Friday, May 11, 2007


This article was originally published on the 14th July 2006 under the title MULTI LEVEL TIMESHARE IS NO HOLIDAY. You can get the award winning Personal Finance every Saturday in The Independant On Saturday (Durban) and The Saturday Star (Johannesburg). You can also view this article on Personal Finance's surperb website along with many other interesting articles (

Timeshare holidays have been around for years and in many instances they are a very good deal.For example, I own timeshare at the Vacation Club at Sun City. One year, my one week there got me two weeks at a ski resort in Switzerland via a swap through the RCI timeshare exchange system.Unfortunately, there have also been some major timeshare scams. One of the bigger ones involved Holland Moorehouse, which disappeared without providing the promised holidays.Most of the more recent scams have involved the points system of timeshare. With the points system, you do not buy into a particular resort, but you purchase points for holidays at various resorts. The points system companies buy resorts, or buy into resorts (that is, a fixed number of units) or they hire units from resorts.Research I did a few years ago showed that, on the whole (but not necessarily always), you got better value for money by buying into a resort and then using RCI if you want to stay somewhere else.My one problem with RCI is that it never seems to be able to book you into one place for more than a week. I suspect this may have something to do with the fact that it charges for each booking. So booking you into three different venues over three separate weeks provides RCI with more income than three weeks at the same venue.I am raising timeshare again because:
Personal Finance has received a number of queries about an Australian multi-level marketing outfit called the Business Club, which is now very active in South Africa. The Business Club sells a points timeshare product called the Holiday Club.
Readers have complained that the points system does not meet their expectations or does not provide suitable accommodation at convenient times.
Manie van Schalkwyk, the Credit Information Ombud, says his office is seeing an upswing in consumers being listed at credit bureaus for non-payment of timeshare or holiday club purchases. Most points timeshare contracts commit you to paying for the points for holidays for a number of years. You must still pay if you do not take a holiday. And pay you must, even if you do not like the look of the venues on offer. This is a major complaint about the points system - namely, many of the venues are poorly situated or are of poor quality, while the better resorts are seldom available at convenient times.Van Schalkwyk says: "Unfortunately, most of the consumers who come to us for help with timeshare or vacation club issues are, in fact, victims of their own inability to read the contracts that they happily signed when offered 'free' holidays or other benefits."People go along to presentations and see wonderful resorts in exotic places and it all looks very affordable. Many of the salespeople are agents and exist on the commissions they make. Their sales tactics are very aggressive and they resort to telling the consumer partial truths."Van Schalkwyk says consumers are so busy concentrating on the film or presentation that they lose sight of the fact that they are signing a binding contract.What worries me is when a multi-level marketing organisation overlays the points system. Most of these organisations have dubious marketing methods. Multi-level marketing is based on one person signing up other people, who, in turn, sign up others. Each level in the organisation is paid a percentage of whatever amount is paid by people in the level below it, and the sponsors also take a slice.For a multi-level marketing company to be legal, it must offer a product.These pyramid organisations make many exaggerated claims, including that the system creates more wealthy people than anything else. This is plain rot. They also use hard-sell tactics. Someone who has already signed up invites you to a meeting. The meetings have the atmosphere of a religious revivalist session in which speaker after speaker hammers home the message that joining the organisation is the only way to get rich. The problem is that if these structures were perfect, everyone would eventually sign up and everyone would be back at square one, less the amount paid to the sponsors. In reality, the pyramids are fragile and people drop out.A legitimate reason for joining would be if you need the product being sold, and you should join only once you have assessed that the product is appropriate and offers the best value for money.Most multi-level marketing organisations don't want you to consider their proposals rationally, so they seldom allow you to take away the documentation and study it. This is also a fault of the timeshare points industry.You should never sign up for anything - be it timeshare, life assurance, an investment or some multi-level marketing scheme - before you have studied all the documents for two weeks, and then only after all your questions have been answered in writing and you have been able to make comparisons with other products. Signing up under pressure only makes you a potential sucker.Before you sign on the dotted lineManie van Schalkwyk, the Credit Information Ombud, has the following advice about buying timeshare:
Don't let salespeople rush you or make you feel stupid or ignorant if you ask questions. Don't assume anything; ask and make sure. It is your right as a consumer to question anything.
Make sure that you can afford the purchase and that there are no hidden costs.
Take careful note of the time limits that apply to cooling-off periods. If the contract states you can cancel in writing in five days, but you cancel after six days, you will end up paying for something you do not want.
Always cancel contracts in writing and get a written acknowledgement that your letter has been received, or ask the company for a letter stating that it has cancelled the contract. Telephoning the salesperson is not good enough. Do not be naive and rely on the goodwill of salespeople, who are out to earn their commission. There are some good salespeople who explain things properly, but there are also those who just want their profit and who will make misleading promises to get you to sign.
Some salespeople ask you to fill in a contact "to qualify for a special rate", but say you can withhold your credit card details until you make a final decision about whether you want to purchase the timeshare. The salesperson tells you that if you want to cancel the contract, you just need to telephone the company and ask the salesperson to destroy the contract. But this does not happen and the contract is processed.If a you sign a contract and it is processed, the contract is enforceable and you are liable for the outstanding money, even if you have received a verbal promise from a salesperson that he or she will destroy the contract.
Check your contract. If a salesperson tells you something that is not in the contract, it is the contract that is going to be believed when you are listed at a credit bureau and not a partially remembered conversation with a salesperson who may have left the company concerned.
If you have a complaint against a timeshare or holiday club sales company, you can telephone the Timeshare Institute of South Africa on (011) 805 3027. To contact the Credit Information Ombud, telephone 0861 662 837; or write to Postnet Suite 444, Private Bag 1, Jukskei Park, 2153; or email The ombud's website is at


John Walker said...

A nice article - I am a regular reader of Personal Finance but I unfortunately missed this edition. Thanks for showcasing it. Nice web site - keep up the good work.

Tittle-Tale Titt said...

Just a packground to illustrate why The Business Club came in to being and why it is so important to The Holiday Club.

The Holiday Club does not market itself - it uses outside broker firms such as Equitec to market its product. For this it pays Equitec handsomely (a minimum of 65% of your initial price goes to the broker firm). The balance of 35% goes to procure stock (developments and bulk timeshare week purchases) and admin costs. The reason why the re-sale value of points is so low is due to this high commision paid upfront to the broker firm. The broker firm in turn has to use their 65% of the purchase price to cover their admin costs, commissions and very high marketing costs. The biggest killer for them is their marketing costs - if they use a telemarketing team it can cost them in the region of R200,000 in phone costs alone per month. Couple this with the prohibitively high cost of plush office and presentation venue rentals, roaming team costs (accomodation, vehicle, venue's & fuel) and you'll find that the 65% is eaten up rather quickly. The broker firms charge an initial deposit when you invest (which goes directly to their marketing costs) which is normally between 20& to 50%. The balance of their 65% is paid out to them in instalments as and when you pay your instalments for the balance of your purchase price directly to The Holiday Club (this is where The Holiday Club makes its money charging excessively high interest rates). The broker firms were continually forcing The Holiday Club to increase the price of the points to cover their rising costs. The problem with this was that The Holiday Club were going to come face to face with a ceiling which would cause them to price themselves out of the market. They had to find a cheaper, alternative method of marketing. Enter Mr Bruce Manson of Light House Marketing who presented to The Holiday Club his model of multi-level marketing timeshare (which he calls single line marketing) which has little if no marketing costs. The only costs involved would be the down-line commission (coupled with the odd admin and venue hire cost). You can guess what happened! The market needed an alternative to the tired old telemarketer harassing you half-way through your well deserved dinner in the evening. And what better than to get your neighbour to convince you to attend a 'mind blowing, life changing business model'. So this was the real reason for the birth of The Business Club - ITS AN ALTERNATVE (and a very much cheaper alternative) TO THE CONVENTIONAL METHOD OF TIMESHARE MARKETING. When you join The Business Club you have been suckered into buying timeshare and you are now encouraged to sucker your friends, family and colleagues to follow suit. You become the Pied-piper blowing on your whistle tales of how to retire rich, retire young!
Has it worked? Friends tell me that you have to book weeks ahead to attend a presentation in Gauteng. So obviously it will work for those who get in early (2 years ago) and quick (to sucker as many of your loved ones as soon as possible to ensure you get some money out). Like all the schemes before this, I predict that The Business Club will be like a house of cards in 5 years time, leaving many undried tears, broken friendships and empty bank accounts. The Holiday Club will issue loud protestations that The Business Club were only using their product and that they had nothing to do with it. Bruce Manson will be safely in Australia (where he already has relocated) counting his millions. And the rest of us will only be richer waiting like a ship of fools for the next current to blow in the path of another unfailing-get-rich-scheme.

Thoko said...

Mr Cameron pleez expose these crooks and save us

Jackie A said...

Who will save us? We need more sites like this!!! Thganks

Jackie A said...

Who will save us? We need more sites like this!!! Thganks