Aggressive anti-rental email response from MS

[we"reofftoneverland]

Interesting to ponder how Disney could crack down in practice on “commercial” renting as opposed to making reservations for friends and family. If an owner claims that they made a reservation for a friend, charging nothing, how does Disney prove otherwise? Demand an affidavit from both parties testifying under penalty of perjury that they are, indeed, buddies? How long must the friendship have existed? Do Facebook friends count? How do you prove that no payment was made? Give Disney access to all of your bank account, PayPal, and Venmo records? It’s hard to imagine Disney doing any of this.

On the other hand, confirmed reservations being listed on eBay or Redweek, for example, would be much easier to clamp down on; it would be easy for Disney to monitor such listings, see when the reservation is made and the listing falls off, and cancel it. They could also use the same approach to attack the DVC Rental Store, which publicly lists reservation requests, complete with check-in dates and point amounts, which drop off the list when the reservation is made (obviously this would cause that platform to quickly change its model to more like the behind-the-scenes points matching that David’s does).

They could limit you to a certain number of reservations not in a member’s name. They do this for transferring points. As you said they could also limit use of third party agencies. Those are commercial by definition. They are profiting off of each reservation.

 

[crisi]

Interesting to ponder how Disney could crack down in practice on “commercial” renting as opposed to making reservations for friends and family. If an owner claims that they made a reservation for a friend, charging nothing, how does Disney prove otherwise? Demand an affidavit from both parties testifying under penalty of perjury that they are, indeed, buddies? How long must the friendship have existed? Do Facebook friends count? How do you prove that no payment was made? Give Disney access to all of your bank account, PayPal, and Venmo records? It’s hard to imagine Disney doing any of this.

On the other hand, confirmed reservations being listed on eBay or Redweek, for example, would be much easier to clamp down on; it would be easy for Disney to monitor such listings, see when the reservation is made and the listing falls off, and cancel it. They could also use the same approach to attack the DVC Rental Store, which publicly lists reservation requests, complete with check-in dates and point amounts, which drop off the list when the reservation is made (obviously this would cause that platform to quickly change its model to more like the behind-the-scenes points matching that David’s does).

Look for patterns that exceed likely "friends and family" arrangements. Use statistical analysis. Perform Facebook "stings" to "rent" reservations, and then cancel the reservations rented for profit while doing whatever the contract allows to the member who rented the points to prevent that behavior in the future - including cancelling that members reservations - leaving renters in the cold, which would create a chilling effect on rentals. Since WE know the people who have thousands of points and rent them looking for the most profit, it isn't hard for Disney, who can pay people to know, and has access to far more data than we have, to find those people.

There is even fraud software that will tell you if Roy Disney is a known associate of Bugs Bunny - and how close an associate (software like that doesn't tend to weight social media friendships alone highly). My husband ran fraud for a major ecommerce retailer and they'd use it to to make sure gift televisions sent to an alternate address were actually gifts and not someone committing identity fraud. If the software did not indicate a known likely acquittance, they'd hold the order until they got confirmation. Disney could use something like that to figure out if you were renting to friends and family - the software isn't perfect, so action wouldn't likely trigger on one or two stranger rentals a year out of the same member - but would perhaps at five or more for instance. And frankly, I agree with the analysis that says you get to do stranger renters for your PERSONAL unused points once in a while - its when its more often than you use your own points and when you are doing so in a way to maximize profit that you've crossed the line into commercial, IMO.

When Disney decides to define commercial renting more robustly than they currently do, and clamp down on it, they have both the right to do so and the tools to do so. It is possible that they've decided that its time.

 

[tjkraz]

But our POS agreement says that they can restrict it. Here is exactly what the POS says as it relates (V. Rentals part 5.1)

Just because something is written into a contract doesn't mean it is legal & enforceable. Again, it is *possible* that Disney is purposefully avoiding opening Pandora's box because they aren't entirely certain what they will find inside. If they attack parties with deep pockets, it's going to get challenged. And I don't think there's a guarantee that courts or an arbitrator will uphold the idea that Disney can control how people use points after they're purchased.

DVC has done virtually nothing to restrict rentals over the last 10 years. And I don't think it's because renters eat more cheeseburgers in the theme parks than owners.

If that changes in the future and DVC begins to take steps directed at limiting rentals, I'll happily change my perspective.

 

[Sandisw]

But our POS agreement says that they can restrict it. Here is exactly what the POS says as it relates (V. Rentals part 5.1)

"Except for DVD, DVCM or any of the TWDC Companies, use of Vacation Homes and recreational facilities for commercial purposes or any purpose other than the personal use described in the Condominium Documents is expressly prohibited. "Commercial purpose" may include a pattern of rental activity or other occupancy by an Owner that DVCM or the Board determines constitutes a commercial enterprise or practice."

My read on that is they have the authority to say that a pattern of rental activity by an Owner for profit would allow them to flag that as a commercial purpose. I would say at a minimum, using a third party agency would definitely qualify as a commercial practice. Also, it seems that they can determine what a commercial practice is at their discretion. That is what we signed up for.

So, in your mind, if I offer my points here for rent vs. a broker, it changes things? If I am allowed X amount of reservations per year for other guests, including renters, not sure I agree that how I find those renters matters.

Paying the broker part of the fee is simply putting me, as an owner, together with a renter.

 

[sndral]

Agree with this.

I also think there is (should be) a legitimate concern within DVC as to whether this provision would stand up to a legal challenge. While many would argue that limiting rentals serves a greater good, we're talking about a large corporation trying to dictate how customers can use a very expensive product. Just because DVC wrote this vague language into the contract prohibiting "commercial rentals" doesn't mean that courts would agree that Internet rentals or 20+ transactions per year are a reasonable test. They may find that Disney has absolutely no right to prohibit owners from selling points after purchase.

Or they could go the other direction and uphold the clause, while expanding it to include Disney's own commercial point rental activities. This could potentially leave Disney unable to use its own point holdings to sell villas to cash guests.

DVC could consider some across-the-board policy changes which are designed to limit rentals. But there would likely be fallout for all members. For instance, if they tried to limit changes to the names on a reservation to avoid spec rentals, it would impact all of us whenever we need to make changes to a traveling party.

Except the declarations and the POS are not silent or even vague about what you are buying, there are the several warnings in them such as “Ownership Interests should not be purchased with any expectation that vacation homes may be reserved and rented to third parties” and “Ownership interests are offered for personal use and enjoyment only and should not be purchased…with any expectation of achieving rental income,” etc..
The POS specifically makes an exception to allow DVC to rent their own & breakage points, so there’s no basis for “expanding it to include [prohibiting] Disney’s own commercial point rental activities.”
The question in my mind is if DVC decides to become more proactive in enforcing the no commercial use prohibition, which we all agreed to when we signed those documents to buy our points, what steps they‘ll take to do so.
A simple change in booking procedure like requiring you to cancel & rebook to change the lead guest might impact the spec reservation rental market while not effecting the majority of owners.

 

[fumanchu2488]

So, in your mind, if I offer my points here for rent vs. a broker, it changes things? If I am allowed X amount of reservations per year for other guests, including renters, not sure I agree that how I find those renters matters.

Paying the broker part of the fee is simply putting me, as an owner, together with a renter.

No in my mind anyone who perpetually rents (either through a broker or direct to guests) for profit should fall into 'commercial' and be required to show ID of Owner occupancy to use their points during their stay.

The X amount per year without Owner occupancy would cover the one off year where things don't line up and renting is the best option. I would say that should be a very low number.

How many threads are started here and on other places with people discussing owning multiple contracts and using one to purely supplement the cost of MF or ownership in general? That is the type of practice I would target.

 

[sndral]

So, in your mind, if I offer my points here for rent vs. a broker, it changes things? If I am allowed X amount of reservations per year for other guests, including renters, not sure I agree that how I find those renters matters.

Paying the broker part of the fee is simply putting me, as an owner, together with a renter.

From the individual owner’s perspective there is little difference. Indeed, an owner may not gain enough in rental income to pay their MFs + mortgage & thus make no profit at all. So for them a rental through a broker would not be ‘commercial use’ in a ‘for profit’ sense.
However, from a broader perspective there is a difference. The brokers are commercial enterprises, they exist purely to make money by playing matchmaker between owners & renters. An argument could be made that every owner who uses a broker is participating in the broker’s commercial activity by enabling the broker to make that profit. From that perspective an owner who uses a broker is part of the broker’s commercial practice or enterprise.
Of course brokers are just one subset of how folks use the internet to rent points - there’s FB, where no 3rd party is skimming profits from the transactions, for example. Even the DIS rent/trade board is ‘using the internet.’ I’m not sure how the platform OP used - redweek - works, but I doubt that a blanket ban on ‘internet’ rentals is enforceable or practical.

 

[kes601]

Paying the broker part of the fee is simply putting me, as an owner, together with a renter.

Just to play devil's advocate to that point.

While the DVC member renting the stay may not be a perpetual renter / a commercial renter, they are using a commercial service in order to rent based upon that description....could DVC say that violates the no commercial renting?

ETA: @sndral beat me to it....

 

[RoseGold]

On the other hand, confirmed reservations being listed on eBay or Redweek, for example, would be much easier to clamp down on;

There are cruder methods here that would impact renters and maybe owners too, like not allowing you to change the name of the lead guest, or charging to do so, or forcing a bunch of hoops to do so. Other timeshare systems do charge fees to change reservations or don't allow modifications.

DVC could put up a lot of friction if it wanted to, just using methods like this.

 

[mgarbowski]

There are cruder methods here that would impact renters and maybe owners too, like not allowing you to change the name of the lead guest, or charging to do so, or forcing a bunch of hoops to do so. Other timeshare systems do charge fees to change reservations or don't allow modifications.

DVC could put up a lot of friction if it wanted to, just using methods like this.

This would help with or potentially solve the hoarding of widely sought after days and room types, and the ancillary walking that gums things up generally. I can think of "innocent" reasons why one would transfer a reservation, such as an illness or emergency or work obligation that requires cancellation of personal plans after the banking or holding date. So I would not want to forbid it entirely. But I have no issue with a small but not painless fee imposed, and absolutely no issue with limiting the number of times it can be done.

The problem, with limiting repeat rentals, though, as has been mentioned before in this thread, is the most flagrant abusers set up multiple LLCs to bypass those filters. But other timeshares have, I believe, solved that problem.

 

[Sandisw]

Just to play devil's advocate to that point.

While the DVC member renting the stay may not be a perpetual renter / a commercial renter, they are using a commercial service in order to rent based upon that description....could DVC say that violates the no commercial renting?

ETA: @sndral beat me to it....

IMO, that would be tough because the rules say you use for personal use and not commercial use, and it’s been clear that renting to a degree falls under personal use.

Again, the agreement is with the owner and DVD…and so just don’t see how they are going to claim an owner who is renting once a year via a broker is commercial but that someone who rents fifteen a year privately is not.

So, I don’t see the way you secure a rental at issue or different and that is not what should matter..it should be memberships that year after year have enough rentals that clearly are renting for profit in the commercial sense.

While I don’t rent a lot, I’d be one to fight a change that severely limits how one is allowed to secure a rental.

 

[kes601]

IMO, that would be tough because the rules say you use for personal use and not commercial use, and it’s been clear that renting to a degree falls under personal use.

Again, the agreement is with the owner and DVD…and so just don’t see how they are going to claim an owner who is renting once a year via a broker is commercial but that someone who rents fifteen a year privately is not.

So, I don’t see the way you secure a rental at issue or different and that is not what should matter..it should be memberships that year after year have enough rentals that clearly are renting for profit in the commercial sense.

I'm not saying I agree or disagree -- I'd personally rather have the one time a year renter via a broker vs somebody grabbing a lot of valued rooms / dates and renting 10 or more times a year.

But when a third party broker is profiting off of a rental then I imagine it could at some point raise flags at DVC / DVD. I just know when you see something like 1600 rentals on Redweek.com, etc. something is up and I doubt it is the way DVD / DVC would like the system to work.

The cynic in me wonders if DVC might be trying to figure out how they can get into the broker game by cutting out the other "middlemen".....

 

[DonMacGregor]

An argument could be made that every owner who uses a broker is participating in the broker’s commercial activity by enabling the broker to make that profit. From that perspective an owner who uses a broker is part of the broker’s commercial practice or enterprise.

Caveat emptor: IANAL

This was the thought/question I had upthread. When you use a broker, you enter into a contractual arrangement with that broker, and pay a fee for their professional services, and THEY are profiting from their commercial enterprise as a result of your rental and their contract with you.

Not saying that, in and of itself, makes the whole rental "commercial", but it definitely differentiates it from friends and family, or even Facebook. In that scenario, there is a commercial enterprise (the broker) profiting directly and solely from the rental of your points, and you are contractually tied to that enterprise/profit.

I guess in layman's terms, the possible difference is with private rentals, you make the profit (or at least all proceeds go to you). With a broker, not only you, but now a third party commercial enterprise also makes a profit off the rental of your points.

 

[Genie+]

The #1 reason I think any of this changes has less to do with the ambiguous contract wording than how rental business affects profits for DVC/DVD and to some degree WDW/DIS. A reaction most likely happens when commercial renting reduces their profit opportunities. Owner interests matter mostly due to brand protection and continued profitability.

If DVC felt commercial renting necessitates stronger clarification and restrictions, there’s room for them to take certain steps against it. Measures could be debated but I’m not sure their hands are legally tied. The bigger question is how close are we to DVC getting pushed into reaction. A long ways off, if ever? Or around the corner?

 

[tjkraz]

Honestly, @RoseGold's idea of charging to change the lead on a rental might be the easiest way to combat the issue (if an issue exists).

Adding a $20 (or $50, or $100) name change fee to a rental isn't going to disrupt the rental market one bit. It might force the renter to take a slightly lower profit. But rentals will still save money for the non-owner.

Meanwhile, it would be staggering penalty for any member who is forced to bow out of their trip late, forgets to list relatives as lead guest when initially making a reservations, etc.

 

[Matty B13]

I also think there are a lot of Direct Owners who in the past have been able to secure reservations, that they are now having problems not getting and blaming the rentals. I can only imagine how bad race weekends are getting for any studios now.

 

[fumanchu2488]

The #1 reason I think any of this changes has less to do with the ambiguous contract wording than how rental business affects profits for DVC/DVD and to some degree WDW/DIS. A reaction most likely happens when commercial renting reduces their profit opportunities. Owner interests matter mostly due to brand protection and continued profitability.

If DVC felt commercial renting necessitates stronger clarification and restrictions, there’s room for them to take certain steps against it. Measures could be debated but I’m not sure their hands are legally tied. The bigger question is how close are we to DVC getting pushed into reaction. A long ways off, if ever? Or around the corner?

Good point. I would add that the technologic advances and changes in the past 30 years have a lot to do with it. I referenced language in the POS from my RIV contract, which I assume comes from the same standard language developed in 1992. I don't think anyone could have predicted how easy it has become to 'commercialize' the rental process with the use of the internet (amongst other things). 30 years later, I would say it is a good time to recorrect and consider a strict enforcement of a contract term that has been in place since day 1.

 

[we"reofftoneverland]

This would help with or potentially solve the hoarding of widely sought after days and room types, and the ancillary walking that gums things up generally. I can think of "innocent" reasons why one would transfer a reservation, such as an illness or emergency or work obligation that requires cancellation of personal plans after the banking or holding date. So I would not want to forbid it entirely. But I have no issue with a small but not painless fee imposed, and absolutely no issue with limiting the number of times it can be done.

The problem, with limiting repeat rentals, though, as has been mentioned before in this thread, is the most flagrant abusers set up multiple LLCs to bypass those filters. But other timeshares have, I believe, solved that problem.

but there is no exception to borrowing in the case of illness or work obligations, so why would there be an exception with primary name change? I don’t think primary name changes should be allowed.

 

[DonMacGregor]

Adding a $20 (or $50, or $100) name change fee to a rental isn't going to disrupt the rental market one bit. It might force the renter to take a slightly lower profit. But rentals will still save money for the non-owner.

Meanwhile, it would be staggering penalty for any member who is forced to bow out of their trip late, forgets to list relatives as lead guest when initially making a reservations, etc.

I'm not sure "$20 (or $50, or $100)" rises to the level of "staggering", particularly if we're talking about someone who is "forced to bow out of their trip late". I mean, how often is that going to happen?

 

[KAT4DISNEY]

Adding a $20 (or $50, or $100) name change fee to a rental isn't going to disrupt the rental market one bit. It might force the renter to take a slightly lower profit. But rentals will still save money for the non-owner.

Meanwhile, it would be staggering penalty for any member who is forced to bow out of their trip late, forgets to list relatives as lead guest when initially making a reservations, etc.

It's also just an antiquated charge that likely began because people had to call in and it took a service persons time to update. Now with online possibilities any system still charging it is simply padding revenue and doing it because they always have.