Determining a Reasonable Deposit in terms of Section 17 of the Consumer Protection Act 68 of 2008 in the Tourism Industry

By regulating the relations between consumers and service providers, the Consumer Protection Act (68 of 2008) (CPA) is meant to provide certainty to the parties. Greater certainty reduces conflict requiring resolution through mechanisms such as the courts, which, in turn, better serves the interests of consumers and service providers alike. A good example is section 17 of the CPA. This section provides a consumer with the right to cancel an advance booking, reservation or order. In turn, the section permits a service provider to request payment of a reasonable deposit, and if the advance booking, reservation or order is cancelled, the service provider is entitled to impose a reasonable cancellation charge. Section 17(4) provides some guidance on what constitutes a “reasonable charge” in terms of the section.At first glance, these provisions appear to be rather straightforward and not to present problems in practical situations. However, it is not as straightforward as it may appear for consumers and service providers to know with some degree of certainty what section 17 permits in allowing service providers to require payment of a reasonable deposit and a reasonable charge for cancellation of an advance booking, reservation or order. What is to be understood by the right of the service provider to request a reasonable deposit and impose a reasonable cancellation charge? For consumers and service providers to understand what is permissible in terms of section 17 and what is not, a more detailed consideration of the section is required. The first question one may ask is: what constitutes a reasonable deposit and how is it to be determined? Stated differently, the question may be formulated as: when is a deposit reasonable? Answering this question, in turn, may require determining whether the reasonableness of a deposit is to be decided by having regard to the factors provided in section 17(4), or whether these factors are only to be considered when determining a charge for cancellation. Furthermore, is there a relationship between a reasonable deposit and a reasonable charge for cancellation? A final question for consideration is whether a “non-refundable” deposit is permitted in terms of the CPA, and if so, under what circumstances. The aim of this note is to consider and answer these questions.