A 63-year-old Classic Holidays member Bindi Shah was recently told that her scheme runs until 2085 with no exit option, and that it will pass on to her children
This would mean an additional $177,000 in fees at a minimum. Meanwhile, bookings are available at a fraction of the cost outside the scheme
CHOICE has lodged five official complaints with ASIC about timeshare schemes since 2016. In 2021, we lodged a “super complaint” to the regulator
Bindi Shah only found out that she can’t get out of the 71-year Classic Holidays timeshare scheme she signed up to in 2014 when she recently called to ask.
The curt response from the Classic Holidays consultant was a far cry from how the whole thing started. She was handed a scratch-and-win card at a shopping mall that promised a free holiday as long as she attended a Classic Holidays timeshare seminar in the Sydney suburb of Parramatta.
There she was effusively promised discounts of up to 50% on accommodations around Australia. All she had to do was pay $22,000 up front to join the scheme, which she did, and then pay the annual fees. These have gone up steadily and now come in at around $3000.
The value proposition of the scheme has deteriorated significantly
Classic Holidays member Bindi Shah
The program seemed to deliver what it promised at first, though the 50% discounts never came through and the complicated points system made it impossible to know if she was really getting a bargain. Now Bindi, who is 63, is sure that not using the scheme is more cost-effective than using it, even though she has to keep paying the fees.
“In recent years, we have consistently found accommodation prices through Classic Holidays to be higher than those offered by public online travel platforms such as Booking.com,” Bindi says.
“Plus, the scheme’s restrictive cancellation terms compare unfavourably with the flexible 24‑hour cancellation options commonly available elsewhere.”
“Not only is it more expensive, but there are all these restrictions and conditions. There’s no flexibility at all. The value proposition of the scheme has deteriorated significantly.”
Nowhere in the contract anywhere can I find that you can’t cancel
Classic Holidays member Bindi Shah
Bindi’s understanding is that her scheme runs until 2085 – far longer than she’d like to keep it. But when she recently contacted Classic Holidays to cancel it, she was shocked to learn that she couldn’t. This came as news to her. It would mean an additional $177,000 in fees by the time the scheme comes to an end, and that’s only if they stayed at $3000 a year, which is unlikely.
“Nowhere in the contract anywhere can I find that you can’t cancel,” Bindi says. “And when we originally signed up, there was no explanation that there was effectively a no exit clause for the membership.”
This story of being stuck in a timeshare scheme is just one of many that CHOICE has reported on. We also surveyed 351 timeshare members in 2021, around 30% of whom said they would have liked to cancel their membership but couldn’t.
In 2018 we handed a Shonky award to Marriott Vacation Club, a 40-year timeshare scheme whose costs for a one-week booking per year were 938% more over the life of the contract than similar accommodations available on online booking sites.
Marriott’s scheme may have been the worst of the bunch at the time, but we also pointed out that the value for money propositions from other timeshares schemes – including Accor Vacation Club, Classic Holiday, Ultiqa Lifestyle, Wyndham WorldMark South Pacific Club – were also extremely poor.
A timeshare scheme is a financial product and operators need to have a financial services licence, which all the major ones do.
Timeshare members are often unable to find key terms in their contracts that scheme providers say are binding.
It’s a credential that would seem to confer a sense of above-board legitimacy, but timeshare schemes operate on the dark fringes of the financial sector. Nonetheless, they are regulated by the Australian Securities and Investments Commission (ASIC), which has taken steps to provide better protections for timeshare customers in recent years. CHOICE was involved in the consultations leading up to these changes.
In 2020, for instance, ASIC imposed new rules around fee transparency and hardship support. The regulator also made it mandatory to let prospective members know both in writing and verbally how these complicated schemes actually work and the risks they involve.
CHOICE has lodged five official complaints with ASIC about timeshare schemes since 2016. In 2021, we lodged a “super complaint” to ASIC, alleging at least eight industry-wide breaches of financial services laws.
But regulations only go so far when the deal is financially unsound to begin with. ASIC makes clear that two of the most concerning conditions of these schemes – that the only way to get out of one is by selling it, and that they pass on to your children – are enforceable, though the Classic Holidays contracts that CHOICE has reviewed don’t contain these terms.
Bindi has tried to persuade her children to use her Classic Holidays bookings, but they say it’s much easier and cheaper to just book directly with the property or through an online booking service. They don’t want any part of Classic Holidays, even though they’re apparently due to inherit the scheme along with the annual fees. This is a condition that timeshare members discover when they try to exit a scheme. It is not included in the Classic Holidays contracts that we’ve reviewed.
It has also been widely reported that timeshare schemes are very difficult to sell, but that wouldn’t be an option for Bindi anyway.
If they had said, ‘you know, you won’t be able to get out of this’ from the beginning, then we might have thought twice about it
“The Classic Holidays consultant suggested that I could use one of their brokers to sell the membership for a fee. I told him that I felt it would be unethical to sell the scheme to someone else,” Bindi says.
“If they had said, ‘you know, you won’t be able to get out of this’ from the beginning, then we might have thought twice about it. How can you have someone having a managed scheme where there is no way out? It’s just unethical.”
We asked Classic Holidays to provide examples of documents provided to members saying they can’t exit the scheme and explaining that it goes into a member’s estate upon their death. We didn’t get a response.
Timeshare operators are required to be members of the Australian Financial Complaints Authority (AFCA). If you feel you’ve been misled by a timeshare operator, lodge a complaint with AFCA.
If you’re in financial hardship, ASIC regulations allow timeshare operators to release members from schemes in cases where the scheme constitution permits hardship withdrawals.
If the timeshare operator has arranged finance for the initial lump sum membership payment ($22,000 in Bindi’s case), you can cancel the scheme even after the cooling off period if the loan has not yet been provided.
In 2022, the Federal Court found that the timeshare scheme Ultiqa breached financial advice laws by failing to take the best interests of target customers into account and leading them into schemes they couldn’t afford. If a timeshare scheme has arranged finance for your membership, you may be able to challenge whether the advice you received was appropriate for your circumstances.
If you’re trying to sell a timeshare scheme, be particularly wary of scammers posing as brokers or resellers.
Andy Kollmorgen is the Investigations Editor at CHOICE. He reports on a wide range of issues in the consumer marketplace, with a focus on financial harm to vulnerable people at the hands of corporations and businesses. Prior to CHOICE, Andy worked at the Australian Securities and Investments Commission (ASIC) and at the Australian Financial Review along with a number of other news organisations. Andy is a former member of the NSW Fair Trading Advisory Council. He has a Bachelor of Arts in English from New York University. LinkedIn
Andy Kollmorgen is the Investigations Editor at CHOICE. He reports on a wide range of issues in the consumer marketplace, with a focus on financial harm to vulnerable people at the hands of corporations and businesses. Prior to CHOICE, Andy worked at the Australian Securities and Investments Commission (ASIC) and at the Australian Financial Review along with a number of other news organisations. Andy is a former member of the NSW Fair Trading Advisory Council. He has a Bachelor of Arts in English from New York University. LinkedIn
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