.”
Yet the owner was not persuaded, stating they were “absolutely specific” about their refunds policy.
“Of course, nothing is cast in stone and there have been instances like last-minute hospitalisation, a death in the family, or a pet who is sadly no longer with us, which has prompted a refund, but if I am going to make a rule, I need to apply it without fear or favour,” he told Randell.
He cited his cancellation policy, stating they opened their high-season bookings in September, which is when most customers would have made their December holiday plans.
“For this reason, the administrative process is simplified as we do not anticipate having to deal with last-minute cancellations, refunds or date changes. However, we are willing to reimburse customers at 50%, or R500, provided notification is received in writing before October 31 - thereafter not at all. For this reason, please do not consider even making your booking if there is any uncertainty as to your exact holiday dates.”
I contacted the owner about the issue, pointing out that the CPA makes blanket no-refunds policies illegal, and he seemed to have a change of heart.
“(I) appreciate your informed and constructive opinion on our cancellation terms. Having (done some research) on this subject plus what two of my competitors’ policies are, mine would seem to be the least onerous - but nonetheless unlawful.
“Given the emphasis this industry places on repeat business by way of ‘word of mouth’ referrals, it’s certainly not in the interests of any kennel to refuse to refund deposit payments, although I intend to settle here on the basis of retaining a reasonable cancellation and administrative fee in light of what you have mentioned.”
How that refund is to be calculated is uncertain, and Oreo’s place in the cattery was quickly resold, which should be factored into the calculations. B
y qualifying his statement that he would settle “here”, the presumption is that he’s making an exception, which should not be the case as he has admitted that his refunds policy is illegal.
The hope is that he’ll amend his policy to align with the CPA. One would also hope that others take heed - refusing to repay a reasonable portion of a deposit is unfair and violates the act.
Randell was pleased with the outcome: “Many thanks for your assistance, Georgina. A small win in comparison to the Zuma judgment, perhaps, but a win nevertheless, in terms of governance, legal compliance and ethics. May your festive season be enjoyable and may the consumer complaints also take a break until January.”
If you’re unable to resolve a complaint with a service provider, contact the Consumer Goods and Services Ombud (visit http://www.cgso.org.za/ctc) or your provincial consumer protection office.