Lawsuit

[zebsterama]

I'm sure someone else on this board has spun this angle (it’s probably happened at some point) but I figured I'd give it a shot. Apologies if this argument has already been made.

I understand that the DVC POS states that essentially the act of being able to book other resorts/use a members points for non-guaranteed perks (like booking a cruise etc.) is something that DVC provides at their discretion.

I may be stretching it a bit here, but could someone sue (do you think someone would have a case) where a party feels that they are being penalized (i.e. they purchased or sold post 3/20 via resale) unfairly and unjustly (one could even say discriminated against) because DVC is unfairly using their perks (leverage of discretion) to decide who has access to those 'perks' vs. who doesn't.

Wait! ... Before you jump all over me, let me articulate further ....

On what grounds - other than because DVC just prefers people who have bought directly from DVC, and those that bought resale before 3/21/11 - does DVC justify offering perks to some of its lease holders and not others?

Could some kind of resulting lawsuit end up this way - where a judge says...

"OK DVC, you can offer 'perks' if you really want to outside of the contract (if you so choose), BUT you cannot arbitrarily pick and choose WHICH lease holders you give perks to and WHICH lease holders you leave out simply because some have bought directly, some have bought via resale before 3/21/11 and some bought after 3/20/11. That's discriminatory in nature.

DVC therefore your choices are to either:

a) start charging for such perks across the board
b) offer the same perks to everyone regardless of how they attained their contract/lease
c) offer no one lease holder special perks"

I hope that makes sense.

I’m sure that the DVC lawyers have covered this off somehow – but I was wondering if any of the legal beagles on the board have looked at this issue from this perspective.

Remember law is not a science it's an art!

Cheers,
Zebsterama

 

[Brian Noble]

On what grounds - other than because DVC just prefers people who have bought directly from DVC, and those that bought resale before 3/21/11 - does DVC justify offering perks to some of its lease holders and not others?

None. Developer purchase or resale purchase prior to 3/21/11 is exactly the basis.

BUT you cannot arbitrarily pick and choose WHICH lease holders you give perks to and WHICH lease holders you leave out simply because some have bought directly, some have bought via resale before 3/21/11 and some bought after 3/20/11. That's discriminatory in nature.

I'm not a lawyer, but I'm not aware of a legal basis for this argument. Disney can choose to reward (or not reward) its customers in more or less any way it chooses. If tomorrow Disney decided that anyone wearing a green shirt had to pay double to get into the park, that would be within their rights.

There are some forms of discrimination that are illegal---for example, Disney could not decide to rent hotel rooms only to white people---but they are fairly specific.

 

[zebsterama]

I'm not a lawyer, but I'm not aware of a legal basis for this argument. Disney can choose to reward (or not reward) its customers in more or less any way it chooses. If tomorrow Disney decided that anyone wearing a green shirt had to pay double to get into the park, that would be within their rights.

At first glance I would agree with you, and if DVC offered random perks to the odd member every once in a while then I would argue that (apologies just playing devil's advocate) yes you're right, but maybe this could be seen as discriminatory because the "perk" is not given arbitrarily, it's given as act of DVC policy, even IF that policy is not clearly written into the contract; therefore maybe one could argue that it's unfair/discriminatory.

Don't get me wrong -- I DON'T KNOW ... I'm not saying I'm right ... it does seem a little 'fishy' to me that they can do this to some lease holders and not be held to do it to all lease holders -- clearly they've done this to those lease holders they deem as arbitrarily unworthy/less desirable.

One might argue that RIGHT NOW its policy and NOT a perk -- therefore you should take it away from everyone -- or give it to everyone -- or force those that want it to pay a fee for it.

I have no idea if what I'm saying has a lick of weight to it - just tossing around the idea/argument.

Cheers,
Zebsterama

 

[Anewman]

"OK DVC, you can offer 'perks' if you really want to outside of the contract (if you so choose), BUT you cannot arbitrarily pick and choose WHICH lease holders you give perks to and WHICH lease holders you leave out simply because some have bought directly, some have bought via resale before 3/21/11 and some bought after 3/20/11. That's discriminatory in nature.

They sure CAN "arbitrarily" pick and choose when it comes to perks, but they can not pick and choose when it comes to items specifically promised in a contract.

If Disney chooses to give lifetime free admission to all their parks if you buy DVC direct from them, it is well within their legal rights to do so. If they choose to EXTEND those rights to all those that purchased DVC via resale prior a 03-21-2011, it would also be within their legal rights.



PERKS are considered EXTRAs, there is no legal obligation to offer perks to ANYONE or EVERYONE.

 

[sweetdana]

As long as the whole group is not paying for them (say in MF), I do not see why DVD cannot reward direct buyers. They are grandfathering everyone in, and only not offering it to new buyers of resale. (All buyers know this ahead of closing now, with a few hours of research.) They were very good in making it only going forward, they grandfathered everyone in and gave them 3 months to even buy resale.

I suspect 1 reason they are stepping in and SHOULD, is a possible stop to trades on cruise lines and other hotels. 10-15-25-30 yrs from now when say an OKW contract is selling for 5-15$- 35$ a point. (Because they have 2=4=8 yrs left on them. Picking up an OWK contract would be a cheap way to get a cruise a couple times in, pretty much by cost of MF only. I can see them not wanting to take a loss. IE the new cheapest way to book Disney Cruise is buy a resale contract about to expire. This would be a terrible loss for Disney.
Why pay 190$ a point for a 50 yr contract when you could pay 10$ a point for a 5 yr contract.. Totally examples on prices, but this is a fix before it happens. Right now all contracts have 30 + yrs left.. but every yr that # gets smaller.

 

[zebsterama]

They sure CAN "arbitrarily" pick and choose when it comes to perks, but they can not pick and choose when it comes to items specifically promised in a contract.

If Disney chooses to give lifetime free admission to all their parks if you buy DVC direct from them, it is well within their legal rights to do so. If they choose to EXTEND those rights to all those that purchased DVC via resale prior a 03-21-2011, it would also be within their legal rights.



PERKS are considered EXTRAs, there is no legal obligation to offer perks to ANYONE or EVERYONE.

I'm wondering if someone can make the argument that in fact these are NOT perks - they are policy.

I didn't say that they'd be successful at it -- I'm wondering if the argument could be effectively made.

One might argue that if NO ONE who bought points via re-sale post 3/20/11 is able to use their points for a cruise BUT everyone else can, then this no longer a perk, it's policy (it's just happens to be a policy that is not explicitly stated in the written contract). It’s not like some lease holders get valet service and other do not. All other aspects of service are equal across the board.

Just playing devil's advocate ... again I don't think it sticks in court, just trying to stir the conversation a little.

Cheers,
Zebsterama

 

[Greysword]

...What I don't like is their two tiered sytem. If they took perks away from all memberships that is fair and equitable, we all ,including Disney lose the same perks. By only removing perks from the re-sale market they have made an un-fair market, that has de-valued every member that wishes to sell. You either now have to take what Disney gives you or take a greatly reduced price on the secondary market.

Why greatly reduced? Because it no longer has all the benefits of a direct purchase. If you were a new buyer would you buy a membership with more perks or less.

I understand these points, and I would postulate, based on your statements, that DVD simply rebalanced the value of the resale market points to equal the value of direct purchase points.

To expand, I will use SSR, since it is the most extreme example:

Disney Vacation Development is selling brand new (or greatly refurbished warrantied) points at $95 each. With these new points, the member gains a lot of additional perks along with the base contract.

The resale market is selling used points at $50 per point. This is a 47% discount from the new point price. For this discounted price, purchasers were getting the same perks and benefits as new points, which increases the value of these points to exceed the value of the same number of new points.

By removing perks from resale contracts (used points), DVD essentially decreases the value of these points to match the new point level, thus normalize the two. Now the value of each point (new or resale) is closer than it was on March 19th.

Although this was mainly to assist DVD, I think this action more closely fulfilled their inherent promise of maintaining the value of my points instead of hindering it. It may hinder the resale value, but as long as I own the points, this policy maintains the current value for which I paid a premium.

Related notes, DVD did make it quite clear that the membership was not an investment, and they would not be able to predict future returns should I wish to sell (in advertising material and the POS). Also, the price per point on the resale market for SSR was steadily dropping, and I do not think this would have changed if the tiered system was not put in place. As such, all I really had was the initial value of the points, for which I paid, anyway.

Based on these arguments, I think the decision by DVD to remove these benefits was a good one.

- Chris

 

[Sandisw]

I'm wondering if someone can make the argument that in fact these are NOT perks - they are policy.

I didn't say that they'd be successful at it -- I'm wondering if the argument could be effectively made.

One might argue that if NO ONE who bought points via re-sale post 3/20/11 is able to use their points for a cruise BUT everyone else can, then this no longer a perk, it's policy (it's just happens to be a policy that is not explicitly stated in the written contract). It’s not like some lease holders get valet service and other do not. All other aspects of service are equal across the board.

Just playing devil's advocate ... again I don't think it sticks in court, just trying to stir the conversation a little.

Cheers,
Zebsterama

Maybe a way to look at it from this point forward is that they are saying they are giving the ORIGNIAL OWNER the perk and not that it is a perk of the contract. Think of it as a non-transferrable perk--just like the pin codes they send out for discounts.

So when you buy from Disney, they give you the option of using your ponts for Disney Collection, etc. Bascially, its YOUR perk and not the contract's perk. Its like an AP--if Disney says to you that we will give you AP's for 5 years as long as you own the contract. But, when you sell, that benefit is gone.

Remember, this benefit has changed for EVERYONE at this point. Even those that currently own points, bought direct or resale, will not be able to sell the contract with that perk/policy.

 

[zebsterama]

Maybe a way to look at it from this point forward is that they are saying they are giving the ORIGNIAL OWNER the perk and not that it is a perk of the contract. Think of it as a non-transferrable perk--just like the pin codes they send out for discounts.

So when you buy from Disney, they give you the option of using your ponts for Disney Collection, etc. Bascially, its YOUR perk and not the contract's perk. Its like an AP--if Disney says to you that we will give you AP's for 5 years as long as you own the contract. But, when you sell, that benefit is gone.

Remember, this benefit has changed for EVERYONE at this point. Even those that currently own points, bought direct or resale, will not be able to sell the contract with that perk/policy.

Yeah I think that makes sense.

Does anyone know if the POS changes for a person who buys a re-sale ... are they sent a new POS with new restrictions after one passes ROFR?

I would think that the language of the contract would have to change for persons who buy re-sale.

Cheers,
Zebsterama

 

[Chuck S]

I'm interested in knowing if anybody has an opinion on how this may help current DVC owners. Are there benefits to this new policy that I am overlooking?

Possibly, you see, in order to pay for those non-DVC options, DVC rents out and equivalent number of units for cash, using those points.

If the unit does not rent, or has to rent for a highly discounted rate, the cost would have to be made up through dues. If we assume in this economy that demand for cash DVC unit reservations has gone down, the likelihood of renting the unit and recouping the price of the trade also diminishes.

Rather than simply eliminate the option for all members, Disney used it to the advantage of the sales arm, by eliminating the perk from future resales.

If the number of cash rooms outstrips demand, after seeing the affect of the change to the point where the costs of trades are not offset, either expect trades to take even more points, or the perk to be limited further.

 

[Chuck S]

Yeah I think that makes sense.

Does anyone know if the POS changes for a person who buys a re-sale ... are they sent a new POS with new restrictions after one passes ROFR?

I would think that the language of the contract would have to change for persons who buy re-sale.

Cheers,
Zebsterama

I think there will probably only be a one or two page loose addendum to any new POS, mush like the page we had to sign specifically saying we understood the free park pass program would end December 31, 1999.

Whenever there is new printing of the POS, the addendum would like be bound in at that time.

 

[Dean]

I do not understand what you do not understand. I am not asking Disney to ensure my real estate membership never loses value. As the contract matures it will naturally depreciate. If Disney wants to change the perks of membership that is also within their rights. What I don't like is their two tiered sytem. If they took perks away from all memberships that is fair and equitable, we all ,including Disney lose the same perks. By only removing perks from the re-sale market they have made an un-fair market, that has de-valued every member that wishes to sell. You either now have to take what Disney gives you or take a greatly reduced price on the secondary market.

Why greatly reduced? Because it no longer has all the benefits of a direct purchase. If you were a new buyer would you buy a membership with more perks or less.

Maybe members who have never thought about selling don't understand all this, or maybe just don't care. It only affects you if you decide to sell. I hope I have explained my position and represented my position well. Now I have to go apologize for one of my previous posts.

You are looking at this emotionally and based on personal implications. To use ethical and timeshare in the same sentence is a bit of an oxymoron, even for DVC, Marriott and the like, IMO. The ONLY question as to what they can do or the reasonableness of such is the legal test. Once you get beyond that it's simply how you feel about it vs how I do. I do understand the bad taste about one class vs another but DVC didn't remove a single thing from a current owner and any future resale buyer has the opportunity to be warned ahead of time. Given that the legalities clearly state that one should not expect rental or resale return and they Disney does NOT have an obligation to protect the owners resale, which I suspect is the fundamental issue you disagree with. These are perks that are controlled by DVD and could be removed for all tomorrow. BTW, other timeshare companies, including those based in FL or with resorts in FL, have successfully done the same or more.

If enough people made it known that they don't like this policy Disney will change it. If everybody claims they are happy than nothing will change, except of course possibly losing more perks.

I'm interested in knowing if anybody has an opinion on how this may help current DVC owners. Are there benefits to this new policy that I am overlooking?

Only if sales go south and DVD is convinced this is the main reason. More likely is they'll change to something even more dividing than go backwards though. IMO it doesn't matter if it helps current owners however, it's likely that this change will cushion negative changes in the cash exchange areas and may slightly improve availability at times related to less cash exchanges and therefore less rooms secured for cash. But if it does, it'll be a minor benefit. It's also possible that some that would have sold will be more likely to secure high demand times and rent rather than selling. We'll likely never know enough specifics to know about this issues.

but are angered that I dare say something negative about the Great Disney

Also, if you'll look at my history you'll see that I have been more than critical of DVC and DVD where appropriate. To the point that I was likely seen as overly so when it wasn't popular on this board. However, when it comes to this change, the ability to reserve a full week at at time, two reallocations and the valet parking issue; DVC/DVD were absolutely in the right on all fronts. And to be honest, ALL of them affected me somewhat and all in the negative, and I still think it was the right thing to do.

I think a large % of the unhappy group with the various issues I mentioned above can be lumped into one of several categories, or more than one.

• Didn't read and/or understand the paperwork they had in front of them.
• Assumed it wouldn't happen (because it's Disney, because it hasn't happen yet, etc).
• Believed a guide who gave them then then current information or misunderstood the guide in a way that was not intended.

I'm sure someone else on this board has spun this angle (it’s probably happened at some point) but I figured I'd give it a shot. Apologies if this argument has already been made.

I understand that the DVC POS states that essentially the act of being able to book other resorts/use a members points for non-guaranteed perks (like booking a cruise etc.) is something that DVC provides at their discretion.

I may be stretching it a bit here, but could someone sue (do you think someone would have a case) where a party feels that they are being penalized (i.e. they purchased or sold post 3/20 via resale) unfairly and unjustly (one could even say discriminated against) because DVC is unfairly using their perks (leverage of discretion) to decide who has access to those 'perks' vs. who doesn't.

Wait! ... Before you jump all over me, let me articulate further ....

On what grounds - other than because DVC just prefers people who have bought directly from DVC, and those that bought resale before 3/21/11 - does DVC justify offering perks to some of its lease holders and not others?

Could some kind of resulting lawsuit end up this way - where a judge says...

"OK DVC, you can offer 'perks' if you really want to outside of the contract (if you so choose), BUT you cannot arbitrarily pick and choose WHICH lease holders you give perks to and WHICH lease holders you leave out simply because some have bought directly, some have bought via resale before 3/21/11 and some bought after 3/20/11. That's discriminatory in nature.

DVC therefore your choices are to either:

a) start charging for such perks across the board
b) offer the same perks to everyone regardless of how they attained their contract/lease
c) offer no one lease holder special perks"

I hope that makes sense.

I’m sure that the DVC lawyers have covered this off somehow – but I was wondering if any of the legal beagles on the board have looked at this issue from this perspective.

Remember law is not a science it's an art!

Cheers,
Zebsterama

Could they sue, certainly, could they sue successfully, it's about as 100% as unlikely as anything else. But then when McDonald's gets sued for hot coffee that the customer would have complained had it been luke warm, you never really know.

 

[bmtta2003]

Feels great to be back on topic. Thankyou Zebsterama I gladly pass the baton to you and greatly look forward to my retirement

 

[Jason@dvcstore]

Everything depreciates, homes, cars.

In my opinion houses typically appreciate. I have only purchased 2 homes in my lifetime and only sold 1 that did appreciate 57% in only 3 years so I was very blessed in that regard. I do hope when I sell my current house I am able to sell it for more than I paid.

I also think regarding DVC it depends when you purchased. There are some Old Key West owners who have bought directly from Disney for $51 per point or via resale for between $55 and $59 and those owners have still been able to sell for the same price. Typically, of course, if you buy from Disney you will take a much larger loss when selling then if you bought resale.

Jason

 

[Brian Noble]

those owners have still been able to sell for the same price

Excepting the ravages of inflation, of course. $51 in 1991 (the year OKW was selling for that price) is the equivalent of $79 in 2009. Probably about the same today, given the sideways economy we've been in.

A bit OT, but the one thing that astounds me is how little most owners think about, or even understand, the time-value of money in valuing DVC.

 

[ddoconnell]

I think that the only winner in a lawsuit of this type would be the lawyers. Everything is spelled out in the POS. It was stressed to us when we bought (and yes it was direct!) that what we were purchasing was prepaid resort accommodations. There were more perks when we bought than there are now, but the perks were just that....perks. We didn't buy based on perks, just on the fact that we could have a great place to stay at WDW every year.

We are also Disney shareholders and demand that our stock perform. This was a business decision to protect their base...and stay profitable.

I have been in the financial services and legal areas for my entire career and I can't tell you how many complaints I've dealt with where the person said, "No one told me...." Then I look over the contracts and it is clearly spelled out and the person's signature is on it. Same thing here. When you bought, it should have been for resort accommodations, not the exchanges. If you bought for exchanges you wasted your money!

We got exactly what we paid for and the new changes make sense to me and protect what I bought.

Ok....flame away!

 

[awilliams4]

I am new to DVC but I have a friend that has been an owner since the 1st beachclubs were built. I told him about the new developments with DVC. He was telling me he was planning on selling his points to buy baylake towers. So now he is wondering about what his points will be worth on the resale market. The way he sees it is that this is in breach of a contract if the value of the points go down because the value of the points should not change no matter who owns the points. So the points that he has now wont be worth as much now because of the new rules. If the government all the sudden comes out and says the dollar you have is only worth 50 cents if you give it to someone else. Therefore essentially devaluating the dollar. Anyway he was wondering if anyone is preparing to sue disney over this. I bought my points just a month ago so Im covered and I only plan on using them to go to disney and am hoping points go down in value so I can buy some more but everyone should be concerned if they plan on selling them anytime in the future if they allow disney to change what the points can be used for. What if they come out and say you can only use your points at your home resort next. There seems like there should be some protection for the owner of the points not just disney. I am sure this has been discussed before but just curious about your thoughts.

This is really flawed thinking. No where on the contract that your friend purchased does it say he/she has a right to trade out his/her points to stay at say, the Polynesian. This was just an extra benefit that was offered. This offering wasn't included in the purchase.

The value of the DVC contract for the most part will go down with time regardless of the extra bonus benefits that may be added or removed as time goes on. You can't sue anybody because of it.

What about the car just bought off the lot at the dealership, I bet the second it leaves the lot, it is worth less.

 

[awilliams4]

I am not a lawyer but have learned that winning the lawsuit is not always the goal. If a lawyer or law firm found a court to hear the case, it's possible to keep Disney tied up in litigation for years costing tons of time, money and bad publicity. If it lasted long enough Disney would be forced to settle.

What would that do for us DVC owners? Nothing the already overpriced gifts, food, and admissions would surely go up even more.

I don't believe lawsuit is the answer. However going public with DVC owner dissatisfaction would surely get Disney's attention. I have never bought into a time share before. I believe they are all rip-offs, but I trusted the Disney name, only to find I was ripped off anyway!

I have referred 3 friends into buying into DVC and now greatly regret it. I will now unfortunately advise people against the purchase.

Before you advise someone against something, you may want to educate youself a bit first so that you are in a position to give advice. How did Disney rip anyone off?

If they no longer offer free dining next year with a purchase of a resort room at rack rate, would you consider that a rip off too?!?!

 

[awilliams4]

The current changes are just one item to consider. The resale value of our 26 contracts have been going down for the last 2 years. Did Disney's changes and pricing cause the devaluation, maybe?

Transfer rule changes, banking rule changes, wait list rule changes, loss of free valet, 2 point reallocations, and increased software and website problems may have caused members to sell. Add that to increasing room problems, CM's with attitude and less room availability and you could say that Disney has caused our points to loose value.

Were we damaged, yes, can you prove it, probably not.

Bill

I would suggest that the wait list rule changes benefitted the program. I believe they lowered costs. Less high maintenance owners calls, less traffic, less labor, less costs, lower MF.

I would argue that the point allocation benefitted the program as well. I know of many DVC members that were very happy with the changes. Now I don't feel as if I have to work around the weekends when scheduling my vacations because the weekend requirements were SO HIGH that they modified that way people vacatationed.

I may be wrong on the valet, but weren't those paid for through MF's as well? 'If' they were, I would say this was good for the program as well.

Transfer rules......people exploit wholes all the time. At the end of the day, exploited holes cost someone money. Not arguing who ended up paying for those that exploited those rules but I would guess that somehow, someway, others paid for the exploits.

Over the past 3 years, all the changes I have seen are DVC tweeking the system for the long term benefit of all owners.

 

[awilliams4]

I do not understand what you do not understand. I am not asking Disney to ensure my real estate membership never loses value. As the contract matures it will naturally depreciate. If Disney wants to change the perks of membership that is also within their rights. What I don't like is their two tiered sytem. If they took perks away from all memberships that is fair and equitable, we all ,including Disney lose the same perks. By only removing perks from the re-sale market they have made an un-fair market, that has de-valued every member that wishes to sell. You either now have to take what Disney gives you or take a greatly reduced price on the secondary market.

Why greatly reduced? Because it no longer has all the benefits of a direct purchase. If you were a new buyer would you buy a membership with more perks or less.

Maybe members who have never thought about selling don't understand all this, or maybe just don't care. It only affects you if you decide to sell. I hope I have explained my position and represented my position well. Now I have to go apologize for one of my previous posts.

Disagree. The world and everything in it is tiered. If I buy BCV direct, I pay like $120 per point or whatever. If I buy resale, I pay around $80.

If I go Disney Dining Plan and spend more, I get two table service meals, if I don't, I get a Hot Dog and a snack.

If I pay Deluxe, I get the monorail, bigger rooms, nicer pad. If I go value, I get twin size bed and busses everywhere.

If I get 5 day base ticket. I get to go to the parks one per day, no more than 5 days within a 14 week period. If I spend more and get an Annual Pass, I can go whenever I want and park hop.

All members are not buying their points direct, so therefore they are different.

All guests aren't spending the same amount of money and therefore have different experiences.