TIME SHARE IN­DUS­TRY?

WILL WE SEE CHANGE IN LAWS GOV­ERN­ING THE There has been lit­tle reg­u­la­tion of the sec­tor – de­spite the in­tro­duc­tion of the Con­sumer Pro­tec­tion Act – as most leg­is­la­tion re­lat­ing to the in­dus­try is out­dated

CityPress - - Business - AN­GELIQUE RUZICKA busi­ness@city­press.co.za

The head of the Na­tional Con­sumer Com­mis­sion (NCC), Ebrahim Mo­hamed, has ap­pealed to con­sumers to ac­tively par­tic­i­pate in the on­go­ing pub­lic in­quiry that is look­ing into the time share in­dus­try. Ahead of the pub­lic hear­ings in the Western Cape, which ended last week, he quoted Ma­hatma Gandhi when he said: “You must be the change you wish to see in the world.”

Some say the time share in­dus­try has seen few changes in terms of the typ­i­cal struc­ture of the pack­ages on of­fer. While short-term con­tracts are avail­able, con­sumers are still of­fered con­tracts that can re­sult in them be­ing locked in for life, and which may also force them to pay po­ten­tially high levies.

What’s more, in per­pe­tu­ity con­tracts re­sult in fam­ily mem­bers in­her­it­ing them, which means the next gen­er­a­tion could get stuck with a con­tract they may not want and may strug­gle to get rid of.

Mo­hamed said some of the key chal­lenges that were iden­ti­fied dur­ing the hear­ings in Pre­to­ria ear­lier this month in­cluded the re­fusal by hol­i­day clubs to can­cel time share con­tracts, the over­selling of lim­ited ac­com­mo­da­tion – which leads to un­avail­abil­ity of ac­com­mo­da­tion when con­sumers at­tempt to make book­ings – and the charg­ing of ex­or­bi­tant levies for up­keep and main­te­nance of fa­cil­i­ties owned by hol­i­day clubs in spite of a 2014 SA Rev­enue Ser­vice di­rec­tive stat­ing that levies can­not be charged to peo­ple who do not have a ti­tle deed and who do not own a prop­erty.

The mar­ket­ing tac­tics that some in the in­dus­try use have also been crit­i­cised. Some peo­ple are roped in to at­tend pre­sen­ta­tions un­der the guise of hav­ing “won a prize”, at which stage they are shown a video of all the pos­i­tive as­pects of the deal. Lights are dimmed, lim­it­ing the time to pe­ruse the terms and con­di­tions in the pa­per­work, and, in some in­stances, peo­ple are put un­der pres­sure by be­ing told that they can only get the deal if they “sign to­day”.

The NCC is not the only body that has weighed in on some of the time share in­dus­try’s ques­tion­able prac­tices.

Ros­alind Lake, di­rec­tor in com­pe­ti­tion prac­tice at Nor­ton Rose Ful­bright SA, says: “There have been nu­mer­ous com­plaints about time share. It got to a point where there was a stan­dard let­ter is­sued by the Free­dom Front Plus that was used by con­sumers who were be­ing chased for pay­ment by time share sup­pli­ers. They also set up a sys­tem to fa­cil­i­tate con­sumer com­plaints.”

Part of the prob­lem is that, to date, there has been scant reg­u­la­tion within the time share in­dus­try, de­spite the in­tro­duc­tion of the Con­sumer Pro­tec­tion Act (CPA).

“The time share in­dus­try ar­gues that it doesn’t fall within the CPA be­cause the ser­vices are reg­u­lated by prop­erty laws, the con­tracts con­sti­tute credit agree­ments reg­u­lated by the Na­tional Credit Act or be­cause the con­tracts with con­sumers pre­date the CPA,” says Lake.

She says that, while the CPA came into ef­fect on April 1 in 2011, the time share in­dus­try is reg­u­lated within the prop­erty in­dus­try to some ex­tent through the Share Blocks Con­trol Act and the Prop­erty Time-Shar­ing Con­trol Act. Part of the role of the in­quiry is to de­ter­mine the ex­tent to which the CPA is ap­pli­ca­ble to time share providers.

Mo­hamed ar­gues that the Prop­erty Time-Shar­ing Con­trol Act, the Share Blocks Con­trol Act and the Sec­tional Ti­tles Act hold old leg­is­la­tion that is most likely out­dated.

“As a scholar of the law, it is my be­lief that the law is not static – that it is al­ways chang­ing, and that, in a democ­racy in par­tic­u­lar, it should re­spond to change in so­ci­ety to re­main rel­e­vant and ef­fec­tive,” says Mo­hamed.

There’s a not so sub­tle tus­sle go­ing on be­tween the NCC and the Vacation Own­er­ship As­so­ci­a­tion of South­ern Africa, which is the trade as­so­ci­a­tion for the time share in­dus­try.

When City Press ap­proached the as­so­ci­a­tion for com­ment re­gard­ing the in­quiry, a spokesper­son said it had not yet been given a date from the NCC for the in­dus­try to present its case. How­ever, the as­so­ci­a­tion pledged to is­sue a re­lease that would cover the mat­ters raised in the pub­lic hear­ings.

It cer­tainly did so in May af­ter the NCC launched the in­quiry, point­ing out “its ut­ter dis­may at the in­ac­cu­rate state­ment that the in­dus­try cap­tains have turned a blind eye to the plight of con­sumers for such a long time”.

It said that, in 2008, rep­re­sen­ta­tives of the Vacation Own­er­ship As­so­ci­a­tion met with the NCC, which was then called the Un­fair Busi­ness Prac­tices Com­mit­tee, on nu­mer­ous oc­ca­sions to pro­pose amend­ments to leg­is­la­tion to as­sist con­sumers.

While the as­so­ci­a­tion has been crit­i­cal of past in­ves­ti­ga­tions con­ducted by the NCC – in 2014, it cau­tioned the NCC that the in­ves­ti­ga­tion into three ma­jor hol­i­day clubs was be­ing han­dled in­cor­rectly and would ul­ti­mately lead to a waste of the con­sumers’ time and tax­pay­ers’ money – it has com­mit­ted its sup­port to this in­quiry and has pledged to fully com­ply with all re­quests made for in­for­ma­tion.

Mo­hamed says that chief among the things the NCC hopes to see come out of the pub­lic in­quiry is the creation of a sin­gle piece of leg­is­la­tion that will be used to ef­fec­tively and com­pre­hen­sively reg­u­late the time share in­dus­try, and which will cre­ate a means for con­sumers to par­tic­i­pate and have a voice in the af­fairs of hol­i­day club schemes.

While new leg­is­la­tion will most likely af­fect the in­dus­try go­ing for­ward, it’s un­likely that it will af­fect the in­dus­try ret­ro­spec­tively. In other words, con­sumers will prob­a­bly not get their money back, but they might be given the op­por­tu­nity to can­cel the deal.

Lake says: “I would cer­tainly con­sider it to be in­con­sis­tent with the Con­sumer Pro­tec­tion Act to not have the abil­ity to get out of the con­tract at all. If a sup­plier can can­cel but a con­sumer can­not, that is an un­fair term. There­fore, if a con­sumer en­tered a con­tract af­ter 2011, they should be able to get out be­cause of the act. His­tor­i­cal cases af­ter this in­quiry may be re­ferred to the tri­bunal for con­tra­ven­ing the act, but peo­ple will strug­gle to get money back un­less a sup­plier is found to have con­tra­vened the act. It de­pends what the find­ings are.”

. Have you bought time share? Do you think it was a good in­vest­ment or a rip-off? Share your story by email­ing us at per­son­al­fi­nance@city­press.co.za . To con­tact the NCC dur­ing the in­quiry to share your story, email time­sharein­quiry@thencc.org.za

PHOTO: ISTOCKPHOTO

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