Ten Things That Need to Change in the Timeshare Industry - Timeshare.Lawyer

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At the end of 2018 the National Consumer Commission (NCC) finally released their long-awaited report. The report breaks down the outcomes of the public inquiry that was held in regards to the timeshare and vacation ownership industry. The industry has seen numerous repeated complaints over various issues and the inquiry has been set up to provide some resolutions to these repeated issues that are continually complained about by consumers.

Whilst the public inquiry took place consumers stated their complaints which were large in their number but very similar in their ilk. One person even spoke of her contemplation of suicide to escape the crippling debt her timeshare commitment had gotten her into.

The inquiry was headed up by Diane Terblanche, the former chair of the National Consumer Tribunal. There were also another two professionals on the panel, attorney Zandile Mpungose and property lawyer Audrey Ngcob.

NCC commissioner Ebrahim Patel approved the final report and accepted the recommendations – which are aimed at improving the structural and behavioural issues in the industry. The very things that have had consumers wrapped up and tied up in timeshare or vacation ownership contracts.

The 10 changes that the panel proposed and the NCC Commissioner approved are below:

1. Contracting: The panel has warned against the commission accepting the industry’s cancellation proposal for both membership and credit agreements, they might involve collusive behaviour for competitors to agree on contractual arrangements with their customers. These arrangements would be in contravention with the Competition Act.

2. Legislative reform: “A modern, industry focused, comprehensive” legislation to centralise the regulation of the timeshare industry should be passed. This is to bring consumer protection in the timeshare or vacation ownership industry in the country “on par” with the rest of the world. The panel also proposed a new regulator be set up to ensure compliance with existing and future legislation.

3. Marketing: The panel called for certain market practices to stop, such as the “enticing or seducing” of consumers through freebies such as motor vehicles, holiday vouchers, and free flights. There should also be a stop 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”.

The panel also recommended consumers be released from their contracts, if they were concluded as a result of unfair market practices.
The industry should develop a Code of Conduct for sales consultants, agents and their clubs; they must also abide to a Code of Ethics. They should also undergo compulsory training and obtain accreditation authorising them to sell timeshare to consumers.

The panel also recommended that vulnerable consumers, and who have allegedly been prejudiced, should be released from their contracts.

4. Quality of service or availability of accommodation: The proposed industry regulator will have a role to play about vacational accommodation, such as ensuring all members are treated fairly. The regulator will also provide independent oversight of the clubs’ membership.

5. Management of clubs: The panel recommended that clubs take steps to ensure their members can attend meetings, including AGMs. The panel addressed the changing of rules for clubs and recommended the NCC consult with relevant regulators to ensure members of clubs are in a position to influence decisions affecting their rights, responsibilities and financial obligations imposed on them.

6. Credit card complaints: Allegations of reckless credit should be referred to the National Credit Regulator (NCR) for investigation. Complaints about the refusal to cancel credit agreements should also be referred to the NCR. Further, allegations of non-disclosure related to credit agreements should be referred to the NCR.

7. Competition issues: It is recommended the NCC consult with the Competition Commission on various matters relating to competitiveness within the industry. A working group committee must be established between the two commissions to oversee matters negatively impacting consumer rights, among other things.

The NCC is also to approach the Competition Commission and the Companies and Intellectual Property Commission to investigate the industry for possible restrictive practices, such as collusion, pricing, marketing, terms and conditions associated with cancellations and with product offerings.

8. Points in the industry: Among the recommendations dealing with points, the panel addressed expiry of points, such that consumers be notified of the imminent lapse of their points. 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 holiday accommodation during any year, they should then pay a reduced levy or management fee. If consumers are faced with potential forfeiture of points due to non-availability of accommodation, the points should be carried forward until the consumer can secure accommodation accordingly with their contractual rights.

Further, a platform should be created for cashing in, exchange and re-sale of points, the panel recommended.

9. Engagement with industry on existing complaints: In the short-term the panel recommends the NCC engage with the industry on a club-to-club basis regarding complaints logged against them as have been head in the public inquiry.

The complaints that must be urgently addressed relate to consumers seeking cancellation of contracts, especially where questionable marketing practices played a role, and sales made to vulnerable groups of consumers.

10. Other matters: The panel also made recommendations regarding the confidentiality of members’ information, the NCC is to engage with the relevant Ombudsman regarding possible violation of the Protection of Personal Information Act.

The panel also made recommendations with regard to debt collections and litigation as well as the abuse of bank accounts and debit orders.

The Vacation Ownership Association of Southern Africa (Voasa) have welcomed the release of the report. In a statement, their chief operating officer Alex Bosch said Voasa would continue to work with the NCC to “achieve the appropriate balance of rights and obligations” between consumers and the industry.

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