Davids DVC: Rental reimbursement or rescheduling?

[Dracula]

That's an interesting view that I didn't even consider. Taking the voucher, the renter would already be paying an additional 5.5% more at the new rate. So the compromise would eliminate the risk of a voucher for the cost of $1.1/pt. Insurance if you will. I wonder as a renter, how many would be a proponent of that.

Keep in mind that vouchers are only issued for reservations canceled by Disney. This $2.20 extra per point, if David is bankrupt, would work well on reservations that can be fulfilled, either as planned or rescheduled, but it would not work on expiring points.

 

[merry_nbright]

My biggest fear is availability if we have to cancel a week in June. It seems like rooms are going so fast, part of me is panicking over that now.

 

[Yinn]

My biggest fear is availability if we have to cancel a week in June. It seems like rooms are going so fast, part of me is panicking over that now.

I think appearances may be worse than reality. I've been able to reschedule into several trips in August, November, and Feb. The thing is, it's changing regularly. One day it'll be nothing is available, the next it's a ton of stuff. There's a whole lot of us changing things every day.

 

[merry_nbright]

I think appearances may be worse than reality. I've been able to reschedule into several trips in August, November, and Feb. The thing is, it's changing regularly. One day it'll be nothing is available, the next it's a ton of stuff. There's a whole lot of us changing things every day.

Ah, thank you! I’m having mental panic attacks over this all day. As if the stress from work and this mess isn’t bad enough.

 

[Galun]

Although if they are stating 2000+ rentals have already been affected and this goes on for another 2 months we could be looking at 5000+ rentals. If they were for an average of $3000 each we are looking at $15,000,000. If 40% of that has already been payed to owners we are talking $9 Million still in their possession. If 50% of that can be rebooked through cash bookings for a new (or existing but different) company, they get their commission on that and then could claim additional monies owed to a different LLC by ramping up their debt from another company. The above is all fictional and could be on the very high end, I'm just trying to illustrate the amount of money that could be in play here.

Let’s see. 2,000 rentals affected in 2 months. So that implies 12,000 rentals a year. Let’s say it’s 10,000 reservations. Let’s say the average cost of a rental is $2,000 - most people go to Disney at least for like 5 days?

That implies $20,000,000 in revenue. He keeps $4,500,000 at 22.5% commission ($4.5 pp / $20pp). As a broker most of the business cost is employees, maybe some marketing. I read somewhere he had around 40 employees? So his employees make $100,000 a year?

My conclusion is that 1). I have no idea his cut is this deep; 2). He is not giving me the protection that I think I am getting; 3). There are hundreds of thousands of people who wants DVC reservations.

Screw that. I will no longer rent out my points through him going forward.

 

[Galun]

Third.. If you take the voucher option and reschedule for say, November, and Davids goes bankrupt in June you can still file for a charge back and most likely get your money back.

You probably will not. A chargeback ruled in your favor means money from the merchant to you. If the merchant is bankrupt when you file the chargeback, there is no money to go back to you even if the chargeback is ruled in your favor.

In my opinion, you should file the chargeback immediately when the reservation is canceled through no fault of your own, and the travel voucher was not an acceptable option. If the chargeback is ruled in your favor, you make a new reservation with cash through Disney that can be canceled without penalty. If the chargeback is later reversed, you‘d still have the voucher so you cancel the cash disney reservation and rebook with the voucher.

 

[Dracula]

Let’s see. 2,000 rentals affected in 2 months. So that implies 12,000 rentals a year. Let’s say it’s 10,000 reservations. Let’s say the average cost of a rental is $2,000 - most people go to Disney at least for like 5 days?

That implies $20,000,000 in revenue. He keeps $4,500,000 at 22.5% commission ($4.5 pp / $20pp). As a broker most of the business cost is employees, maybe some marketing. I read somewhere he had around 40 employees? So his employees make $100,000 a year?

My conclusion is that 1). I have no idea his cut is this deep; 2). He is not giving me the protection that I think I am getting; 3). There are hundreds of thousands of people who wants DVC reservations.

Screw that. I will no longer rent out my points through him going forward.

There are other costs: 3% credit card fees ($600k per year). Rent for his office space. Computer equipment and software. Then, employee costs are more than just wages - Ontario levies additional taxes on the employer. Legal fees for the attorneys he is consulting right now.
But your conclusion is very valid - it is more beneficial for renters and owners to meet in the market without a broker.

 

[YourEveryDayAdam]

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[stlrod]

Everybody does realize don't they that there are a lot of calculations being done on a 2000+ number provided by David? Seems like another flawed model.

 

[Galun]

This is only half true. The truth is MUCH more complicated. The end result is, that no matter if the original merchant goes bankrupt, the card holder still gets their money back.

Thanks for the detailed post. That's very good.

So, if the customer's issuing bank is on the hook for the chargeback of a bankrupt merchant, can't the issuer just deny the chargeback? It would be one thing if there is a merchant to go after the funds. But if the merchant is bankrupt and the issuing bank is responsible, perhaps they will now point to the no refunds clause. It's not like the individual customer will have the resources to fight the denial of the chargeback against their issuing bank.

I had personal experience buying wine futures from a merchant that went bankrupt. Turned out the merchant was building a Ponzi scheme, using money from the wine futures to buy wine on the market to deliver. I initiated a chargeback with Amex and they paid for it, but that wasn't the norm. Most people tried the chargeback route and got denied. Even some people who had Amex got their claim denied. I imagine it's a combination of size of the chargeback and relationship / money making potential from my spend with amex. But in this example, your explanation does make sense - Amex gave me the credit for the chargeback, and I imagine they took the loss.

 

[fsjking]

Thanks for the detailed post. That's very good.

So, if the customer's issuing bank is on the hook for the chargeback of a bankrupt merchant, can't the issuer just deny the chargeback? It would be one thing if there is a merchant to go after the funds. But if the merchant is bankrupt and the issuing bank is responsible, perhaps they will now point to the no refunds clause. It's not like the individual customer will have the resources to fight the denial of the chargeback against their issuing bank.

I had personal experience buying wine futures from a merchant that went bankrupt. Turned out the merchant was building a Ponzi scheme, using money from the wine futures to buy wine on the market to deliver. I initiated a chargeback with Amex and they paid for it, but that wasn't the norm. Most people tried the chargeback route and got denied. Even some people who had Amex got their claim denied. I imagine it's a combination of size of the chargeback and relationship / money making potential from my spend with amex. But in this example, your explanation does make sense - Amex gave me the credit for the chargeback, and I imagine they took the loss.

I suspect the bank eats a lot of them with customers they want to keep. Our company does about 100k a year with Stripe. We are fairly sure that we've had people initiate chargebacks, but not a single one has been even forwarded to us for dispute let alone taking the money out of our account. Last year we added square terminals for in person sales and had 3 chargebacks. All 3 ended up being resolved in our favor, but they did take the money out originally then return it. But I'm guessing it's a difference between a processor we've dealt with for a number of years, and one we were a new customer with. I'd say it's a similar process on the customer side. One's they want to keep, they eat. One's they don't, they refuse. Now that doesn't account for what the PP was talking about regarding the laws of chargebacks. I'm sure that weighs in on the decision heavily.

 

[Mumof4mice]

Anticipatory breaches based upon hearsay and innuendo rarely go well. However, if you have correspondence from David's which states that you will not be paid the remaining 30% per the contract, or a posting somewhere on the web from David's that they aren't paying the 30%, it's not an anticipatory breach at all. I recommend, as a first step, to contact David's in writing asking them to have David himself write a letter of personal guarantee of the final payment, stating that you have read that his company has defaulted on paying the remaining 30% of some contracts, and see what his response is. If you don't get a positive response, or a response at all, then I suggest you speak to an attorney.

That's what I thought. Hearsay and my concern about their solvency are insufficient grounds to justify an anticipatory breach.

Thank you for your explanation and practical suggestions @CraigInPA . I will email David's and ask for a personal guarantee that they will pay the balance even if resorts are closed. Hopefully we could come to an amicable agreement as the amount at stake isn't worth the legal costs or hassle of taking it further.

 

[cmrdgrs]

<snip...> I would not expect David to have millions of dollars at his disposal. <...snip>

Obviously, this is all speculation on what he has or doesn't have in the bank. This broker has been making a LOT of money for heck of a L-O-N-G time. If he didn't frivolously spend his profits, I do think having millions is possible.

 

[YourEveryDayAdam]

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[VeroGuy]

You also seem to be under the belief that the owner and renter have a contract that excludes David's and supersedes the agreements in place between them and David's. That is not the case. You need to look at all 3 contracts to understand why David's is actually responsible to both parties, but neither the owner nor renter have a responsibility to each other beyond the owner not cancelling the reservation made (which no one can argue is the case in this situation).

Couldn’t the argument be made that Disney as the property management company acted on behalf of the owners in this case?

 

[TS1998a]

Has anyone gotten the remaning 30% on a Disney-cancelled reservation? One of my renter's was supposed to check in today (offered to reschedule but no response from David's on this reservation) and no payment. Just curious before I send them yet another email that will likely be ignored as well.

 

[CraigInPA]

Couldn’t the argument be made that Disney as the property management company acted on behalf of the owners in this case?

Acted on behalf of the owners, yes.

Acted at the direction of the owner whose name appears on the rental agreement, no.

You can't extend liability to the owner by the fact that all DVC members have hired a company which acts autonomously for the well being of the entire group of members. That's like trying to sue the President of the United States because a restaurant you invested in failed because the President issued an order for social distancing.

The contract is clear in how an individual owner may cause a breach. The closure of the resorts is not included in the list of potential owner breaches. Had a force majeure clause been included, liability for this situation would have been clear. This is really a case of incompetent contract drafting, and it's going to bite David's hard as they will have to assume liability to both parties.

 

[CraigInPA]

I suspect the bank eats a lot of them with customers they want to keep. Our company does about 100k a year with Stripe. We are fairly sure that we've had people initiate chargebacks, but not a single one has been even forwarded to us for dispute let alone taking the money out of our account.

There are two fees paid when you process a transaction. The first is a transaction fee. It's usually a small amount of money, like $0.01 to $0.35 and you pay it regardless of whether the charge is accepted or not. The second fee is the discount rate, which is a straight percentage of the total amount collected. This is usually between 1.25% and 5%. The lower figures are for established merchants who move a lot of volume. People using Stripe and Square typically are paying high transaction fees and discount rates because they aren't doing millions of dollars a year. If you're not getting chargebacks from Stripe, it's likely they are eating those chargebacks because your discount rate and transaction fees allow them to write off a certain number per year. If the number of chargebacks reaches a point where they aren't making money, they'll suspend your account.

 

[ziravan]

“Due to the incredible impact of the COVID19 pandemic, we have been forced to step outside of our policy in order to be more accommodating to the affected travelling families that had secured reservations that now have been cancelled by Disney due to the closure of Disney Resorts.”

This is the money quote from David’s email: an admission that he is violating the terms of the original contract, “forced to step outside our policies”.

THIS is the documentation I would be giving the CC companies on a chargeback - David admitting that he’s no longer honoring the contract.

 

[Galun]

My only thought with your situation with AMEX is that perhaps they saw "Wine Futures" and immediately ruled it investing, which wouldn't qualify for protection, since investments can lose value. But I can't say for sure what happened since I have VERY incomplete information. I think since you got your money back, you likely got someone who processed your claim who didn't understand it fully...they may have just saw "you bought wine, you didn't receive wine, seller can't prove they sent wine...chargeback approved"

Wine futures are actual purchases, it’s basically wine maturing in barrel that haven’t been bottled for release. So it should be the same goods not delivered. The merchant was supposed to take my money to buy the wine that I designated. Instead he took the money to fill other people‘s orders. He also bought a few houses, a boat, and paid for some “internet dates“ if I remember correctly. anyways...

The scope of chargebacks you described certainly put it in perspective. This is really straight forward - the average processor isn’t going to understand dvc point system and analyze a contract. They see no check in, not the renter‘s fault, vendor refused refund.

Renters really ought to go for chargebacks. If you chargeback you will most likely win and you get your money back. In the small chance that you lose, you get the voucher.