The Consumer Goods and Services Ombudsman (CGSO) recently looked into the issue of ‘non-refundable’ deposits and asked if such a concept even existed in South Africa.
The case centered on a couple who had to repeatedly put their wedding plans on hold due to the impact of the Covid-19 pandemic.
After three failed attempts to have their dream wedding, only to have their plans scrapped by Covid-19, the couple have decided to call off their wedding altogether. After having reserved and deposited a deposit on the place in December 2019, the happy day was initially scheduled for May 30, 2020, then March 2021 and finally, set for November 26, 2021.
In January 2021, with uncertainty looming over the rollout of the vaccine in South Africa, the couple informed the provider that they would rather cancel than risk another postponement.
Believing that 11 months’ notice was reasonable and fair, the couple demanded reimbursement of the R30,674 they had paid to the supplier. The supplier refused and the couple then turned to the CGSO for help in obtaining a reasonable refund.
“We spoke with the supplier, who shared their calculations, explaining that they would only consider a refund if the couple booked the venue,” the mediator said.
“We referred the supplier to Article 17 of the Consumer Protection Act (LPC)which stipulates that consumers have the right to cancel reservations in advance subject to the payment of reasonable cancellation charges and that the circumstances must be considered, in particular whether the period of notice is sufficient for the service provider, acting diligently, finds a replacement booking. ”
As a result, the CGSO informed the supplier that its cancellation policies were against the CPA and recommended an amount of R22,580.04 as a fair refund. However, the supplier refused to pay the amount as it included a non-refundable deposit of R5000.
Article 51 of the CPA
The CGSO subsequently referred the supplier to article 51 of the Consumer Protection Act which stipulates that the contracts drafted cannot contain terms and conditions contrary to the provision of the CPA since the Act will prevail.
“Put simply, you can’t opt out of the law. Even if the customer has signed the agreement, the law prohibits contracting out or waiving certain consumer protections under this law.
The supplier eventually accepted our recommendation and paid the recommended amount of R22,580.04 in full,” the mediator said.
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