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Royal Holiday Club Accused of Fraud

Our fraud alerts are designed to pass on to you, the savvy consumer, up-to-date and confirmed information regarding suspicious timeshare companies. Unfortunately, these alerts often – indeed, almost always – come at the expense of customers who have already been scammed out of hard-earned funds. Such is the case with Mark and Misty Nason of Puyallup, Washington, who are interviewed in an exclusive article published on the website of Seattle-based news station KING 5. After signing a $17,000 contract with Royal Holiday Club, they hardly received the regal treatment they were offered in the sales pitch.

The Nasons’ deal gave them ownership of three timeshare weeks – a respectable vacation window, but one few families can afford, especially families with multiple children like the Nasons. Royal Holiday Club representatives assured them that they’d be able to sell the unused weeks back to the company without any issue.

“We asked many questions about that feature, stipulations and when we could do it,” Misty Nason said. “They said absolutely any time just call.”

But upon attempting this procedure they found that selling back timeshare weeks is not a part of Royal’s official policy. To top off the bait-and-switch, the Nasons were told that they themselves were responsible for swallowing the sales pitch claims without confirming their veracity. “His exact words: ‘It's your fault, Ms. Nason, you were lied to,’ ” Misty Nelson said. “ ‘It's your responsibility to make sure you are getting everything you are being told.’ ”

Similar customers have been victims of the same sort of tactics. Leanne Carden, another Washington state native, was planning on leaving the Royal Holiday Club presentation until representatives told her that the company could help her sell unwanted timeshares she already owned. The Royal Holiday team cut a deal with Leanne that would sell her timeshares through a separate affiliated corporation and also give Leanne travel and airfare deals. But none of these promises were kept.

She called Royal Holiday Club and demanded a refund. “I said ‘I'm just going to get a lawyer,’ And he [the Royal phone rep] said ‘Leanne, we have the best lawyers write this contract. There's no way you can break this contract. It's air-tight.’ ”

KING 5 had a University of Law professor, Kate O’Neill, examine a few sample contracts. She notes that the legal details make it nearly impossible for customers to sue. “The purchase and sale agreement says the governing law will be the law of the state of Mexico City,” O’Neill adds. And the contracts include what are called “merger” clauses, iron-clad legal disclaimers automatically discrediting any verbal agreements between customers and sales representatives. So, under contract, none of the promises made to the Nasons or to Leanne Carden would hold.

After KING 5 contacted Royal Holiday Club, they claimed that these complaints are a loud minority, constituting only 1% of all sales. What’s more, they maintain that the company is aware of the fraudulent claims made to both the Nasons and Miss Carden and insist that the sales representatives responsible were fired.

But the company’s Better Business Bureau profile tells a different story. Royal Holiday Club currently has a grade F – the lowest possible. “This company has quite a few complaints,” said Marcella Kallmann, a BBB representative. “In the past 36 months they have almost 200 complaints.” In addition the company has been lambasted on consumer report websites and reportedly hundreds of lawsuits have been filed.

Leanne Carden was luckily able to cut her losses – she filed a complaint with Profeco, a consumer organization in Mexico, and regained $3,000. The Nasons were less lucky until KING 5’s investigation, but now Royal Holiday Club has promised to furnish them with a full refund.

They provide excellent advice: “We just want to warn people to just walk away, no matter what they offer you,” Mark Nason imparts.

All quotes from the original KING 5 article here.

To read an additional KING 5 blog entry with comments from other victims of Royal Holiday Club, click here.

To see the BBB file, click here.

Royal Holiday Vacation Club Update: 4/17/08

Suspicion continues to surround Royal Holiday Vacation Club as more and more consumers claim that the company is guilty of fraudulent business practices. They were the subject of a hidden camera investigation on 20/20 and a subsequent article on the ABC News homepage that interviewed several customers and Royal Holiday representatives in an attempt to separate the fact from the fiction.

The Royal Holiday Club is now selling point-based vacations (timeshares in everything but name) out of Mexico to locations in the Caribbean. The fees are comparable to those of usual timeshares – roughly $465 yearly after an initial payment of $11,000. And the name of their program – “Vacations for Life” -- might remind some of the perpetuity clauses that exist in timeshare contracts.

According to the Mexico’s consumer protection agency, Procuraduria Federal del Consumidor, Royal Holiday has 1,800 unresolved complaints. The US-based offices in Florida have been similarly inundated with frustrated testimony to the Better Business Bureau describing "high pressure sales tactics that are absolute lies" and "no destinations ever available, no matter how far in advance they called." The Better Business Bureau has awarded the Royal Holiday Vacation Club with an “F” rating – the lowest possible.

Perhaps the most illuminating portion of the ABC article occurs when the 20/20 Producers decide to experience a Royal Holiday Club presentation themselves. They discovered a number of textbook high-pressure sales strategies and outrageous pitches:

“But perhaps the most incredible claim we heard all day was the promise that our entire purchase price would be invested in a Swiss bank, that would return every cent to us in 30 years. Even Royal Holiday's lawyer said he never heard that one. Later, Royal Holiday explained that it offers an option to invest a small part of the purchase price with a company in the British Virgin Islands and, if the investment pays off, 30 years later customers could get their money back.”

To read the full article, click here. The article also features several comments from actual Royal Holiday Vacation Club members who have written in with thoughts. A salient quote from the comment page:

"I've been a "member" since 2000 and have actually been able to take 3 vacations with RHC, yet each with its own set of problems. I first purchased my membership in Freeport, Bahamas with the promises many of you have stated. I was expressly told that I could travel anytime I wanted in the RHC network, just make a phone call. Well, that isn't true, now is it?? In fact, I was told not to worry, that RHC would make rooms available for its members. I was also told that I wouldn't have to pay country taxes or resort fees, again not true! Just a couple of weeks ago I tried to make a reservation for NYC for Sept, a full 6 months in advance, but no rooms were available, same story always. This time I was told they had openings later in the year if I wanted or the other choice was to pick another destination. No joy here, my destination of choice was NYC! I guess this is yet another year of paying the annual fee without getting to travel using my membership. Where is the savings?? I also wanted to change my name on my account. I tried 3 times. The 1st attempt was in person at an RHC office in Puerto Rico, and just to be clear, I wasn't staying at a RHC resort. I presented this gentleman my marriage certificate and he updated the system while I sat there. I was told I'd get a new member card in the mail. The 2nd attempt was during vacation in Nassau Bahamas, and yes I was using my RHC membership. I was actually told that I shouldn't have had a membership because their policy is not to sell to singles. Can you believe that....discrimination too! The 3rd attempt occurred as a result of my scathing customer survey about that trip. I blasted them on the quality of the hotel, room, customer service, and yes the taxes that I wasn't suppose to pay! I was contacted by email and phone and told to send my marriage certificate to MEXICO! I didn't, so the account hasn't been changed. ABC, please help."

Royal Holiday Club Update 7/5/08

The Royal Holiday Club has released an official statement in an effort to atone for the many accusations being leveled against them. This statement can be read below or at this site.

“I want to make absolutely clear that both the resale program you reference and the “International Leisure Group” name under which it was marketed were fraudulent undertakings by rogue sales individuals and were presented to prospective members without the knowledge, approval or involvement of Royal Holiday. The false promises that were made run counter to everything that we stand for at Royal Holiday. We have not only dismissed the individuals who engaged in these unscrupulous activities, but also initiated criminal proceedings against them…”

This text was featured as a letter in the latest issue of TimeSharing Today by Director General Louis Laara Gonzalez. Gonzalez also pointed out Royal Holiday Club's 25 years of outstanding service. This letter was published alongside a case study of a couple who have enjoyed their RHC timeshare since 1998.