SuperSpark explains holding deposits and the CPA

Jacobus from Bloemfontein wants to know when it would be considered legal to withhold a holding deposit if a deal does not materialise?

He writes:

Dear SuperSpark,

“A customer paid a holding deposit on a vehicle and asked us to keep the vehicle for two weeks after which the remaining funds would have been available.

We contacted the customer after two weeks. He then informed us that he had subsequently bought a different vehicle from another dealership and wanted his deposit refunded.

What are my rights given these circumstances?”

SuperSpark replies:

Dear Jacobus,

Holding deposits are not described under the CPA as such, but will fall under the section for lay-by’s. Section 62 (4) (a) stipulates that you may charge a termination fee, subject to subsection (5) and (6).

You may not charge:
(a) if the customer has passed away or in the case of hospitalisation
(b) if the customer was not informed of the penalty before paying the holding deposit

The Act regulates the maximum amount that may be charged in regulation 35 (1) “a penalty shall be reasonable but may not exceed one percent of the full purchase price of the goods.”

As none of the provisions above apply, you are entitled to a cancellation fee within the described parameters.

Gotta fly…


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