Consumer commissioner opens up about timeshare inquiry

Johannesburg – The inquiry into timeshare investment will get to the bottom of the issues raised by complainants, said consumer commissioner Ebrahim Mohamed.

Mohamed spoke to Fin24 on Tuesday, at the National Consumer Commission’s (NCC) first round of public hearings into the timeshare industry.

The hearings flow from "thousands of complaints" received over the past decade by the NCC and the Department of Trade and Industry (dti). The complaints relate to the points system and contracts in perpetuity which are not governed by the Consumer Protection Act, Fin24 reported.

At a public information and evidence gathering sessions which started on Monday, consumers complained that vacation club companies failed to deliver on their promises.

“This inquiry is a fact finding mission aimed at unearthing challenges so that the missteps of the vacation ownership industry can be corrected,” Mohamed said previously.

He told Fin24 on Tuesday that the inquiry is to get a “holistic view” of the industry in order to resolve the issues which have persisted over many years. “By law, consumers are bound by their contracts, and this is why timeshare companies have been able to get away with this type of conduct for so many years.”

Mohamed advised consumers to be cautious when entering timeshare contracts. “They should ask questions. If they are not happy with the contracts, they should not sign.

“If they wish to include clauses in the contract, that are not included in the contract, they should insist that it be included. They should not be swept away by the suave nature of the sales person.”

Consumers have an option to cancel a contract within seven days after signing, said Mohamed.

There are contracts that do not end if a person dies, and their children may inherit it. “It can be legal, it needs to be taken on, and it’s one of the issues that we certainly will be taking on.”

How it works

A consumer pays a large sum of money upfront, on the day of the presentation by a sales person, explained Mohamed.

“With that money, the consumer is supposed to enjoy for the rest of their life one week’s accommodation at the venue owned by the timeshare company.

“Together with this, there is a point allocation, depending on the number of points the consumer has purchased, the consumer may go on holiday,” he explained.

However, one of the complaints received by the commission involves a consumer that paid money upfront and then continued to pay monthly payments. The consumer could not go on holiday for the first five years.

“So she had to pay R500 per month, R6 000 per year, which amounts to about R30 000 in five years before she could go to Durban on holiday,” said Mohamed.

“It is not absolutely clear as to how the points system works, or what these points mean. We need to get to the bottom of it.”

Timeshare holder Erika Meyer, who invested R100 000 in a timeshare company, had to continue paying increasing management fees over 15 years, the hearings heard on Monday. Management fees effectively escalated from R200 to R800.

Apart from the price increases, Meyer said she cancelled the contract in 2015 because she could not get a booking when she needed one.

Some consumers have had to pay up to R3 000 per month and a further R5 000 per annum for administrative fees.

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