Section 64 of the Consumer Protection Act, Act 68 of 2008 (CPA) provides that in the event that a consumer agrees to pay a once-off membership fee or an amount for access to services, in terms of which such services are provided at a date more than 25 business days after payment is made, such prepayment for services to be provided remains the property of the consumer until the full membership fee or amount has been used.
In the event the facility that provides such services closes down, they have the responsibility to either ensure that a reasonable accessible alternative facticity in the same business sphere is available, and if no facility is available, they need to notify all affected consumers within 40 business days of closure of such imminent termination of the facility and refund any membership fees within 5 business days after closure.
Any person who assumes control of the prepaid facility’s property as an administrator, executor or liquidator of an estate must determine if any amounts belonging to a consumer is held and must comply with this section.
It is therefore important to ensure that in the event that you operate a sports club, or instance a golf club or social club that receives annual membership fees, you make provision for Section 64 of the CPA If the club therefore closes and no alternative golf or social club in the immediate area is available, to whom membership can be transferred, the facility needs to ensure that all membership fees not utilised will be refunded to the members. This can be done by holding membership fees in a separate account and only utilising it when payment is due for a monthly subscription and to the extent that such monthly subscription is payable.
The aforementioned proposal, that all membership fees not utilised must be held in a separate account, is also applicable to the circumstances where a service provider takes possession of a consumer’s property. Section 65 of the CPA in this instance provides that in the event that a supplier takes possession of a consumer’s property which includes a pre-payment, deposit, membership fee or any other property they may not treat the property as if it’s their own property and in handling and utilisation of such property, must exercise a degree of care, diligence and responsibility and is liable if they fail to do the same. Section 65, therefore, does not merely suggest but obliges the service provider to hold such property separately.
As with Section 64 of the CPA any person who assumes control of the service provider’s property as an administrator, executor or liquidator of an estate must investigate if any amounts belonging to consumers is in possession of the supplier and must ensure that the property is dealt with in compliance with this section.
ABOUT THE AUTHOR
Jano Fourie is a SEESA Consumer Protection & POPI Legal Advisor since August 2011 and has almost 7 years previous experience as an attorney. He obtained his BA Law and LLB degrees from the University of Stellenbosch. He also obtained a Masters Degree in Tax Law from Unisa.