Background
Resort Condominiums International, normally referred to as RCI, are without doubt the largest timeshare exchange company in the world.
In the early days of timeshare where owners simply owned weeks the exchange process was both simple and clear, and it worked. With the advent of floating weeks and similar developments, RCI decided to introduce a system of points. In 2002 the points programme was launched and this is where the problems started.
Because points have no specific purchase attached to them, meaning no specific apartment or property like a fixed week, there is no limit to the number of points that could be sold.
The Problem
Technically, RCI (Resort Condominiums International) points were retailed by individual resorts or developers in place of fixed or floating weeks with the result that annual maintenance fees were attached to the resort where they were purchased, this is commonly known as the “home resort”.
Taking a simplistic view: if a resort has one apartment that was sold as fixed weeks then there could only be a maximum of 52 owners, however when points are retailed the number of owners increases exponentially and in reality has no limits.
Owners became frustrated about the fact that they experienced problems in making bookings to their home resort because of the number of points owners all vying for the same booking.
Naturally the same problems occur when trying to use the exchange system; in fact the whole thing was becoming a mess. Another allegation against RCI was that availability was further damaged by the renting out of inventory to non owners, this would be pivotal in the Class Action presented later.
The Class Action
It all started with the Murillo Complaint in March 2006 then really picked up speed in January 2010 when a Class Action was presented in the United States District Court for the District of New Jersey by Anton Gentz and others, the main claim, and we quote, was as follows:
“Consumer Fraud Act by failing to provide Points Exchange members sufficient access to RCI- affiliated resorts.”
After various appeals RCI eventually reached a settlement over allegations it improperly rented timeshare inventory to non-members. This meant that owners who participated in RCI’s Points Exchange Program would be eligible for a settlement.
The settlement resolved the class action lawsuit, although RCI denied it did anything wrong, but agreed to settle the class action lawsuit settlement to resolve the litigation.
The Settlement
As stated above, RCI denied any wrongdoing but did offer a financial settlement. Members of the RCI points programme settlement included all U.S. residents who were members of the RCI Points Exchange Program, either directly or through a vacation club, on or before April 25, 2012.
Members of the RCI class action lawsuit settlement would receive one of the following cash benefits, as long as they submitted a valid claim form by the then deadline of August 24, 2012:
(1) Current RCI Point Exchange Program members will receive a $12 cash payment;
(2) Former RCI Point Exchange Program members will receive a $10 cash payment.
Victory or not?
As stated above, this litigation revolved around the RCI Points program and allegations of improper use of points by RCI. The settlement is understood to have cost to RCI approximately $19,000,000 to members of the Settlement Class, and included substantial injunctive relief. Final approval of the settlement was granted so the payouts began.
Whilst financially, individual owners had settlements not worth the paper they were printed on, the moral victory was a great success. The action of getting the mighty RCI to court was a shot across their bow indicating that ordinary people will not tolerate sharp practise by large institutions, or to be blunt, points owners were not prepared to put up with the shenanigans of RCI.
Did RCI learn from this? Probably at the time the answer was yes, but since then a lot of water has passed under the bridge and both RCI and resorts persist in selling points which to this day further exacerbates exchange problems.
A vast number of the enquiries received at TCA revolve around exchange problems, so is there any solution? Probably not.
Under the fixed week system, life was simple but given the RCI points scheme, how much resort inventory has been sold over and over again since the system was introduced back in 2002? We would guess the answer to that would be frightening.
2021 and beyond
It goes without saying that 2020 has been an extremely challenging year for the holiday industry as a whole, timeshare being no exception. A sales message often used by RCI is the ability to bank points, in a normal year this may work fine but when looking at 2020 we would ask how many points owners have been forced into banking points because of lost holidays and what effect will this have on 2021 bookings?
We think most readers will agree that the chance of the Covid pandemic being anything like under control, until at least the end of the first quarter 2021, is highly unlikely. What kind of pressure will this put on an already strained system? When holidays resume with some semblance of normality, the rush will be on to get away, both resorts and exchange programmes will simply not be able to cope. We anticipate that the RCI (Resort Condominiums International) system, along with other exchange companies and resorts may need at least 3 years to return to a level playing field.
It is certainly likely that booking a holiday will be a case of take what’s offered at a time offered. Getting where you want when you want will be almost impossible. Booking a holiday will be more of a lottery than a comfortable click of a few keys. If you have already experienced problems with the RCI system, as the well worn saying goes: “you ain’t seen nothing yet”.
Call us flippant or even cynical but maybe RCI should stand for:
Resorts you Can’t get Into
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk