No deception will lead to no sales.
Article originally published SEPTEMBER 8, 2005 –Reviewed and approved.
By Neil Jenman
Ten years before the hard-sell investment seminars and two decades before get-rich- scams, timeshare touts harassed tourists at the Gold Coast. They were the original spruikers of Australian real estate.
In the early 1980s, bikini-clad women and white-shoe salesmen confronted people on the streets of Surfers Paradise.
Potential victims were offered free gifts to lure them to a heavy-duty sales pitch for a product presented as a cheap way to buy real estate. In the trade, this grab-em method was known as “body snatching”.
Once the scams were exposed, the backlash almost killed timeshare.
Fast-forward 20 years and timeshare is still fighting for its life, even though 130,000 consumers in Australia have a financial interest in the murky method.
Today’s sales techniques are more sophisticated, but the product that’s had more makeovers than the Gabor sisters simply can’t get out of its own way. It’s still seriously ‘on-the-nose’.
The weight of complaints about dishonesty prompted a federal parliamentary inquiry and now the Parliamentary Joint Committee on Corporations and Financial Services delivered its recommendations – which outlaw pressure selling, baiting people with free holidays or electrical goods to get them to sales seminars, and offering “inducements which are only available if the purchaser signs up immediately”.
There will be a ten-day cooling-off period, a guaranteed buy-back price and consumer warning statements. Senator Grant Chapman, chairman of the committee, says these measures will help to end “the dark practices of the past”.
But the proposals will probably eliminate timeshare. And for one simple reason – timeshare touters depend on dodgy methods.
Timeshare is a concept where people pay thousands of dollars upfront for the right to use resort accommodation for a week each year. It’s a product with myriad problems such as heavy maintenance fees and the difficulty in getting out. Few sensible people buy timeshare unless they’re duped or coerced.
“There is no secondary market for people to sell ‘used’ timeshare interests,” says Senator Chapman. “Once they buy in, they’re locked in for up to 80 years.”
“The industry argues that pressure selling is a thing of the past, but we are not convinced,” says Senator Chapman. “Buyers who attend timeshare seminars are very likely to be subject to undue pressure.
“Timeshare is a complex product costing thousands of dollars. A decision to purchase should be a considered decision made after reflection, not a hurried decision made on a sales deck.
“The new regulations should prevent timeshare operators from using bait to get people to sales seminars. If these inducements are offered, it should be clear that their price is attendance at a sales seminar, and this should be stated up front, not in the fine print.
“The regulations should require timeshare operators to make it clear that timeshare is not equivalent to owning real property. Timeshare is not an inexpensive way to get into the property market. Timeshare consumers should be told, up front, that they are buying an entitlement to accommodation, not an actual piece of real estate.”
Labor MP Anna Burke, the committee’s deputy chair, calls timeshare a “vague industry” and says: “People need to know what they are getting into. They need to know they are not buying a holiday house – they are buying a leisure product what will devalue.”
So, there you have it.
No more deception means no more sales.
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