Time for a break
In July 2014 Tania and Thomas went to their local shopping mall and were given a scratch and win card from Timeless Trips, a timeshare operator. They were guaranteed a prize of one of an ipad, travel vouchers or an overseas holiday, plus a chance to win $100,000. To confirm their prize and enter the draw for $100,000, Tania and Thomas had to attend a 90 minute seminar 2 weeks later explaining Timeless Trips’ memberships.
Arriving at the seminar, Tania and Thomas were told the $100,000 draw would actually take place later in the year. Their prize was Timeless Trips’ travel vouchers that they could use at one of Timeless Trip’s resorts.
During the seminar, Tania and Thomas were given a hard sell by Timeless Trips’ agents. After 90 minutes of convincing, Tania and Thomas signed up to a lifetime membership for $26,990. They paid a deposit of $2,739.47 and agreed to finance the rest at 14.9% interest per annum. The membership balance totalled $43,572.48 to be paid over 7 years in instalments of $518.72 per month.
Tania and Thomas were given all the disclosure documentation about Timeless Trips. They were told to not worry and put it away until their membership cards arrived.
Tania and Thomas returned home, put the documents under the bed, and forgot about them until the next month when their membership cards arrived and they had to pay the first instalment.
After paying for the first 3 instalments, Tania and Thomas felt that they were unlikely to be able to get their money’s worth out of Timeless Trips as they were at best only able to holiday once every 2 years. Tania and Thomas contacted Timeless Trips to cancel the contract.
The complaint
Timeless Trips told Tania and Thomas they had no grounds for cancelling the contract. As far as Timeless Trips were concerned changing your mind did not relieve Tania and Thomas of their obligations under the contract. Timeless Trips referred to their disclosure and in particular the cooling off statement which allowed for cancellation for any reason within 7 days of signing the contract. Outside of this 7 day period, the only option available was for Tania and Thomas to sell their interest to another party. Tania and Thomas said they had not been made aware of the 7 day period of cancellation and were led to believe they could cancel at any time. Tania and Thomas were not interested in putting someone else in their position and wanted to cancel their membership for a refund.
Timeless Trips’ position
Timeless Trips was of the view that the contract and disclosure documentation were clear about the rights of cancellation and the contractual obligations. Timeless Trips did not believe that its staff had in any way misled Tania and Thomas and they had made the decision of their own volition. The contract was clear that after 7 days there was no right of cancellation and in order to extract themselves they had to sell their membership to another customer.
FSCL’s involvement
We investigated and found:
- The disclosure documents were accurate and included the cooling off period limited to 7 days.
- Although the presentation had been a “hard sell”, Tania and Thomas were free to leave the seminar at any time and were not coerced into the contract.
- There was insufficient evidence to conclude Timeless Trip’s agents had misrepresented the memberships or the contract or misled Tania and Thomas.
- Tania and Thomas had the opportunity to read and understand the disclosure documents before signing the contract and to consider them in the 7 day cooling off period.
Outcome
We helped to negotiate a settlement. Timeless Trips agreed to Tania and Thomas downgrading their membership to a 20 year term with a $10,000 subscription price difference. Taking into account the deposit and monthly instalments already paid by Tania and Thomas, they had to pay a balance of almost $12,000 to Timeless Trips, which they were able to pay without having to organise finance and pay further interest.
Lesson
Do not sign on the dotted line unless you are sure you want the service you’re signing up for. Most financial services will provide you with a full product disclosure, you should read this carefully as it will set out the terms of your contract. A right to cancel is not an inherent right and unless it is specifically recorded, you may not be able to cancel without paying a financial penalty.
