Timeshare Fraud - A Brief background About RCI and the Timeshare Industry
RCI was formed in 1974. They state they that do not own any resort property. Their business model is based on assisting owners of these various timeshare vacation resort properties with "Exchanging" with owners of other resort properties. Not only could you change your location, you could also change the time of the year. In a word, RCI is the central reservation system for a "members only" type of club. Whether this is true or not remains open to question.
Depending on what size unit is owned, and the season, you could Exchange a one bedroom unit in the High season in Florida, for a one bedroom unit in the High season for Hawaii, or, "like for like."
RCI helped create the developer's dream of turning expensive and cost prohibitive vacation property developments into an affordable alternative for the average family, one week at a time. "Let us turn your vacation dreams into reality" became a popular slogan for the timeshare industry.
To become a member of RCI, you had to purchase a unit/week of timeshare at an approved RCI affiliated resort. All RCI affiliated resort properties were thoroughly checked-out to make sure that only the best resorts with high standards were permitted, and that they maintained these standards or risk being excluded from their unique reservation system of Exchanging. Again, it is questionable whether this has been followed through.
RCI and the resort property developers formed a symbiotic relationship with each feeding off the other, and profiting handsomely in the process. The resort developer could charge a premium for their property because of the RCI Exchange system, and RCI would gain all the members the developer sold to. Many feel RCI has come to abuse this special relationship.
The resort developers enrolled all their owners into RCI after they purchased their timeshare. This was not an option. The timeshare owner now also became a RCI member, and as such, in addition to paying an Annual Management Fee to the resort, they would have to pay an Annual Subscription Due in order to belong to RCI. And then to Exchange, there would be another small fee to pay. There were often "other" small fees that would start to creep into this supposedly inexpensive alternative to holiday homes and hotelcosts.
To reiterate, the main benefit of the RCI membership was the fact of having the option to "Exchange" for different resort locations and different time periods of the year for a small reservation fee, called an "Exchange Fee."
In total there were the following fees:
1. Initial purchase price to buy the timeshare. (A one-time investment paid to the developer)
2. Annual Management Fees (To maintain the resort)
3. RCI Annual Subscription Dues (To be a member in order to have option to Exchange)
4. RCI Exchange/Reservation Fee (Only when you Exchange your timeshare for another location and/or time period)
In addition to these fees, there are "special assessments" the resort developers charge from time to time for no real or apparent reason other than to create added revenue. They disguise these assessments as repairs for a new roof, or unexpected expenses from weather storms, etc., but there are supposed to be "sinking funds" or reserves to compensate for any extra expenses, and/or insurance to cover these costs. Also, RCI soon learned they could start charging additional fees to let friends use your timeshare, called "Guest Certificates." Friends and family were supposed to be able to stay for free.
RCI would also start charging additional fees to extend the reservation "window of opportunity" for the Exchange system. They would also start offering "insurance" in case you had to cancel your Exchange. And finally, they would start charging for rentals if they could not get you the desired Exchange you wanted. The question remains, why is something available for rent, but not for Exchange? And since when did RCI enter the rental business? And more importantly, if RCI does not own any resort, whose inventory are they renting?
All these little things started to add up, to the benefit of RCI, and to the detriment of the members.
Depending on what size unit is owned, and the season, you could Exchange a one bedroom unit in the High season in Florida, for a one bedroom unit in the High season for Hawaii, or, "like for like."
RCI helped create the developer's dream of turning expensive and cost prohibitive vacation property developments into an affordable alternative for the average family, one week at a time. "Let us turn your vacation dreams into reality" became a popular slogan for the timeshare industry.
To become a member of RCI, you had to purchase a unit/week of timeshare at an approved RCI affiliated resort. All RCI affiliated resort properties were thoroughly checked-out to make sure that only the best resorts with high standards were permitted, and that they maintained these standards or risk being excluded from their unique reservation system of Exchanging. Again, it is questionable whether this has been followed through.
RCI and the resort property developers formed a symbiotic relationship with each feeding off the other, and profiting handsomely in the process. The resort developer could charge a premium for their property because of the RCI Exchange system, and RCI would gain all the members the developer sold to. Many feel RCI has come to abuse this special relationship.
The resort developers enrolled all their owners into RCI after they purchased their timeshare. This was not an option. The timeshare owner now also became a RCI member, and as such, in addition to paying an Annual Management Fee to the resort, they would have to pay an Annual Subscription Due in order to belong to RCI. And then to Exchange, there would be another small fee to pay. There were often "other" small fees that would start to creep into this supposedly inexpensive alternative to holiday homes and hotelcosts.
To reiterate, the main benefit of the RCI membership was the fact of having the option to "Exchange" for different resort locations and different time periods of the year for a small reservation fee, called an "Exchange Fee."
In total there were the following fees:
1. Initial purchase price to buy the timeshare. (A one-time investment paid to the developer)
2. Annual Management Fees (To maintain the resort)
3. RCI Annual Subscription Dues (To be a member in order to have option to Exchange)
4. RCI Exchange/Reservation Fee (Only when you Exchange your timeshare for another location and/or time period)
In addition to these fees, there are "special assessments" the resort developers charge from time to time for no real or apparent reason other than to create added revenue. They disguise these assessments as repairs for a new roof, or unexpected expenses from weather storms, etc., but there are supposed to be "sinking funds" or reserves to compensate for any extra expenses, and/or insurance to cover these costs. Also, RCI soon learned they could start charging additional fees to let friends use your timeshare, called "Guest Certificates." Friends and family were supposed to be able to stay for free.
RCI would also start charging additional fees to extend the reservation "window of opportunity" for the Exchange system. They would also start offering "insurance" in case you had to cancel your Exchange. And finally, they would start charging for rentals if they could not get you the desired Exchange you wanted. The question remains, why is something available for rent, but not for Exchange? And since when did RCI enter the rental business? And more importantly, if RCI does not own any resort, whose inventory are they renting?
All these little things started to add up, to the benefit of RCI, and to the detriment of the members.
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