In a first, Centre plans to turn the screws on holiday home clubs ...
The consumer affairs ministry is planning to introduce guidelines with strict penalties for holiday home clubs that fail to provide what they promise, two persons directly involved in the process said.
The government is exploring different 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, the first person said, who spoke on the condition of not being named.
“Instead, these clubs often offer these facilities to higher-paying non-member guests and prioritize private, non-member bookings over those of permanent members," the first person said.
“It falls under unethical trade practices, and the Central Consumer Protection Authority (CCPA) has the mandate to act against it,” this person said.
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,” this person said.
The membership cost of such holiday home clubs ranges from ₹3 lakh to ₹11 lakh for a 25-year period. Initially, consumers are required to pay 25% of the agreed-upon membership fee upfront, while the remaining 75% is paid through EMIs.
The basic offer that these establishments provide 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 find themselves running from pillar to post to get their money back if they plan to exit their membership,” the second person said, citing the complaints.
“The companies impose so many conditions that it becomes extremely difficult for members, i.e., consumers, 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 second person added.
The Holiday Home Club concept involves a membership-based system where individuals or families can join a club that offers access to a variety of 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.
Queries emailed to the consumer affairs ministry, along with some leading holiday clubs remained unanswered till press time.
While talking to Mint over the phone, consumer rights activist Kashyapnath Upadhyaya said, “I urge the Ministry of Consumer Affairs to take strict action against all such holiday home clubs for breaching the trust of consumers.”
“Consumers from all classes fall prey to their ‘lucrative’ offers. The government's plan to act against these unethical practices is a well-thought-out move to protect the interests of consumers,” said Upadhyaya, the president of Consumer Protection Association (CPA)—a non-profit organization recognized by the consumer affairs ministry.
The CCPA, which reports to the consumer affairs ministry, has brought separate guidelines on misleading advertisements by IAS coaching institutes, prevention of greenwashing, and norms to prevent pesky calls are also on the cards of CCPA.
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First Published:
21 Jul 2024, 05:05 PM IST
HomeIndustryIn a first, Centre plans to turn the screws on holiday home clubs, impose penalties for unfulfilled promises
