Is there a brighter future ahead for the Timeshare Industry?
We have been working in timeshare law for a long time now, and along with many others in the industry, we have seen years of clients who have complained about the same, repeated problems within the industry. As a result of numerous issues and public complaints in the timeshare industry there was public inquiry into timeshare which aimed to to provide some resolutions for these repeated issues.
We have been waiting for the outcome of this report into the timeshare and vacation industry carried out by the National Consumer Commission (NCC) in 2018, which details the outcomes of the public inquiry into timeshare. Now this report is available, we will break down some of the key findings here.
What happened during the public inquiry?
The hearings were hosted in Durban by the NCC and were lead by Diane Terblanche, the former chair of the National Consumer Tribunal. During the hearing, there were also another two professionals on the panel, attorney Zandile Mpungose and property lawyer Audrey Ngcob. The NCC Commissioner, Ebrahim Mohamed, said that the report was “meant to unravel and understand the complexities of the industry, assess the extent of consumer challenges, and after assessing all facts and balancing them with research, to make recommendations to improve consumer protection within the timeshare industry”. In a bid to begin to unravel some of these complexities many customers were asked to explain their situation before the panel in Durban.
It is clear from the report that the NCC understood that so many of the complaints about timeshare were coming in on very similar grounds. Many people claimed that they had felt trapped and tricked into a deal which had then crippled them financially and was almost impossible to escape from. There were many awful stories recounted but two of the most shocking are summed up by the commissioner below:
“It was most disturbing and sad to see elderly, vulnerable pensioners sob and plead with government for help and relief at the public hearings. The greatest discomfort I experienced though, was when a Free State-based consumer (relayed) a blow-by-blow account during her oral submission, of how she had planned to take her own life to escape her debt-stricken circumstances, which were occasioned by ‘a mistake’ she made when she signed up for a lifelong ‘timeshare trap’,” said Mohamed.
For those of us who work in timeshare law, sadly it is not surprising to hear such disturbing stories and we have worked with many people who have experienced extreme stress from feeling trapped in a timeshare contract.
What will come of the 2018 public timeshare inquiry?
Commissioner Ebrahim Mohamed approved the final report and accepted the recommendations laid out within it. These aims were to work on improving the structural and behavioural issues within the industry which were the source of the majority of customer complaints. The report essentially puts the responsibility back onto the NCC to enforce the new regulations within the report. The NCC will also have the onus on them to engage with other role-players, such as the Consumer Goods and Services Ombudsman (CGSO), the National Credit Regulator and others, to educate consumers and make recommendations to the minister.
The 10 key recommended steps moving forwards from the report are as follows:
1.Marketing/ misrepresentation: This recommendation would end the “enticing or seducing” of consumers through manipulative sales tactics. All ‘extras’ such as motor vehicles, holiday vouchers, and free flights that could seduce a buyer to make a purchase without fully thinking it through should be stopped. The panel also called for an end to high pressure selling, inducing consumers to sign contracts under pressure by using terms like “offers are valid for today only”, or “bonus points are only available today”.
One really important recommendation from the panel was that they asked that any consumers who had been subjected to these unfair market practices to be released from their contracts. The suggested that any timeshare sales people should undergo compulsory training on fair marketing and obtain accreditation which would authorise them to sell timeshare to consumers.
They want the timeshare industry to develop a Code of Conduct that would be used with all sales consultants, agents and their clubs who must also follow a Code of Ethics. The panel also recommended that vulnerable consumers, and who have allegedly been prejudiced, should be released from their contracts.
2.Contracting: The panel warned against the commission accepting the industry’s cancellation proposal for both membership and credit agreements. In the report, they outlined that this action might involve unlawful behaviour where competitors could agree on contractual arrangements with their customers. These arrangements would go against the Competition Act.
3.Competition issues: It is recommended the NCC consult with the Competition Commission – a working group committee must be made between the two, to oversee matters which are adversely impacting on consumer rights
4.Legislative reform: The panel called for “A modern, industry focused, comprehensive” legislation to centralise the regulation of the timeshare industry. This reform would protect the consumers in a way that is on par with the rest of the world.
5.Management: The panel recommended that timeshare and vacation clubs take steps to ensure their members can attend meetings and recommended the NCC consult with relevant regulators to ensure that all members of clubs are in a position to influence decisions affecting their rights. Consumers should also have a say on things like maintenance fees and the responsibilities and financial obligations imposed on them as part of their contracts.
6.Quality of service/ availability of accommodation: This suggestion is to ensure that all members are treated fairly. The regulator would provide independent oversight of the club’s’ membership and look into availability (a key complaint in the inquiry).
7.Credit card complaints: The National Credit Regulator (NCR) will now be responsible for all complaints with credit cards. This is to include complaints about the refusal to cancel credit agreements.
8.Points: There were many recommendations in the report in regard to timeshare points. The report states that a platform should be created for cashing in, exchange and re-sale of points and the panel looked into issues such as the expiry of points and said that consumers should be warned in advance of expiration. They should be refunded the money they paid towards the maintenance of the holiday accommodation the points are associated with.
In cases where consumers could not secure any holiday accommodation during any year, they should then pay a reduced levy or management fee. Points should be carried forward until the consumer can secure accommodation accordingly with their contractual rights.
9.Engagement with industry on existing complaints: In the immediate future, the panel recommends the NCC engage with the industry on a club-to-club basis regarding complaints lodged against them. Cancellation of contracts, especially where manipulation practices were used, and sales made to vulnerable people should be regarded as urgent complaints.
10.Other: The panel also made recommendations regarding the confidentiality of members’ information.
In addition to these complex suggestions for improvement, the panel also made recommendations in regard to debt collections and litigation (not forgetting the abuse of bank accounts and debit orders). The commission said it predicted that it would be a medium to long term implementation period and stated that the length of time for the report to be actioned would also depend upon the willingness of industry to engage in good faith with it. The NCC has held discussions with Trade and Industry Minister Rob Davies about the recommendations and he has called on clubs to resolve specific complaints “without any further delay”.
What if I want to act on my complaint now?
We will be keeping a close eye on the developments and hoping that positive change within the industry does come from this public inquiry. If you need any advice or guidance on how to move forwards with a timeshare complaint, please don’t hesitate to get in touch with Athena Law today.
We have years of experience in this industry and many success stories for clients who have been in your position, and we may be able to help you too. We promise to beat any quote you are given and if we feel there are strong grounds for your case we may be willing to represent you on a no win no fee basis.
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We look forward to hearing from you soon