The Time Share Scam, 2.0: Luxury Vacations

New York Times reporters Rukmini Callimachi and Derek M. Norman interviewed fifty people and attended a three-hour sales pitch before bringing us this story about Unlimited Vacation Club (UVC), a scammy business that overpromises, under-delivers, and causes people to empty their savings accounts after glitzy presentations at swanky tropical resorts.

In true NY Times style, after a splashy headline, the reporters acknowledge that vacation clubs have their “devoted fans.” We don’t hear much from them. Instead, we get a statement from a UVC executive who boasts that twenty percent of members upgrade because they are so pleased with the experience.  When we do hear from the satisfied customers, the endorsement is not entirely ringing. One has to work hard to get UVC discounts, researching fares and contacting UVC with screengrabs of lower prices in order to qualify for those discounts. Some describe the upgrade as yet another swindle.

The Times provides a typical account of, to borrow Oren Bar-Gill’s coinage, seduction by contract.

They said they were stuck with pricey contracts they had signed after lengthy pitches in beguiling surroundings, as copious amounts of complimentary alcohol were served to them. The pitches they heard diverged sharply from the agreement — which members described as a voluminous and dense document that they were not able to read: They were asked to sign the contract on an electronic tablet, where the text was so small it resembled the label on the back of a Tylenol bottle.

The last element of the seduction is that Hyatt has put its name and its A+ Better Business Bureau rating behind the vacation club, which has an F rating. But the Times reports that Hyatt, Marriott, and Hilton are getting out of the hotel-owning business, pivoting to franchising and management. Hyatt got UVC as a side-dish when it acquired a company that owned 99 resorts in Mexico and the Caribbean. It seems like it is interested in divesting from UVC, but meanwhile it is collecting between $60 and 70 million in royalties and fees.

Here’s a video from the company:

Notice, there was no mention of contracts, black-out dates, or restrictions in the video. There isn’t even any fine print, notifying viewers that the governing contract is subject to Panamanian law! If the sales pitch is that four-minute video multiplied by fifty, I’m pretty certain I would be immune. I don’t really drink, so the alcohol would only make me sick.

According to the article, one in five time-share buyers regret their investment, but vacation clubs are worse because you have no ownership interest. A big part of the problem is blackout dates. One couple bought a $52,000 members, hoping to book luxury hotels so that they could ski in Aspen. But the rooms were only available in summer months.

This post is brought to you via the sharp eyes of Scott Burnham, who shared the story with me. And here’s something that’s not at all a scam: The ninth edition of  Burnham & Brooks, Examples and Explanations: Sales and Leases (right), is now available for adoption for the Spring. I was a satisfied adopter of the Eighth edition, and I am in for the upgrade.