Davids DVC: Rental reimbursement or rescheduling?

[Marionnette]

What are the consequences for David’s with all these chargebacks? Is it a black mark on his business?

In the short term, the business loses the revenue from the transaction. In David's case it comes down to both what they paid out to the owner AND what gets refunded to the renter. So, they get hit twice.

In the long term, enough charge backs puts the merchant at risk of paying higher fees for every credit card transaction or possibly not being able to accept credit cards at all.

 

[FreeTime]

What are the consequences for David’s with all these chargebacks? Is it a black mark on his business?

I expect that he will not be able to cover all of the chargebacks and will file bankruptcy. When the card carrier credits a consumer and they chargeback the merchant, the merchant is obligated to pay the carrier the amount they credited the consumer. David’s is likely fighting these credit card companies saying that he continued to offer vouchers, etc. I suspect that CFPB is involved due to the number of chargebacks.

 

[Best Aunt]

I expect that he will not be able to cover all of the chargebacks and will file bankruptcy. When the card carrier credits a consumer and they chargeback the merchant, the merchant is obligated to pay the carrier the amount they credited the consumer. David’s is likely fighting these credit card companies saying that he continued to offer vouchers, etc. I suspect that CFPB is involved due to the number of chargebacks.

what’s CFPB and are there negative consequences for the company if it is involved?

 

[New Mouse]

At some point it would also likely impact his credit card fees as well. Im not sure if or when they would actually cut off his ability to take payments.

 

[Bearval]

What are the consequences for David’s with all these chargebacks? Is it a black mark on his business?

the only " black mark" would be from owners/renters, there would be none from the credit card companies since the charge back process is what they and the merchant agree to settle disputes.

 

[FreeTime]

what’s CFPB and are there negative consequences for the company if it is involved?

Consumer Financial Protection Bureau. They help to resolve financial claims from customers as well as monitor businesses that have had a high number of complaints and chargebacks. Their model doesn’t monitor David’s but monitors complaints received on credit cards. When they see an increase in complaints against a vendor, they investigate. Their database will allow them to see these chargebacks to David across all credit cards. As they are a government agency they don’t just see those where consumers have went to them for complaints as they can access more data if they have reason to.

 

[YourEveryDayAdam]

At some point it would also likely impact his credit card fees as well. Im not sure if or when they would actually cut off his ability to take payments.

Yes it can. Too many charge backs and his merchant account provider could determine that his business is too risky and terminate his merchant account...i.e. he couldn't process credit cards any more. It doesn't takes a LOT of charge backs for that to happen though. Most merchant providers require the charge back rate (% of transactions that result in a chargeback) to be less than 1 or 2%.

Chargebacks are the LEADING cause of why merchant accounts are terminated by the provider.

There are usually 3 things a merchant account provider can do:
1) Merchant can lose any favorable processing rates the merchant gets for processing volume. David's likely has enough sales that he gets a discount on his credit card processing. This raises his costs to accept credit cards
2) Merchant account providers will often institute a reserve account for a merchant. The merchant account provider will hold a percentage of a merchants charges in the reserve account for anywhere from 120-180 days. usually around 1-2 months of anticipated sales volume (15-30% of gross sales)
3) The merchant account provider can terminate the merchant account completely and they will lose the ability to process credit cards. At this point, the merchant is STILL liable for future chargebacks. But since, as an internet business, they can no longer sell using credit cards it usually means they are out of business.

Again, if his chargeback volume gets above 1-2% he could be at risk for any or all of these things happening.

See: https://chargebacks911.com/terminated-processing-agreement-and-closed-merchant-account/

 

[Brianstl]

I'm glad this all worked out for you! I'm sure there will be many owners (like me) who previously used David's who will now be posting points for rent on these boards, so you will have options in the future.

I don’t think that will be an option many renters will take. The number of owners that believed they didn’t have to refund money for reservations when the resorts were closed is going to be enough to scare off many previous renters from going that route. For me personally it isn’t worth the risk going forward.

At least with a point rental company I can pay using a charge card and get my money back by disputing the charge. That option isn’t available when renting directly from the owner.

I will be just booking hotel rooms in the future.

 

[Deb & Bill]

What are the consequences for David’s with all these chargebacks? Is it a black mark on his business?

Unless he paid cash for that yacht, he might be late in making his payments on it.

 

[paddles]

Hi everyone - I've read some of this very long thread, but haven't gotten through all of this.

We're currently booked through David's for an Aulani trip over Christmas. I've never used them before and was really worried about booking a non-refundable trip. Lesson learned. If the world is opened up by then and the resorts are open, we'd like to go.

The question I have is if David's goes bankrupt between now and then, will I still have the reservation at Aulani's? When I paid in full, I believe the owner got 70% and had to transfer points, with the final 30% being paid to them on the first day of the reservation. But can the owner remove those points for any reason if David's goes under?

thanks for your insights!

 

[CarolynFH]

Hi everyone - I've read some of this very long thread, but haven't gotten through all of this.

We're currently booked through David's for an Aulani trip over Christmas. I've never used them before and was really worried about booking a non-refundable trip. Lesson learned. If the world is opened up by then and the resorts are open, we'd like to go.

The question I have is if David's goes bankrupt between now and then, will I still have the reservation at Aulani's? When I paid in full, I believe the owner got 70% and had to transfer points, with the final 30% being paid to them on the first day of the reservation. But can the owner remove those points for any reason if David's goes under?

thanks for your insights!

The owner could cancel the reservation if they wanted to, up to the day of checkin, due to not getting the 30% owed to them on day of checkin. Hopefully the owner would communicate with you beforehand (they have your contact information because they needed it to make the reservation in the first place) and work with you in some way, so that you wouldn’t show up at Aulani and be surprised not to have a reservation.

Hope that won’t happen to you!

 

[paddles]

thanks for your quick reply. It's tough because it's not clear if Aulani will even open up by Dec....

But I'll keep positive thoughts. I REALLY would love a trip to Hawaii, so fingers crossed

 

[YourEveryDayAdam]

Hi everyone - I've read some of this very long thread, but haven't gotten through all of this.

We're currently booked through David's for an Aulani trip over Christmas. I've never used them before and was really worried about booking a non-refundable trip. Lesson learned. If the world is opened up by then and the resorts are open, we'd like to go.

The question I have is if David's goes bankrupt between now and then, will I still have the reservation at Aulani's? When I paid in full, I believe the owner got 70% and had to transfer points, with the final 30% being paid to them on the first day of the reservation. But can the owner remove those points for any reason if David's goes under?

thanks for your insights!

Technically, the DVC owner can cancel the reservation at any time, whether David's goes bankrupt or not. What is supposed to protect the reservation is the 30% of the money that David's owes the owner to guarantee that the reservation exists when you check in.

If David's does goes bankrupt, then there is more than a fair chance the owner cancels the reservation because the owner isn't going to get paid all of the money owed to them. It's going to depend on the individual owner. Some may keep the reservation. Others might cancel it to reclaim their points. As the renter, there isn't anything that YOU can do about it. Hopefully, if the owner cancels, they at least let you know so you aren't in a lurch to find accommodations when you arrive. I would see about checking the status of the reservation before you get on the planes to make sure it's still valid.

Be assured that if David's does go bankrupt and you don't have a reservation, then you can file a chargeback with your credit card company and probably get a full refund through them. This is true whether David's still exists or not. Additionally, if Aulani/Hawaii isn't reopened by the time your trip comes around, then you should also be able to file a chargeback through your credit card and get a full cash refund through them as well. I would recommend NOT taking the "voucher" offer he has been giving renters...Cash is king!

 

[WDWEPCOT]

I agree 100% with the above - please check your resv before you leave and if the resort is not open immediately file a chargeback DO NOT take that voucher !!
Good Luck I hope it works out for you!!

 

[paddles]

Thanks for all the responses. I called Chase about my Reserve card earlier today and they said I wouldn't get anything back if David's goes under (Chase says they don't cover insolvency of a business or the pandemic). For those who got a chargeback credit, I think it only happened when the the resort is actually closed.

Hopefully, David's stays liquid enough to last through Dec. Otherwise, I may be SOL. And I would definitely NOT take a credit voucher!! I had a Royal Caribbean cancel my cruise in June, and I took the money and ran!

 

[CarolynFH]

Thanks for all the responses. I called Chase about my Reserve card earlier today and they said I wouldn't get anything back if David's goes under (Chase says they don't cover insolvency of a business or the pandemic). For those who got a chargeback credit, I think it only happened when the the resort is actually closed.

Hopefully, David's stays liquid enough to last through Dec. Otherwise, I may be SOL. And I would definitely take a credit voucher!! I had a Royal Caribbean cancel my cruise in June, and I took the money and ran!

I sincerely hope all goes well for you. But if Hawaii and Aulani are still closed in December, you can file a chargeback with Chase since David won’t be able to provide the accommodations you paid for. Don’t take a voucher then - if David goes bankrupt it will be worthless.

 

[lawboy2001]

I don’t think that will be an option many renters will take. The number of owners that believed they didn’t have to refund money for reservations when the resorts were closed is going to be enough to scare off many previous renters from going that route. For me personally it isn’t worth the risk going forward.

At least with a point rental company I can pay using a charge card and get my money back by disputing the charge. That option isn’t available when renting directly from the owner.

I will be just booking hotel rooms in the future.

Under the contract with David's, owners didn't have to refund the money they had been paid in the resort closure situation. David's had to refund the renters.

I don't disagree with your broader point though -- there will be a much less vibrant DVC point rental market in the future!

 

[Brianstl]

Under the contract with David's, owners didn't have to refund the money they had been paid in the resort closure situation. David's had to refund the renters.

I don't disagree with your broader point though -- there will be a much less vibrant DVC point rental market in the future!

I am not talking specifically about David’s here. There was multiple owners on this site talking about About how their private contacts were non refundable ignoring the fact that no matter what you put into the contract that if you can’t make the accommodations available, the owner has defaulted on the contract.

It should be noted that applies to owners that rented through David’s, too. David’s just decided not to pursue that route because he was trying to not upset owners. Without owners willing to make points available to him, he doesn’t have much of a business. He decided that trying to limit the anger of owners by not telling them they were legally obligated to return the money for rentals during the resort closures was best for his business.

 

[YourEveryDayAdam]

Thanks for all the responses. I called Chase about my Reserve card earlier today and they said I wouldn't get anything back if David's goes under (Chase says they don't cover insolvency of a business or the pandemic). For those who got a chargeback credit, I think it only happened when the the resort is actually closed.

Hopefully, David's stays liquid enough to last through Dec. Otherwise, I may be SOL. And I would definitely NOT take a credit voucher!! I had a Royal Caribbean cancel my cruise in June, and I took the money and ran!

Honestly, I have to COMPLETELY disagree with the assessment you got from Chase's representative. I think you were provided bad information. EVERYONE is responsible for the transaction. It starts with the merchant and works its way all the way back through the chain to your credit card issuer. If the merchant can't pay then the merchant's credit card processor pays...if they can't pay (exceptionally rare...has never happened) then visa/mastercard will pay...If visa/mastercard won't pay (due to policies) then the issuer bank (your bank) will be required to pay.

From https://www.creditcards.com/credit-card-news/deposit-refund-bankrupt-company-1267/

Of course, if the merchant’s gone bankrupt, there may not be any money in its account to deduct. In this case, Visa, MasterCard and American Express require that the acquirer cover the loss. It’s not merely a suggestion, says Teri Charest, a spokeswoman for U.S. Bank. “Banks are bound by [these] rules and parameters established by the card networks,” she says.

I hope it doesn't get to that point, but if it does get to it...still file the chargeback. Just don't mention anything about them going bankrupt. Just say that you paid for a reservation and the resort is closed. merchant isn't providing a refund. At that point the chargeback will go to the acquiring bank (David's Bank) and it's their responsibility to collect from David's. But they'll pay your bank who will then pay you.

I think perhaps you ended up in Chase's travel insurance department? It's true that their travel insurance probably wouldn't cover this situation. But you want to specifically end up in their "charge back" (sometimes called "disputes") department. Chargebacks are another and different kind of protection that will protect you in the case that you don't receive the goods or services you paid for.

 

[WDWEPCOT]

Thank you so much for clarifying all that is involved with credit cards - it is very helpful to all of us !!!