Resort Condominiums International [RCI]was firstly the defendant in a Class Action Legal Suit in the USA. Coincidentally another claim was issued the same day whereby many consumers alleged improper rentals and fraud. The two separate class action were co-incidentally filed on March 14, 2006, in New Jersey.
They both levelled the allegation that RCI fraudulently marketing its exchange programs because weeks that are space banked or converted to points by RCI. They then rented out the weeks to the general public instead of keeping them available for exchange by weeks and Points members.
The suits alleged RCI makes more money from renting the weeks than it makes from the exchange fees, and that rentals of prime weeks are made to non-members through a variety of websites vehicles which retained secret agreements with RCI.
In one legal action, Murillo v. Resort Condominiums International, filed in the United States District Court for New Jersey, included an introduction summarizing the allegations as follows:
“As RCI tells it, each member can deposit his or her timeshare with RCI, thereby making it available for other members of the program and can then withdraw a timeshare [that] another member has deposited”.
“A key selling point is that only members of the program can access the deposited timeshares. This concept of a one-for-one exchange exclusively among RCI members is RCI’s bedrock marketing principle. Unfortunately, RCI creates this image of its program through a uniform fraudulent, deceptive and unconscionable marketing scheme”.
“In practice, the RCI members are not the only persons with access to the timeshares. While RCI members deposit their timeshares into the system, RCI does not make all these timeshares available for exchange. Instead, RCI skims a large percentage of the timeshares from the system, including many prime timeshares, and rents these out to the general public for profit”.
“RCI also uses these timeshares for promotional purposes and as fringe benefits for its employees, further depleting the number of timeshares available for member exchanges”.
“Through these and other business practices, RCI converts many of the prime timeshare deposits into cash, leaving much less desirable timeshares in the system for member exchanges. As a result of these fraudulent practices, the actual experiences of many RCI members is that no matter how meticulously they follow RCI’s rules and procedures, no matter how far in advance they begin looking for an exchange, they simply cannot find any comparable exchanges”.
“RCI profits by these practices at the expense of its members, whose timeshares and RCI “benefits” are rendered virtually worthless.”
In the Murillo consumer complaint, it further alleged that despite RCI’s claims that the timeshares rented to the general public are weeks that RCI members historically do not want or use, many prime vacation weeks are being rented. In saying this RCI attempted to explain away that these rentals of prime weeks, with what was expressed as a “cover story” in that the prime weeks were deposited in exchange for a cruise or plane ticket and thus did not come from the timeshare exchange inventory.
However, according to the consumer, the majority of these prime weeks “was deposited by RCI members in good faith to support the concept of one-for-one exchange.”
The allegations of the Murillo included claims that a portion of the RCI booth at recent ARDA trade show suggests that RCI secretly enters into agreements with third-party vendors who purchase high demand timeshare weeks which had been deposited by members and resold them to the general public through various Web sites while concealing any relationship with RCI.
The prime weeks available for exchange were further diminished, according to the consumer, by RCI’s practice of giving its employees free use of these weeks and using such prime weeks for the promotion of other products sold by RCI affiliates.
The second class action was also filed in New Jersey Superior Court in that the consumer Chace headed the charge in Chace v. Resort Condominiums International, coincidentally he made the same basic allegations: RCI, despite its public pronouncements to the contrary, uses weeks deposited by members to provide inventory for its various affiliated rental programs. Both the Murillo and Chace legal actions include a count that RCI’s misrepresented its rental programs constituting a violation of New Jersey’s Consumer Fraud Act which entitled the Plaintiffs to triple damages.
The relief sought by the consumer groups was a refund of all amounts of money received by RCI and “other appropriate legal and equitable relief,” and an order barring RCI from continuing to rent prime weeks out of the exchange inventory if consumers were able to prove their allegations.
RCI’s attorneys, Pitney Hardin upon receipt of the legal action filed a motion to remove the New Jersey case from the state court system to the Federal Court. Both suits were then assigned to the same Judge and it was likely that both will become a consolidated into one case since they involve similar allegations.
When contacted for comment about these lawsuits, RCI’s Ray Shepherd stated: “RCI’s policy is to not comment on matters in litigation.” The consumer’s attorney in Chace v. RCI was Mr David C. Berman and In Murillo v. RCI, the consumer’s local counsel was Christopher M. Placitella backed by law firms in New York, Washington, DC and Illinois.
It was welcoming news to many in the USA that RCI’s practices are being challenged. When interviewed on member stated “As a member since 1978 with resort weeks located in Hawaii with excellent trading power, I found it harder and harder to exchange once the weeks were deposited. In fact, last year I had been searching for two weeks in Myrtle Beach for almost a year until, at the end, I had to forego the search and rented the weeks from RCI instead. It seems there are so many weeks available on their rental program and very little when it comes to exchanging weeks. It’s amazing to see the deals sometimes on extra vacations and all the availability and no match when it comes to being exchanged. Antonia Del Gaudio, I definitely agree that RCI weeks members should join together to sue RCI. I have had requests in for two years for a dozen different resorts in Florida in the winter and never got them. That is after depositing my resort two years in advance. I also am a member of Interval International and they have found me great resorts also. For two years, I wondered why there was such a difference.
In December 2008, a settlement was agreed in the class action lawsuit – Murillo vs. RCI Below you will find the terms and conditions of the settlement benefits in their latest form, which might have been subject to slight change.
.Murillo vs. RCI Settlement Conditions II.
TERMS AND CONDITIONS OF THE SETTLEMENT BENEFITS RCI shall make available to all Settlement Class Members the changes and benefits in this Section II (the “Class Benefits”), such benefits to be in addition to any vouchers, discounts, refunds, or other benefits of any kind that may be available to RCI Weeks Exchange Program Members as of the Execution Date other than as set forth in this Settlement Agreement.
- Member Disclosures. RCI will disclose the following information to any Member (as to Corporate Participants, such information shall be provided only to the extent the Third Party Entity with which the Corporate Participant is affiliated reflects Trading Power in values for communication to the Third-Party Entity’s owners), provided that a Member properly submits to RCI the information regarding the Member’s Vacation Time that is otherwise required by RCI to make a Deposit (e.g., week number, resort J.D., bedroom size, and kitchen size):
- Disclosure of Trading Power. a. RCI shall disclose, to any Member who owns Vacation Time, the Trading Power for that Vacation Time prior to the Member’s actual Deposit of the Vacation Time, subject to the following:
(i) the Member requests the disclosure more than fourteen (14) days and less than two (2) years prior to the starting date of the Vacation Time that is the subject of the Member’s proposed Deposit; and
(ii) RCI will provide the Member with the Trading Power of the Member’s Vacation Time that RCI has assigned based on the assumption that the Deposit will take place on the same day that the Trading Power is determined by RCI, and RCI will concurrently and prominently disclose that, if the Deposit is not made that day, the Trading Power subsequently may be affected by the factors enumerated in Section IX.
- below, and thus is subject to change until the time of actual Deposit. In conjunction with a Member’s actual Deposit of Vacation Time in accordance with the applicable Terms and Conditions, RCI will disclose the assigned Trading Power of the Deposit to the Member.
- RCI will provide information to any Member regarding
(a) Member Exchanges over the prior two years by region and sub-region (if applicable), calendar month, average Trading Power of confirmed Exchanges, and average historical supply, and
(b) currently available Inventory for which the Member’s Vacation Time has sufficient Trading Power to effect an Exchange, including the current Trading Power of the available Inventory based on the assigned Trading Power of the Member’s Vacation Time and in accordance with the applicable Terms and Conditions. For example, provided that a Member properly submits to RCI the information that otherwise would be required to deposit the Member’s Vacation Time (e.g., week number, resort LD., bedroom size, and kitchen size), RCI will disclose to that Member currently available Inventory for which the Member’s Vacation Time has sufficient Trading Power to effect an Exchange. RCI’s disclosure of available Inventory is not and shall not be construed as a representation or guaranty that such Inventory will be available for Exchange at the time the Member deposits the Vacation Time. A list of the regions and sub-regions currently used by RCI in conducting searches to effect an Exchange, which is subject to change by RCI in the normal course of business, is annexed to this Settlement Agreement as Attachment 4.
- The information identified in subsections II.A.l and ILA.l.b shall be provided only to Members who own the Vacation Time for which information is sought, are in compliance with the applicable Terms and Conditions and have a valid log-in identification, password, and/or personal identification to use RCI’s web-based or automated systems. Such information shall be made readily available on a website regularly maintained by RCI.
- Nothing in this Section II or in this Settlement Agreement shall require RCI to disclose the methodology for calculating Trading Power, including but not limited to any formulae, algorithms, or calculations.
- The information identified in subsections II.A.l.a and II.A.l.b shall be made available beginning on or before August 31, 2010 and continuing for a period of two (2) years from the date on which such information is first made available by RCI in accordance with this Section II.A.! or August 31, 2012, whichever is earlier.
- Balancing of RCI Deposits and Rented Inventory. RCI represents that, on a calendar year basis and by Trading Power Segment, the aggregate quantity of Vacation Time that is deposited by Members and is rented by RCI shall be less than the aggregate quantity of Inventory and Alternative Inventory that RCI or others deposit or contribute, or that RCI otherwise permits to be contributed for Exchange, except that this representation excludes (a) the quantity of Vacation Time that Members deposit to acquire Alternative Inventory (as measured by the aggregate Trading Power of such Vacation Time), and
(b) Vacation Time that is not the subject of a Confirmation ninety (90) days prior to the start date of that Vacation Time.
- Disclosure of Weeks Program Activity. RCI agrees that, for the calendar year ending December 31, 2008, and for at least two calendar years thereafter, RCI shall make information available to all Members regarding activity in the RCI Weeks Exchange Program, by Trading Power Segment, during the prior calendar year. Such disclosure shall be in addition to any statutory disclosures RCI may or may not provide. RCI may determine the timing, frequency, and form of such disclosures, provided that the information disclosed by RCI shall include the following:
(I) the total number of units of Inventory deposited more than ninety (90) days prior to the starting date of the deposited Vacation Time, showing the number of such units deposited by each of Members, RCI, or others
(2) the number of Exchanges in the RCI Weeks Exchange Program completed more than ninety (90) days prior to the starting date of the deposited Vacation Time, including the total number of Exchanges involving Members’ Vacation Time exchanged for other Members’ Vacation Time, the total number of Exchanges involving Members’ Vacation Time exchanged for Inventory or Alternative Inventory deposited by RCI, and the total number of Exchanges involving Members’ Vacation Time exchanged for Inventory or Alternative Inventory deposited by others;
(3) the total number of units of Inventory that were not the subject of an Exchange; and
(4) the total number of units of Inventory that were deposited by Members and rented by RCI more than ninety (90) days in advance of the starting date of the deposited Vacation Time.
- Disclosures to New and Enrolling Members. On or before August 31, 2009, RCI shall, to the extent legally permitted, require Affiliated Resorts to provide new and enrolling Members with information and disclosures regarding the RCI Weeks Exchange Program. This information and these disclosures shall, at a minimum:
(I) explain the manner in which Trading Power shall be disclosed to individual Members;
(2) identify all of the factors that impact Trading Power and the Exchange of Vacation Time; and
(3) provide the most recent compilation of data made available to Members pursuant to Section II.A.(2) above. RCI will monitor the compliance of a sample of Affiliated Resorts in providing the information identified above to new and enrolling Members and, as to Members who provide RCI with a valid e-mail address, RCI shall conduct a post-emolument survey regarding the application and disclosure process, and RCI shall promptly address any responses in the post-emolument survey that RCI identifies as a deficiency in Affiliated Resorts’ disclosures with the intention of correcting the deficiency.
- Priority for Weeks Program Exchange Fulfilment. Commencing on or before August 31, 2010, and continuing for a period of two
(2) years from the date on which the benefit provided in this Section ILC is first made available by RCI or August 31, 2012, whichever is earlier, each Deposit of Vacation Time for the purpose of an Exchange right, made more than one year in advance of the starting date of such Vacation Time, shall be available exclusively for Exchange by Members and eligible members of the RCI Points exchange program (subject to balancing as required by Section II.A.(2), above) for a period of thirty-one (31) days from the date of Deposit, including the initial Deposit day, and shall not be available for any other purpose, including, without limitation, Rental. In addition, upon each such Deposit of Vacation Time, as well as with respect to Deposits made less than one year in advance of the starting date of the deposited Vacation Time, RCI will make available that Vacation Time to satisfy an active and pending Exchange Request, based on the Trading Power criteria set forth in Section IX.A below. If no such Exchange Request exists upon the Deposit date, RCI will make the deposited Vacation Time available for both Exchange and Rental, should RCI wish to offer the Vacation Time for Rental. Notwithstanding the foregoing in this Section ILC:
- RCI may exchange Vacation Time with other exchange programs for the purpose of balancing exchange systems as described in subsection ILA.(2), above, or for the purpose of enhancing Member satisfaction;
- RCI may, at any time, rent or otherwise dispose of any Vacation Time that
(a) is acquired by RCI and is in excess of the amount of Vacation Time that RCI deposits or has deposited, if any, for the purpose of balancing Inventory available to Members as set forth in Section ILA.2 of this Settlement Agreement or
(b) is not the subject of a Confirmation ninety (90) days prior to the starting date of that Vacation Time;
- Although not included within the definition of a Member, RCI may, in its sole discretion, permit an Affiliated Resort to make a Deposit and perform an Exchange and provide the Deposit or resulting Confirmation to a Member subject to the terms of this Section ILC and the Terms and Conditions; and
- To the extent there is a conflict between the provisions of this Section ILC and the terms of any agreement between RCI and Affiliated Resorts that may limit or otherwise relate to the availability of a Deposit, including but not limited to limitations on the ability of a Member to Exchange for Vacation Time that is located within a certain radius of the Member’s Deposit, the terms of RCI’s agreement with the Affiliated Resort shall control.D. Expiring Deposit Recognition. Settlement Class Members, excluding Former Members, who are identified on the list annexed to this Settlement Agreement as Attachment
5, may elect to receive a $30 credit applied toward the Member’s next Exchange. Not later than April 6, 2009, an eligible Settlement Class Member seeking the benefit available in this Section ILD must complete and submit directly to RCI a Claim Form to be made available via a link posted on the RCL com website or, upon request, by U.S. regular mail, in accordance with the terms and procedures set forth in such Claim Form. Eligible Settlement Class Members were identified on Attachment 5 based on the following criteria:
(1) the starting date associated with said Member’s Vacation Time is between January 1, 2000 and August 31, 2008;
(2) the Member paid RCI to extend, for a minimum of six months, the ability to apply the Deposit toward an Exchange;
(3) the Member-initiated and maintained a Properly Submitted Exchange Request for a period of at least thirty (30) consecutive days;
(4) the ability to apply the Deposit toward an Exchange expired; and (5) the Member did not confirm an Exchange against that Deposit. The credit available under this Section ID shall be redeemable from August 31, 2009, through December 31, 2009. E. Additional Benefits for Current Members. In addition to the benefits set forth above, a Settlement Class Member who is a Member in good standing may select, at his or her sole option, one of the following five additional benefits, subject to the terms, conditions, and limitations set forth in this Settlement Agreement, by completing and submitting directly to RCI a Claim Form to be made available via a link posted on the RCLcom website in accordance with the terms and procedures set forth in such Claim Form. 1. Request First. If a Settlement Class Member selects this benefit, RCI shall provide the Settlement Class Member with the opportunity to search Inventory and make an Exchange Request prior to depositing Vacation Time, and such opportunity shall expire upon the earlier of
(a) the date on which the Settlement Class Member effectuates an Exchange and
(b) two (2) years after the Effective Date. A previous, unexpired Deposit may not be used in connection with Request First. In order for a Settlement Class Member to use this benefit and to properly identify Inventory for which the Settlement Class Member’s Vacation Time has sufficient Trading Power to effect an Exchange, the Settlement Class Member must provide the starting and ending dates, resort LD., bedroom size, and kitchen size of the Settlement Class Member’s Vacation Time to be deposited, and the starting date of the Settlement Class Member’s Vacation Time must be at least nine months into the future. No Exchange Fee shall be required by RCI in connection with the use of Request First unless and until an Exchange Confirmation is made. If the Request First search identifies a desired Exchange, the Settlement Class Member must Deposit the Vacation Time at the time of the Exchange to confirm the Exchange.
- Membership Renewal Credit. If a Settlement Class Member selects this benefit, RCI shall provide the Settlement Class Member with one of the following:
(a) Members (excluding Corporate Participants) whose RCI Weeks Exchange Program membership expires within two years of the Effective Date shall be given a two-month extension of their RCI Weeks Exchange Program membership; and
(b) Members (excluding Corporate Participants) whose RCI Weeks Exchange Program membership expires more than two years after the Effective Date can elect either
(i) a two-month extension of their RCI Weeks Exchange Program membership,
(ii) a $20 credit toward an RCI Weeks Exchange Program membership renewal, which shall be added to the Member’s current subscription term, or
(iii) a $20 credit toward the Member’s next Exchange, which credit shall be valid through the date that is two years past the Effective Date, provided that the starting and ending dates of the Vacation Time that is the subject of the next Exchange to which the credit will apply may take place at any time.
- Prorated Refund of Subscription Fees. If a Settlement Class Member selects this benefit, the Settlement Class Member’s membership in the RCI Weeks Exchange Program shall immediately terminate, and RCI shall provide the Settlement Class Member with a prorated refund of his/her Subscription Fee and a full refund of fees paid by the Settlement Class Member for pending Exchange Requests.
- Free Rental Night. If a Settlement Class Member selects this benefit, RCI shall provide the Settlement Class Member with one free night stay at any RCI Rental offered as single night stays, subject to availability, to be used toward the same room of any paid Rental of at least one night. The Rental must be reserved within one year of the Effective Date.
- Cruise Certificate. If a Settlement Class Member selects this benefit, RCI shall provide the Settlement Class Member with a $100 discount certificate per cabin to be applied toward the purchase of any Cruise offered by RCI at the time this benefit is selected with the option of receiving additional $100 discount certificates (one per cabin) toward the purchase of up to three additional cabins for the same Cruise by the same Settlement Class Member. The Settlement Class Member will be required to book any and all such Cruises within one year from the date this option is selected. The Cruises themselves may occur at any time subject to availability. Requirements for Selecting Additional Benefits for Current Members. Not later than April 6, 2009, individual Settlement Class Members seeking one of the benefits described above in Section II.
E must complete and submit directly to RCI a Claim Form to be made available via a link posted on the RCI.com website, or, upon request, by U.S. regular mail, in accordance with the terms and procedures set forth in such Claim Form, and such benefit shall be redeemable commencing no later than August 31, 2009.
- Benefits for Former Members. Former Members who are Settlement Class Members may elect to receive either
(1) a $15 payment from RCI or
(2) a $15 credit toward an RCI Weeks Exchange Program membership. Not later than April 6, 2009, a Former Member seeking one of the benefits available in this Section II.G must complete and submit directly to RCI a Claim Form to be made available via a link posted on the RCI.com website or, upon request, by U.S. regular mail, in accordance with the terms and procedures set forth in such Claim Form, and such benefit shall be provided to Former Members by December 31, 2009.
- Class Benefits Not Transferable or Assignable. No Settlement Class Member shall transfer or assign any Class Benefit to any other person or entity, including any Third-Party Entity, and Class Benefits shall not be redeemable for cash value by any Settlement Class Member or any other person or entity, subject to the terms, conditions, and limitations of this Settlement Agreement.I. Time Limitation. Except as otherwise provided herein, and without altering any shorter or longer period that is specified herein, RCI shall not be required to offer or provide any of the Class Benefits identified in this Settlement Agreement for more than two years from the Effective Date.J. Waiver/Modification of Requirements. Notwithstanding anything in this Settlement Agreement to the contrary, nothing in this Settlement Agreement shall be construed to restrict, limit or otherwise impede RCI’s rights to
(1) accept or reject any enrolment application, and
(2) waive or modify, in RCI’s sole discretion, the application of any requirement applicable to the RCI Weeks Exchange Program that otherwise could be imposed upon a Member, including transaction fees, provided that such waiver or modification does not impair or diminish the Class Benefits.
- Extension of Deadlines for Benefits. If RCI cannot perform an obligation required of it by this Settlement Agreement by the date specified herein, RCI will notify Class Counsel promptly (i.e., within days or weeks as may reasonably be appropriate under the circumstances) of the reason for the delay and the date by which RCI expects to be able to complete the required task.
What This Means for RCI Members What the Murillo vs. RCI settlement means for RCI members: Absolutely nothing, other than a fairly compelling argument to look elsewhere for timeshare exchanges come August 2010. Nothing outlined in the proposed settlement above is any different than the alleged practices RCI was being sued for in the first place. Basically, if you do not bank your week more than a year before your week is reserved, they will pull it out of the exchange pool and rent it out. RCI is required to maintain a quantity balance of banked weeks vs. available weeks so members who have banked also have weeks to choose from out of the pool, but there is no mention in the settlement regarding the QUALITY of these weeks. Trading power is also addressed in the settlement, and this will require RCI to disclose each week member’s trading power. This is how it should have been from the beginning, and how it has always been for points members. Weeks members have a right to know realistically what their week can trade for, and maybe this will help to alleviate any future confusion regarding trades viewed by members as “unfair”.
The class action suit seems to have rationalized and legalized the unfair exchange practices of RCI, forcing them to draw up a legal disclosure defining (and admitting to) their business model. Now that it is legal for them to rent out weeks banked less than a year in advance, you can expect nothing to change, and the availability for trades should remain the same.
Keep in mind, any potential class member (current or former RCI member) could opt out of this settlement to pursue their own case or could file an objection to the terms of the settlement. Please help in getting the word out about this latest class action lawsuit regarding RCI. If nothing else, this can at least allow people to become more knowledgeable about the inner workings of RCI. Always remember that as a timeshare owner you do have other options for exchange other than RCI. Many timeshare owners are now starting to turn to smaller companies for their time share exchange needs, and the following article is a good place to start if you want to learn more about this option – Alternative Timeshare Exchange Companies.
Un like the USA Cases the UK action has not been settled has been in front of the High Court in London who will rule in Septembers and millions are at stake as well as the reputations of the RDO and TATOC
Posted on: 22nd June 2016