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'We were ripped off': Consumer complaints prompt ASIC review of timeshare holiday schemes

Sep 13, 2017
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Updated September 13, 2017 22:41:58

Carina Gabb felt trapped. In 2014, she paid $21,000 to join a timeshare scheme she thought would guarantee cheap international holidays for the rest of her life.

Key points:

  • 175,000 timeshare members in Australia
  • Consumer complaints prompt ASIC to review timeshare holiday schemes
  • Timeshare Council says the industry contributes nearly $700 million to the economy

But three years since she signed on the dotted line with timeshare giant Classic Holidays, she had not gone on a single trip.

“We were ripped off,” she told 7.30.

“They’ve taken our money, they’ve not provided us what they’ve promised us. They mislead us.”

Ms Gabb is among a growing number of consumers who say timeshare operators are behaving unethically, and are offering a products that simply are not value for money.

She says she was told during a Classic Holidays sales seminar that after paying her joining fee, she would be able to book a four-week holiday to the United States for less than $4,000.

But she says when she received her membership details and logged on to book the trip on the Classic Holidays system, she was quoted $8,000.

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“My heart sank. I felt betrayed,” she said.

‘Those practices are disgraceful’

After a flood of complaints, the Australian Securities and Investments Commission (ASIC) is now considering introducing tougher rules to protect Australia’s 175,000 timeshare members.

The regulator is conducting a review of the sector, and has asked consumer groups and the industry for input on what changes are needed.

“We’ve received complaints about people being lured in to [timeshare] seminars really under false pretences,” Katherine Temple from the Consumer Action Law Centre said.

“What people find once they arrive at these seminars is that they’re subject to very high-pressure sales tactics and they feel a lot of pressure to sign up to what is essentially a very poor value product.

“And, really, those practices are disgraceful and we would like to see them stopped.”

The Australian Timeshare and Holiday Ownership Council (ATHOC) is contributing the review, but it has warned ASIC against making drastic changes.

“We do hope … that full and complete consideration has been given to the effect any changes may have on existing timeshare owners and the future growth of the industry which currently contributes more than $692.5M annually directly into the Australian economy,” ATHOC’s general manager Laura Younger said in a statement.

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The timeshare industry has evolved significantly since the early holiday ownership schemes started to emerge in Australian in the 1970s.

Under early schemes, members would pay for access to a particular property for a number of weeks each year.

Australia’s biggest timeshare providers, which include Classic Holidays, Accor Vacation Club, Ulitiqa and Wyndham Vacaton Resorts, now offer points-based schemes.

Under most schemes, members pay a joining fee in return for an annual allocation of points — which can be used to purchase accommodation in Australia and overseas.

For higher-end trips, members have to pay to buy extra points.

Schemes ‘poor value’

Consumer group Choice argues that points-based programs “hide the poor value of schemes”.

It says many consumers would be better off booking holidays themselves.

“Points schemes appear to be deliberately complex,” Choice said in its submission to ASIC’s review.

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However, Ms Younger said there was no sign that members were unhappy with points-based schemes.

“There are more than 81,000 owners participating in points-based clubs within Australia who regularly use their points for holidays which is testament to the popularity of this product,” she said.

“Owners in points-based clubs have increased flexibility and can use their points for both accommodation as well as cruises, car hire, airfares or other holiday related purposes.”

Ms Gabb has tried repeatedly to cancel her Classic Holidays membership, but there is no exit clause in her contract.

The contract requires her to pay an annual membership fee for 80 years — until she is 110 years old.

However, after being contacted by 7.30, Classic Holidays said it had cancelled her membership because of unpaid annual fees.

Ms Gabb said she had not received any notification that her membership was cancelled.

Classic Holildays denied Ms Gabb was misled at its sales seminar, saying that the price quoted for the US trip was not all-inclusive.

Topics: consumer-protection, tourism, australia

First posted September 13, 2017 20:12:20

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