Commission says time-share industry must clarify model
CAPE TOWN — The National Consumer Commission has given the R3.5bn holiday time-share industry until the end of this month to clarify the nature of its business model, and motivate why its contracts with timeshare owners should not fall under the provisions of the Consumer Protection Act.
If the contracts of vacation clubs or time-share holiday schemes are found to fall under the act, they would be bound to the 24-month cancellation clause, providing much relief to disgruntled consumers.
The fact that many holiday timeshare contracts cannot be cancelled and exist in perpetuity has been a bone of contention. Consumers are obliged to continue paying subscriptions, even when they cannot afford them and cannot derive any benefit from them because the schemes are oversubscribed.
Many members complain that their requests for holiday time at their chosen resorts on specific dates are repeatedly turned down because the resorts are full. The surge in complaints led to the commission announcing in April that it would investigate the schemes, which have hundreds of thousands of members. In total, 42 time-share entities have been investigated.
The commission’s head of enforcement, Prudence Moilwa, said yesterday the industry insisted during the probe that time-share con- tracts did not fall under the act and thus could not be cancelled, because members bought property for which they paid levies. But, she said, the industry had difficulty identifying the specific property acquired by people who bought time-share points in order to justify its argument.
The problem with the time-share points system, Ms Moilwa said, was that “people buy points but they are not assured that they will be able to get accommodation”.
She said the points do not entitle the buyer to a specific establishment — they enter a pool for accommodation when it is available.
“The commission questioned what exactly consumers were paying for, especially with regard to levies because one only pays levies on property that can be identified. If it is ownership of property, consumers should be able to have access to their property, should have something tangible and be able to dispose of it. If it is a fixed-term agreement, consumers should get a right to cancel the agreement.”
The industry said that it wanted to respond to the concerns raised by the commission and possibly amend its business model as regards the selling of points to bring it into line with the act.