Schools' blanket 'no refund' policy is illegal

In terms of the Consumer Protection Act (CPA), consumers may cancel advance bookings and be refunded what they paid, minus a 'reasonable' cancellation penalty.
In terms of the Consumer Protection Act (CPA), consumers may cancel advance bookings and be refunded what they paid, minus a 'reasonable' cancellation penalty.
Image: PaylessImages

Is it legal for private schools to force prospective parents to pay a hefty deposit or fee to enrol their child, and then refuse to refund a cent of it if they choose not to send the child to the school?

No, it’s not, says Consumer Goods and Services Ombud Magauta Mphahlele.

Such a blanket “no refunds” policy is illegal, thanks to the Consumer Protection Act (CPA).

In terms of the CPA’s Section 17, consumers may cancel advance bookings and be refunded what they paid, minus a “reasonable” cancellation penalty.

But some private schools appear to regard a “reasonable” cancellation penalty as 100% of all deposits or enrolment fees paid by prospective parents.

In June, Dineke Daniel of Plumstead, Cape Town, applied to enrol her daughter at Curro Century City for Grade 1 next year, and was asked to pay a R5,000 deposit to secure her place. Having reconsidered, given the travelling distance, Daniel e-mailed the school in mid-October to say the child would no longer attend the school.

“I was then told that the deposit was completely non-refundable,” she said.

The school sent her a letter stating: “It is common practice in the independent school environment that an enrolment is secured by the payment of a deposit. “The school’s application for admission indicates that the required deposit is a non-refundable deposit.”

It goes on to say that retaining the entire deposit is a reasonable cancellation fee as the reservation “effectively disqualifies” a potential other pupil from being accepted due to limited space. There were administrative costs involved in “uploading the learner on all the school’s systems” and a cancellation had “financial and other costs” for the school, Curro Century City told Daniel.

Mphahlele said the timing of the cancellation notice given by a parent would influence the extent to which a school would be able to find a replacement pupil.

“If there is a high demand in the context of limited space, one could assume it would not be difficult for a school to find a replacement, depending on when the cancellation took place.”

The CPA requires schools to “act diligently” to find a replacement consumer from the time of receiving the cancellation, she said.

“In this regard the ‘general practice’ of the private school industry would need to be considered.

“For example, it is well known that private schools keep waiting lists which are used to fill up vacancies that occur as a result of cancellations. The school would need to disclose if they have waiting lists and when and how these are applied.”

Companies, private schools included, are required to prove that their cancellation penalty is not unreasonable, the ombud said, such as the actual cost of admitting a new student, the actual or potential loss of income suffered; and the steps they took to find a replacement and any constraints they had.

“That information would assist in determining whether retaining 100% of the deposit is fair as per the requirements of section 17,” Mphahlele said.

Responding, Curro’s marketing and communication head Mari Lategan said that when Daniel cancelled her daughter’s enrolment, the school, relying on the terms and conditions set out in the admission form, told her that the deposit was non-refundable. “The school will never at that point repay any deposit before duly obtaining inputs and authorisation from the finance department at Curro head office,” she said.

Daniel’s matter was subsequently referred to head office “for inputs on the consideration of the possible repayment of the deposit and/or whether a portion of the deposit should be set off as a reasonable charge”, she said.

It was then decided to refund her in full, Lategan said.

“The financial department had not yet communicated this to the school and before that could be done, the school received and escalated TimesLIVE’s e-mail.”

Curro was “totally in agreement” with the Ombud’s views and did not interpret the CPA any differently, she said.

“Curro would always have considered (Daniel’s) request once it was escalated to head office and her deposit would have been refunded irrespective of her approaching TimesLIVE, and/or any other authority.”

She said Curro would review “the necessary protocols” to ensure that its schools “communicate the position better and more accurately to parents in future cases which may well occur”.

 

  • What if a school calls the amount parents are required to pay in advance to secure their child’s place an “enrolment fee” rather than a deposit? Consumer Goods and Services Ombud Magauta Mphahlele said a consumer would still be entitled, in terms of the CPA, to cancel at any time with 20 business days’ notice and the school would still be required to refund, minus a “reasonable” cancellation penalty.
GET IN TOUCH: You can contact Wendy Knowler for advice with your consumer issues via email: consumer@knowler.co.za or on Twitter: @wendyknowler

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