Consumer protection guidelines for holiday-home clubs soon

The Consumer Affairs Ministry is planning to introduce guidelines with strict penalties for holiday-home clubs that fail to provide what they promise.

The government is exploring ways to check unethical trade practices by some holiday-home clubs that lure new consumers with the promise of superior amenities, but fail to provide such facilities to their registered members, a ministry official said. 

“Instead, these clubs often offer these facilities to higher-paying non-member guests and prioritise private, non-member bookings over those of permanent members," he said.

Unethical trade practice

“It falls under Unethical Trade Practices, and the Central Consumer Protection Authority (CCPA) has the mandate to act against it,” he added.

Section 89 of the Consumer Protection Act 2019 states that creating false or misleading advertisements detrimental to consumers can result in imprisonment for up to two years and a fine of up to ₹10 lakh. For subsequent offenses, the penalties increase to imprisonment for up to five years and a fine of up to ₹50 lakh.

Having received numerous complaints through the National Consumer Helpline (NCH) against holiday-home clubs, the ministry is reviewing these grievances and plans to shortly bring in guidelines and penalties to curb such unethical practices, the first among the two people mentioned above said.

“These complaints reveal a pattern where these establishments promise ‘heaven,’ but when it comes to delivering the services, consumers are left with experiences far from what was advertised,” the official said.

The membership cost of such holiday-home clubs ranges from ₹3 lakh to ₹11 lakh for 25 years. Initially,  consumers need to pay 25% of the agreed-upon membership fee upfront, while the remaining 75% is paid through EMIs.

Seven nights' stay for free 

The basic offer of these establishments is a 7-night stay per year at any of their properties, either domestically or internationally, for free, along with a 25% discount on food during the stay. “Although they promise seamless withdrawal, consumers often hard put to get their money back when they plan to exit the membership,” another official said.  “The companies impose so many conditions that it is hard for members to escape their ‘trap’. In most cases, consumers do not get their money back, and in the rare instances where they do, a significant amount is deducted.

The holiday home club concept involves a membership-based system where individuals or families can join a club that offers access to holiday properties or resorts. Members pay an initial joining fee and annual maintenance fees in exchange for the ability to book stays at different holiday destinations, often at a reduced rate compared to traditional holiday rentals or hotels.

Consumer rights activist Kashyapnath Upadhyaya said, “Consumers from all classes fall prey to the holiday home clubs' offers. The government's plan to act against these unethical practices is a good move to protect the interests of consumers.” Mr. Upadhyaya is the president of the Consumer Protection Association.

                                                          (By arrangement with livemint.com)