Secondary Market and Price Fixing

[yitbos96bb]

What is the name of your state? Illinois


This was a topic of discussion on a Disney Forum website, so I thought I would post it and see if anyone knew the answer.

Disney has a timeshare program where they sell points to owners who then use said points to make reservations. Disney allows owners to "rent" their points to other owners and non-owners. Basically, the Owners will sell their points for one year at an agreed upon price (usually $10 per point) with the buyer and then will book the time for them OR if the buyer is a fellow owner, transfer the points to their accounts.

Recently some owners have been complaining that the price the points are being posted for on this forum site are too low. The forum has no control over the property, does not get any fee for allowing people to post and generally has nothing to do with the entire process other than as a place for people to advertise.

Many suggested that a minimum price be either enforced by the forum or agreed upon by many of the owners. Others have said that was price fixing and would be illegal.

This got me wondering a few questions:

1) Since this is a secondary market resell, would price fixing laws be applicable? Are these laws applicable to individuals selling personal items, such as someone selling on ebay, or their timeshare week as in this scenario?

2) If they are illegal, would people reselling need to have some sort of resale or vendor license to legally sell the items?

3) Would the income being generated need to be reported to the IRS?

4) What legal regulation is placed on the secondary market... in person to person sales such as this one? Fraud laws would apply obviously, but what other regulations?

Thanks a lot, I look forward to hearing from you.

 

[dallas702]

The real question is: why do people get involved with this idiocy?

 

[yitbos96bb]

The real question is: why do people get involved with this idiocy?

That is a matter of opinion. Given we vacation at Disney every year, it is much cheaper for us to do this than pay $350-500 a night for equivalent lodgings. However, that isn't really the point of the posting... it isn't about the pros and cons of timeshares but rather a question on whether something is legal or not. If you can answer the questions, I would appreciate it... if you do not know, please keep your opinions about timeshares to yourself as they are off topic and have nothing to do with the question at hand. Thanks.

 

[dallas702]

I'm not talking about timeshares. I'm referring to the point bartering and other online schemes that usually end up in disaster.

 

[yitbos96bb]

I'm not talking about timeshares. I'm referring to the point bartering and other online schemes that usually end up in disaster.

My apologies then. Misunderstood. I agree with you then on your previous post. I have never rented my points... It usually falls into 3 catergories... Those who have extras they aren't going to use and want to recoup a little bit instead of them going to waste... Since Disney allows you to do their Cruise Line and hotels for points, but the value isn't really there, some people rent their points and use the money gained to pay for that particular item as they can usually get nicer accomidations....Third are people who are trying to make a buck.

As I said, I don't rent my points. My interest is purely academic here... Just wanted to know if it fell with the letter of the law of Price fixing OR since it was a secondary market, similiar to what you would do on ebay, if it wouldn't fall under that law.

 

[divgradcurl]

1) Since this is a secondary market resell, would price fixing laws be applicable? Are these laws applicable to individuals selling personal items, such as someone selling on ebay, or their timeshare week as in this scenario?

Well, any time there is "collusion" to fix a price, whether in a primary or secondary market, there may be an antitrust violation. However, you generally have to have "market power" for an antitrust allegation to stick. If your secondary market effectively controls the sale of these points, then there certainly could be enough "market power" to find an antitrust violation. A quick call to the Department of Justice would probably answer your questions...

2) If they are illegal, would people reselling need to have some sort of resale or vendor license to legally sell the items?

Depends on the state, and whether you are merely selling you own points, or somebody else's points.

3) Would the income being generated need to be reported to the IRS?

Yes.

4) What legal regulation is placed on the secondary market... in person to person sales such as this one? Fraud laws would apply obviously, but what other regulations?

Whatever laws already exist covering the sale of goods.