Timeshare firms need to be honest

Pushpa Girimaji
Pushpa Girimaji

I have nicknamed them dream merchants, and I stay a mile away from them. These are, presumably, agents of timeshare companies, and every time I visit this neighbourhood supermart, I see several of them asking people to fill up forms for a "lucky draw." "Just give your contact number and address, and you are sure to win a prize", they say. Sure enough, those who have filled these forms get telephone calls, informing them that they have won prizes, and are asked to come for a presentation to avail of the free offer.

Once consumers go for the presentation, they are given such a rosy picture of the timeshare concept that they end up signing for the timeshare holiday and paying hefty sums. As a concept, timesharing of holiday resorts is excellent, provided the companies use an honest, transparent and ethical approach to marketing it, instead of subterfuge and deceit that give rise to disputes.

In one particular case, for example, the clients were told that the payment of Rs 2.5 lakh each for the membership could be paid in 12 interest-free instalments, to be collected on their credit cards. They were also told that the timeshare company had a tie-up with a credit card company to facilitate this. However, when the consumers got their credit card bills for the month, they were in for a big shock — the timeshare executive who sweet-talked them into becoming a member, had debited the entire money in one go.

When questioned, the timeshare company assured the clients that the credit card company was instructed to collect the money in 12 interest-free instalments, but the bank denied any such arrangement. The consumers are now desperately trying to cancel their
membership and get back their money, but the company is not
even responding.

It is to protect people from just such malpractices that in Europe, the timeshare directive of 2009 makes full disclosure mandatory for all timeshare companies. It also regulates the contract between the consumers and the timeshare company to ensure that customers get a fair deal. Even more important, it provides for a cooling off period of 14 days calculated from the day the contract is signed, during which time the customer can cancel the contract without assigning any reason.

The directive also prohibits receipt of any advance payment throughout the cooling off period. In fact, the new directive of 2009 is an improvement on the earlier directive of 1994, which provided for a cooling off period of 10 days. In India, in the absence of any such specific consumer protection measures, people are often victims of unfair trade practices, and find it extremely difficult to cancel the contract and get back their money.

In fact till 2003, customers in India who had a raw deal vis-`E0-vis timeshare companies could not even approach courts for relief because in two of its orders delivered in 1996 and 1997, the national commission had held that such complaints did not come under the purview of the courts. It was only in 2003 that in a common order disposing off a bunch of six petitions pertaining to different holiday resorts, the apex court held that when a consumer, who purchases the right to stay in a holiday resort for a particular period, is denied that right, or the services rendered are not as agreed upon or as per standards, it is a clear case of deficiency in service on the part of the owner of the holiday resort. The consumer, who is a victim of such service, is entitled to compensation (TV Sunderasan vs Sterling Holiday Resorts — FA NO 163 of 1995).

In a bid to introduce self-regulation and ensure that timeshare companies follow ethical and fair practices, the All India Resort Development Association has formulated a code of ethics for timeshare companies, and this includes a cooling off period of 10 days within which clients have a right to cancel the contract for a full refund. AIRDA also tries to resolve disputes between timeshare companies and consumers (website: http://www.airda.org). If only timeshare companies followed this code in its letter and spirit, there would not be any complaints, nor would there be any need for the government to bring in a legislation to protect consumer interest vis-`E0-vis timeshare resorts.





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