Timeshare Inquiry: almost two years later, what has happened?

Since the NCC’s landmark report in 2018, consumers feel that nothing much has happened or changed, and they’re starting to question whether the NCC has forgotten about them.

They still struggle to find accommodation and cancel their contracts. The report is not even available on the NCC website anymore, while Phetho Ntaba, media liaison officer of the NCC, says the report was lost when the website was hacked, but it will be replaced soon.

The former commissioner of the NCC established a formal Inquiry into the vacation ownership and timeshare industry in 2017. The inquiry panel did extensive research and held public consultations with interested parties, including consumers, industry participants, consumer protection bodies and regulators.

Most of the complaints raised during the inquiry related to:

• Consumers unable to cancel their contracts
• Forfeiture of points
• Unavailability of accommodation
• Unacceptable alternative accommodation
• Misrepresentations during sales presentations
• The value of the points
• Membership fees linked to membership levels, levies, and unpredictable annual increases
• Annual general meetings are not accessible, and inadequate complaints handling.

The report concluded with various short, medium and long term recommendations, as well as recommended legislative reform.

Legislative reform

The panel recommended:

• Amendments to the Property Time-Sharing Control Act, such as delegating the administration of the act to a regulatory authority and an email address where notice of cancellation is considered received once proof that it was sent is provided.
• New regulations for the Consumer Protection Act (CPA) to specify the purchase of points and membership application agreements as fixed term agreements.
• A modern, industry focused, comprehensive piece of legislation that centralises regulation of the timeshare industry in South Africa.
• A new regulator must be established to enforce compliance with existing and future legislation.
• A clear and concise statement of the value of points and how it was calculated, reflecting the exact number of points required for a booking, that clubs provide an annual valuation certificate for their points, consumers get notified when points expire, reduced levies for no bookings and carry-over of points when no accommodation is available.
• A platform must be created for cashing in, exchanging and reselling of points.

According to Ntaba, the NCC, DTIC Policy Unit and the CIPC are working on the proposed regulations relating to issues of disclosure or transparency towards consumers. However, the CPA has not yet been reviewed and changed to address impediments to consumers’ access to the courts and enable them to approach the courts directly in respect of complaints of prohibited conduct.

The Ombudsman for Consumer Goods and Services deals with timeshare complaints currently, she says. According to Ntaba, the regulation process does not require parliamentary intervention or processes and is in the purview of the minister. She confirmed that discussions in terms of what will be in the regulations are currently underway, but the long-term intervention of overhauling legislation has not started and will occur via parliament.

Short term recommendations

The short term recommendations included:

• Engaging with the timeshare industry on existing complaints, especially about cancelling contracts that were signed after questionable marketing or contracting practices were used, including non-disclosure, manipulation of the cooling-off period, and failure to conduct affordability assessments.
• That the NCC consults with other regulators to find ultimate solutions to consumer complaints.

Ntaba says about 1200 complaints were received during consultations.  Approximately 997 were resolved and their contracts cancelled. The NCC engaged with various stakeholders before the inquiry started and during the inquiry panel formulated questionnaires covering various issues relating primarily to the mandate of the Regulators, and their mandate regarding the timeshare industry.

Medium to long term recommendations

• Clubs should ensure that members can attend meetings, with equal representation from provinces, and offer customer satisfaction surveys.
• The NCC should approach the relevant bodies to investigate the industry for possible horizontal and vertical restrictive practices.
• The practice of luring consumers with freebies such as holiday vouchers, cars, and free flights must stop.
• Customers who signed contracts as a result of unfair marketing practices must be released from their contracts.
• Consumers must not be lured to marketing events with scratch cards or stories that they won holidays or other prizes, and they must not be required to bring their credit cards to marketing presentations.
• Consumers must not be pressured to sign contracts and the NCC and the CGSO must develop a detailed statement of practice outlining pressure selling in timeshare.
• Compulsory training for timeshare marketing and sales personnel.
• The industry must, as an interim measure, develop a Code of Conduct for the industry regulating the conduct of sales people and the clubs they represent.
• The practice of selling timeshare as an investment must stop.
• The NCC must investigate and take action where the CPA had been contravened and refer matters relating to non-disclosure regulated under other laws to the relevant regulators for investigation.
• Credit-related complaints must be referred to the National Credit Regulator.
• All timeshare contracts must be changed to fixed term contracts, subject to renewal and that consumers automatically get the rights afforded to them by section 14 of the CPA.
• A regulation must be promulgated in terms of section 12 of the Property Time-Sharing Control Act, about the information clubs/developers must disclose to potential members.
• Consumers must first have time to consider, digest and assimilate all information before signing.
• Consumers must get a copy of the contract on the day of signing and the cooling-off period must only start when the last person signs and it is delivered to the consumer and with a notification that membership has been activated and a membership number allocated.

Club meetings, customer satisfaction surveys and enforcement of the PTSCA in terms of the proposed regulations will materialise upon proclamation of the regulations. Once the regulations are finalised and come into operation, these issues will be embedded in the industry’s new culture or way of doing things.

Ntaba says the NCC shared the Report with the regulators. The NCC also engaged with the DTIC policy unit and the CIPC to identify issues that could be addressed outside of the proposed, wholesale overhauling of the legislative framework. It was agreed that these will include the term of timeshare agreements.

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