While Mike and Liz were on holiday in the Gold Coast, they attended a timeshare presentation. When Mike and Liz were shown through the apartment, they felt bombarded with information from four different people. Mike and Liz say they asked on multiple occasions if they were able to get out of the deal if they changed their minds and were told that they could. Mike and Liz signed both the application form to join the timeshare and a loan application to borrow $20,000 to pay the membership joining fee.
When Mike and Liz returned to New Zealand, they were unable to use the booking system, and discovered there were only three timeshare locations in New Zealand. They contacted the timeshare provider and said they wanted to cancel their membership. The timeshare provider said this was not possible, they were locked in for 30 years, but could sell the membership to someone else.
About a year later Mike lost his job, and they could not afford the loan repayments. Mike and Liz again asked to cancel the timeshare membership and loan agreement. The timeshare provider declined their request, but did offer to assess a hardship application.
Mike and Liz were not satisfied with the timeshare provider’s response and complained to FSCL.
Mike and Liz said that they were told when they purchased the timeshare membership that they could cancel it at any time. They were so bamboozled by information at the time that they did not realise they were also borrowing $20,000 to join the timeshare and thought they were only committing to meet annual membership fees. In addition, Mike was now unemployed and they could not afford the loan repayments. Mike and Liz said they were unlikely to ever be able to travel to Australia to stay at the timeshare and wanted to cancel the timeshare membership and the loan agreement.
The timeshare provider did not accept that its staff would have told Mike and Liz that they could cancel the membership. The documentation clearly explained that the membership was for 30 years, and that the timeshare provider does not offer a resale service. Mike and Liz had signed the loan agreement and were obliged to meet the payments. The timeshare provider declined to release Mike and Liz from their obligations, but did offer to credit the account with membership points so that Mike and Liz could use the timeshare and a 12-month interest-free period on the loan to catch up missed payments.
We reviewed all the information and decided to ask the timeshare provider to reconsider, and release Mike and Liz from their obligations. Although the timeshare provider did not offer a buy back service, the agreement did allow the timeshare provider, at its discretion, to redeem a membership. We explained that we felt the timeshare provider should redeem the membership and cancel the loan agreement because:
- Mike and Liz’s financial situation had deteriorated when Mike was made redundant
- Mike and Liz had asked, shortly after joining, to be released and had not received any benefit
- we were concerned that the sales process came uncomfortably close to raising issues of duress, unconscionability and Fair Trading Act issues.
The timeshare provider did not accept any fault on its part, but agreed to release Mike and Liz from their membership obligations and cancel the loan agreement. Mike and Liz were delighted with the outcome.
Insights for consumers
When you are on holiday your defences may be down, and you might be tempted to agree to a proposal that would ordinarily raise alarm bells for you. We encourage you to take your time. There is no need to sign documents on the day. Take the documents home with you so that you can read them and, if necessary, ask your lawyer for advice before proceeding.