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May 2021

Friday’s Letter from America: Consumers being Blamed

Welcome to this week’s edition of Letter from America, since we first published on the subject of timeshare purchases and the consumer labeled as “gullible” and is to blame for their own woes, it has sparked quite a debate on various forums. Today we welcome another old contributor back to Inside Timeshare, Sheilah Brust, who is also a Tarda Board Member and her own take on this subject.

Why the Consumer Should not be Blamed

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By Sheilah Brust, a TARDA Board Member

May 28, 2021 

I have been following ARDA and the Timeshare Crusader’s comments about people like me being gullible, versus Inside Timeshare explaining why the consumer should not be blamed. I read about the non-reliance clause, sometimes called the oral representation clause. I won’t rehash what that’s all about, but being called gullible prompted me to share my experience to explain why my timeshare experience led me to join efforts to form the timeshare consumers’ voice in Washington D.C. 

One of the reasons why the timeshare exit industry is out of hand is because timeshare developers and timeshare industry lobbyists refuse to acknowledge the role that timeshare sales agents play that prompts thousands of timeshare members to contact exit companies or an attorney. My experience serves as a good example. 

I have personally communicated back and forth with Florida’s timeshare division, the Department of Business and Professional Regulation (DBPR) and reached out to ARDA-ROC, along with hundreds of other members who feel they experienced unfair and deceptive sales practices. I won’t go into all the reasons why my reviewer at DBPR, and even the DBPR supervisor blamed me, but I am encouraging the reviewers at DBPR and ARDA to read the book Not Today Buster! Author Vern Thornton, and founder of Senior Vs Crime, explains why the consumer should not be blamed.

Glendora Goodwin, known as “GG” to her friends, is pictured on the cover of Not Today Buster! GG was a “Super Sleuth” in that she worked undercover. She wrote a “Snooper” column for a Florida newspaper. One of her three primary warnings was, “Never buy on the same day an offer is presented.” If consumers followed that advice, it would stop a lot of timeshare complaints.  

I did not think my complaint would be dismissed because I had written proof of deception. Moreover, four others had the same “pencil pitch” in their possession. Only the numbers differed, depending on the points purchased. Note “8631 – 8631 = 0” is written on the left. That was the amount of maintenance fees for that year. The Florida sales agent, writing upside down, explained in great detail how I could be relieved of all maintenance fees.  

https://lh3.googleusercontent.com/8hytFMWae3yvjKgo0-ALQBAc6GVKJ1LhhVtS9GQhix6Z_s5bH2XihgWWpQvfrfeklyfD4_EAFyy9br3kAV_k8Uq8fclDtyPcF-Pi71GGjt-VV4RcWgtsQkOXE_gZ-wrSOc6dr52m

Dismissed by the resort, and DBPR, and no response from ARDA-ROC, I reached out to Seniors Vs Crime (SVC), a Special Project of the Office of the Florida Attorney General. I learned that DBPR is not a consumer protection agency. They cannot mediate a dispute or compel a company to cancel a contract. In contrast, Seniors Vs Crime is a consumer protection agency, and can mediate a dispute. ARDA doesn’t mediate disputes, but they have a Code of Ethics that their members are supposed to abide by. The ROC in ARDA-ROC stands for Resort Owners Coalition, the timeshare members’ arm of the Political Action Committee (PAC). 

I reached out to Seniors Vs Crime and met with a “Senior Sleuth” volunteer at her Florida Delray office. They were understanding and so moved that they looked into other complaints I forwarded to them. They seemed shocked that there is nothing to stop deceptive statements, thanks to the non-reliance clause.  

TARDA stands for Timeshare and Resort Developer Accountability, Inc. A few hundred of us are raising funds to engage a lobbyist organization so that real timeshare consumers can be the voice for timeshare consumers, who at present feel they have no voice. TARDA is an all-volunteer 501c4 nonprofit.  

But back to my being gullible, the purpose of this article. I was a Platinum timeshare member. That means that over the years my husband and I purchased points costing our family over $200,000. Having purchased a few times, and used to relying on the ethics of real estate agents, the sales agent’s written illustration convinced us our agent was being truthful. He provided plausible explanations why this new program to relieve us of maintenance fees had not yet been announced so would not be part of the contract. He said the website would be updated shortly. 

Had I recorded the presentation, which is not legal in Florida without the other party aware, I’m not sure if even that would have been enough to cancel our contract. The non-reliance clause gives a green light for sales agents to say anything to make a sale. Even with proof, that one sentence in a stack of documents that says I did not rely on oral statements, legalizes deception. 

Given no harm befell the agent – he is free to continue to promote the ability to be relieved of maintenance fees. The resort responded that while they could understand his explanation to be confusing, it was not illegal. They would take steps to make sure it would be better clarified in the future. Six months later a fifth member complained, providing the same pencil pitch and the same explanation. Their dispute was resolved. Maybe I paved the way.  

All the complaints sent to ARDA ROC that I am aware of were ignored. 

Thank you Sheilah and those who have helped to edit and proofread the article, it has certainly been a great help at the moment. Hopefully, Inside Timeshare will be back next week with a few more articles. In the meantime have a great weekend.

Friday’s Letter from America

Welcome to this week’s Letter from America with a new contributor Bogdan Matiu a Hilton Grand Vacation member, with the introduction by Irene Parker. This article follows on from the previous articles where members argue that blaming the victims and calling them “gullible” rather than blaming the sales agents for their deceit has incensed many of these disgruntled members.

Why I Should Not be Called Gullible!

See the source image
https://www.learning-mind.com/

AARP Staff writer Doug Shadel, and Vern Thornton,  founder of Seniors Vs Crime, a Special Project of the Office of the Florida Attorney General, explain in their books, Outsmarting the Scam Artists and  Not Today Buster! why the victim, in our case, the consumer, should not be blamed. 

By Bogdan Matiu

Introduction by Irene Parker 

Hilton Grand Vacation buyer Bogdan Matiu launched a Facebook after learning the one-week deeded timeshare he purchased in 2018 for 15,000USD is worth at most 2,000USD on resale. Bogdan’s argument is that anyone familiar with traditional real estate would liken buying a timeshare to a home purchase, whereby the buyer expects their investment to appreciate in value or at least remain stable. 

The Hilton Grand Vacation member-sponsored Facebook: https://www.facebook.com/groups/469026810171895

On the other hand, a timeshare industry lobbyist made this statement:  

“Their value comes from using it,” the timeshare industry’s top lobbyist told ConsumerAffairs in January, admitting that points have no resale value while claiming that consumers don’t mind this because the value comes from the experience.

I understand the industry lobbyist’s position in that the Ozark timeshare my husband and I purchased in 1984 for 6,000USD, which we used or exchanged all over the world for over 30 years, didn’t need to provide a resale value when we voluntarily deeded our week back in 2019.

While I have been a critique of Diamond Resorts for other reasons, product value is not one of them. I amortized our initial purchase price over a period from 2012 to 2015 to compare booking online to using Diamond points. During that period we stayed 181 nights. Utilizing 50% discounts by booking 59 days or less, and traveling slightly off-season, I calculated the average cost to stay in a one or two-bedroom Diamond property was 53.37USD per night which fared better than online prices. We came out ahead. 

However, your grandmother’s timeshare is a far different product than the product that exists today in that today’s timeshare is owned mostly by Wall Street investors. Their mission is to maximize Shareholder value.

According to the lawsuit, Chief Operating Officer Geoffrey Richards told Sapien in a conference call the company had reversed more than $300 million in contracts in order to “insulate” the stock price by making the company’s default rate — the rate at which customers default on their mortgages — look more in line with competitors. Orlando Sentinel, May 13, 2021 

Some annual reports even list a viable secondary market as a risk to investors. Can you imagine Pulte or another homebuilder making such a statement about the primary housing market?

By Bogdan

It is a very dangerous precedent that the Timeshare Industry wants to create in the mindset of the community – their notion that the customer is always wrong and the timeshare developer and their sales agents are always right. 

Developers sell a contract in perpetuity after a presentation that can last from two to eleven hours. After having driver’s licenses and a credit card confiscated, the buyer is pitted against a tag-team of two or more sales agents who demand the purchase be made the same day. 

I will start with an old truth: “Don’t look into your neighbor’s bowl.” For people who are involved and responsible with offering a timeshare product, it is offensive to consider gullible their own consumers. These developers have created the timeshare offering and the question they should ask themselves in earnest is – why are there so many purchasers who did not understand the product? 

The “non-reliance” clause is used to relieve timeshare sales agents from any responsibility for making false claims. Why is the service sold via “oral presentations” if at the same time it is mentioned in the contract that the buyer should not rely on oral representations? In what way is this protecting the consumer? If developers trust their product value and believe their sales agents are honest, then why deny responsibility for the oral presentation?

The timeshare industry lobby ARDA has a Code of Ethics. I raise the following question: If the oral presentation is an important cause of the buying of a timeshare, and this cause is under ARDA control, why are timeshare sales agents not held accountable when sales agents mislead the consumer? One need only review the millions of dollars in Attorney General settlements in America, online complaints, and thousands of people calling exit companies every day, to acknowledge deceptive sales. 

It is not a matter of gullible customers. It is a matter of ethical sales behavior to accept that if the sales agents didn’t provide proper disclosure, the contract should be deemed invalid. If someone from ARDA has the lack of respect to call us gullible, permit me to say that my opinion is that ARDA members, who consciously designed a product that becomes an immediate liability to the buyer, are gullible to believe sales agents who say they didn’t deceive. PERIOD

ARDA members, responsible to promote timeshare products, should ask themselves: What is so complex to not be understood? How many products in the market require hours of hard-sell, even confiscating driver licenses and credit cards. The developers should consider their failure to design the product properly. Timeshare is a one-in-a-million product that requires bribing the consumer to listen to a presentation! The result is sales and marketing costs representing 50% or more of the sales price. As reported by Seeking Alpha, 

If, on average, 50% of the sales price is absorbed by marketing and sales costs and a large portion of current sales are to existing owners that would indicate that the average cost to market and sell to new owners would be pushing well above 50%.

https://seekingalpha.com/article/3991819-timeshare-need-new-act-to-attract-millennial-buyers

Why is this necessary if the product is so great? We the consumers are educated and make hundreds of good buying decisions without someone having to bribe us to make a purchase. Many of us have experienced deceptive practices. We are not gullible. It is the product that is flawed and the way it is packaged is unnecessarily confusing and prone to deceptive sales tactics.

In Summary

I stayed often at Hilton hotels as a Hilton Honors member. I was asked to attend a marketing presentation. I had no idea it was Hilton Grand Vacations, a completely separate entity. This in itself was deceptive. 

For me, there is no “use value” or “fond memory value” for a product that I bought for 15,999USD that has an immediate resale value of at most 2,000USD. This initial purchase, bought from a business that misled me to buy at eight times the resale value, is not of VALUE to me. It is an immediate LOSS that comes attached with a LIABILITY as agents insist that I must buy more POINTS to achieve value. 

As far as the vacation memory value, I have to pay AFTERWARDS through maintenance fees. I could go to many of the same locations without paying my initial 15,999USDs. To make an analogy, how many consumers would pay 15,000USD upfront to Bookings.com just to have the right to use their site? This is at best what the timeshare industry is doing. There is simply no cost to use a website to make vacation destinations. Therefore, associating tens of thousands of dollars with this “service” is questionable. 

I think the Timeshare Industry relies on the following essential facts that fundamentally shape the interaction between the customer and the timeshare industry in a deceptive and unfair way:

1. The direct purchase from the Timeshare Provider has no relationship to market value as the purchase price is 8 to 10 times more than the resale value. 

2. The Timeshare Provider offers a loan at 12% to 19% that allows the customer to acquire the timeshare immediately. There is a transfer of responsibility and purpose from the timeshare client to a debtor-creditor relationship. 

By combining 1 and 2, the customer is chained to a debtor-creditor lien into a contract that, unlike a car or a house, he or she cannot easily sell. 

3. I did not have access to the service until after the contract cancellation period. This made our timeshare contract not a contract – but a deceptive bondage.”   

4. Every “point” purchased will be supported through maintenance fees. Therefore, the first transaction, called “Timeshare Ownership,” is in reality just a “WEAPONIZED CONTRACT TO SELL POINTS AT THE SELLERS PRICE IN PERPETUITY WITHOUT A RESALE MARKET.” 

Timeshare Sellers say, “There is vacation value in points and you are mistaken if you say otherwise!” Yes, there is a vacation memory value, but our point is that the CONTRACT MANDATES we buy points at your set price without a viable secondary market making the purchase a LIABILITY. Complaints about limited availability are always answered with, “Buy more points!” 

My position is supported by David Palmer, the former CEO of Diamond Resorts when he described maintenance fees to investors in 2014, per the Times article: 

“Anything that is put in the budget that gets expended on an annual basis, we get our 15 percent fee,” Mr. Palmer explained to investors at a September 2014 conference, according to a transcript. “That is basically a 100 percent profit business.”

This raises the valid point: What do they really sell? The developer controls both the points and the maintenance fees. The pretense of “respectability” by timeshare developers and their representatives to keep their customers in a bondage relationship I respond to with vehemence and sarcasm. 

I proposed that “owners” picket various sales centers on a regular basis with fliers stating the facts. Unfortunately, most timeshare buyers don’t live near sales centers so such a strategy is difficult to coordinate. What one can do, however, is hand out a flyer to those awaiting presentations if you are at a sales center. We have such a flyer in our Facebook Files. Inform and educate the timeshare consumer.   

Timeshare Developers should welcome our efforts. If they really want buyers to know about the oral representation clause, then help us educate the public.  

Related article recommending timeshare stocks:

In this article we are going to look at another set of evil companies that use high pressure sales tactics to trick consumers into signing complex long-term contracts that they don’t understand: timeshare marketing companies. 

https://finance.yahoo.com/news/best-timeshare-stock-buy-according-135051667.html

Thank you Bogdan for your contribution and also great thanks to Irene who has taken the time to edit the article and write the introduction.

Have a great weekend and we will be back in full swing soon.

Friday’s Letter from America: Sales Agents a Hilton Member Experience

Welcome to this week’s edition of Letter from America, continuing our series on what “sales agents” tell you, and can you actually believe it, we today welcome another new contributor Ali El-Kerdi. His experience will be of great interest to our Diamond readers especially in the light of the Hilton purchase. So welcome to our pages Ali.

Can a Timeshare Buyer Believe Timeshare Sales Agents?

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By Ali El-Kerdi 

May 14, 2021

I have been reading about the “oral representation” clause that allows timeshare sales agents to say anything to make a sale. This protective blanket places the burden on the consumer to prove what the agent said or did not say. People buying new cars from a dealer or a house from a real estate agent rely on the ethics of the sales agent. You might be more wary if buying a used car. 

We thought we could trust the ethics of Hilton Grand Vacation sales agents. With Hilton, trust is often ingrained if the prospective Hilton timeshares buyer is already a loyal Hilton Honors member. I have joined efforts to warn potential first time buyers that you might as well not talk to a sales agent if you are interested in a timeshare. Check first with a licensed timeshare broker who charges nothing upfront. Their commission is paid at closing after a buyer is found, like any traditional real estate transaction. If buying a “used” timeshare, the purchaser must ask what restrictions accompany a timeshare bought on the secondary market.     

On October 17, 2018 we attended a Hilton Grand Vacations (HGV) sales presentation in Florida at Park Soleil Hilton Grand Resort in Orlando with Daniela O, another agent and a manager.  A 60 minute presentation ended up being over three hours. We had told them that we wouldn’t be able to stay long because we had young kids with us. We purchased a week at Ocean 22 in South Carolina which is equivalent to 4,800 bi-annual points should the owner wish to stay at another property other than their home resort.  

My wife and I are working professionals. We clearly understood the answers to questions we asked to address our concerns. We made it VERY clear to Daniela that we would not be able to use the timeshare for a long time due to the age of our children and our current work and school schedules. I am a professor working on my post-doc and my wife is an Internist. We can only able to take off from work for one or two nights stays at a time. It will be several years before we can take a week’s vacation. An ethical salesperson would have told us then and there that a timeshare is not an appropriate product for our family. However, Daniela assured us we could use Hilton’s timeshare points for one or two nights stays and bank points “in perpetuity” to function as a kind of a “vacation retirement plan” as we accumulated points over the years for future vacations. The manager and the other sales agent also confirmed points could be saved indefinitely. We learned points cannot be saved in perpetuity. Points can be “extended” for only two years (for a fee). The only way we can book one or two night stays is if we convert to RCI or Hilton Honors points, but that reduces the value of the points even more and requires a fee to do so. 

It seems obvious to us now that the manager who rushed in with another supervisor waving a print out with “properties that just came on the market” was to stage urgency, making this an opportunity good only for today! Daniela and the supervisor said the property would automatically have higher value because we were buying at a discount, and the value would increase over time like any real estate. They further mentioned we would be able to deduct interest expense. 

Additionally, we were also told that as Hilton Grand owners we would be able to use any Hilton Grand location’s amenities by simply proving that we are owners, without having reservations at said location. We were told that as Hilton Grand owners we would get significant discounts off regular Hilton hotel reservations/stays. I’ve stayed at Hilton properties before subsequent to our timeshare purchase from Hilton Grand Vacations. I spoke to several hotel managers about said discounts. One manager actually laughed and said he hears this all the time. When I texted Daniela to ask her, she asked who told me that. I told her she did in text messages!     

I wrote to Hilton on September 27, 2020 asking that the contract be cancelled. Their November 30, 2020 letter of denial addressed everything except the main deception that was the deciding factor for us to purchase points. In no way can we use these points. We are forced to consider default or pay for something we can’t use. We have always been fiscally responsible. To think that we have to go through a default because timeshare sales agents are rewarded for deception is alarming. Our purchase price was $14,300. The amount financed $12,870. During the process, we were told that the maintenance fee would be $750 every other year, but the maintenance fee is $1,500 every other year. I spoke with a licensed timeshare resale broker who explained that if I wanted to sell they would recommend a price of $2,500 to $3,000, minus a 25% commission, and that there could be no loan outstanding. We have not used any of the points purchased.

I wrote again to HGV on February 28, 2021 in response to their dismissal. They responded parroting the actual program without even addressing the deceptive statements.  

I am learning that the entire industry is tarnished. Timeshare sales are #7 on the Federal Trade Commission’s list of Top Ten Scams. Wyndham Vacation Ownership has almost 2,000 Better Business Bureau complaints and there is an alert posted warning consumers about them. 

https://www.bbb.org/us/fl/orlando/profile/vacation-timeshare/wyndham-vacation-ownership-inc-0733-20000283

This BBB Hilton complaint dated 2/27/20 is so similar to my complaint; it sounded like I wrote it, except that we fortunately did not buy a second time. Having read the complaint, I anticipated Hilton’s dismissal. There have been 876 HGV complaints over the last three years. 

https://www.bbb.org/us/fl/orlando/profile/vacation-timeshare/hilton-grand-vacations-inc-0733-1045054/complaints

BBB Complaint: Advertising/Sales Issues (edited for brevity)

Status: Answered

07/27/2020

Timeshare sold, represented was not as explained. When I tried to take advantage of the services as promised I was told this was not how it is done. I have been paying between $600 and $700 a month for this. When I purchased I was told many things that were not true. I explained my problems with vacationing and that I don’t have much free time. The sales team explained that I could save the points and use them at a different time. Which turned into not being true. The points you are buying expire…. They convinced me through their sales pitch and untruths that I should purchase this plan, I did. Shortly thereafter I purchased a second time because I still believed the stories and didn’t learn the pitfalls yet and I hadn’t used it yet. That is how hard it is for me to get away. Why was I there, I was on business. Then the next year I talked to another salesperson who was supposed to help me. He said that my points should be converted to Hilton Honors Points for hotels. Good idea but not a sound investment. Resort versus a stay at a Hampton Inn. So I’m stuck paying for something I can’t use and losing any investment…. Already paid about $30,000…..  I sent an email to the president of HGV. I had a call back from a salesperson. They were trying to explain how to use the program. I told them all I said above, she said there was nothing she could do…. She said she was there to help, but that the salesperson doesn’t know everything about the plans…. This needs to be looked into. When you buy anything in the form of a loan you own it. House, vehicle, Boat, clothes, food and more. Here you are buying points, they should be yours to use not expire. Promises should be kept. I apologize for not bringing an accountant and attorney to review all documents they quickly put in front of you. You hope you can believe the salesperson. 

Hilton Grand Vacations, Inc. Response

08/12/2020

Dear Mr. *****, We are sorry your experience with Hilton Grand Vacations has been less than satisfactory. As you have entered a legal and binding contract in perpetuity for the purpose of vacation enjoyment, we are unable to cancel your contract. The rescission period extended after the purchase allows the purchaser time to review the documents and cancel should you find the program unsuitable to your travel needs. In your case, the rescission period for your upgraded contract lasted five days from your purchase date. We see that you spoke with our Club Resolution team and they were able to clarify some of the questions you had. Should you need further assistance, as a part of your ownership, we offer to assist you with the help of seasoned Club Counselors who will guide you with optimization of your membership. The club member website, club.hiltongrandvacations.com, has a wealth of learning tools available as well. Regarding your Club Points, you are able to save them and use them other than the year in which they are allotted. Club Points can also be deposited into RCI for an additional 2 years of usage or converted into Hilton Honors points in which they never expire and may be used at any time. Mr. *****, while we are not able to accommodate your request for cancellation, we remain readily available to assist you with optimizing your ownership. Thank you for taking the time to share your feedback. Sincerely, Membership Support Hilton Grand Vacations

https://www.bbb.org/us/fl/orlando/profile/vacation-timeshare/hilton-grand-vacations-inc-0733-1045054/complaints

I filed a BBB review and I intend to file with the Florida Attorney. Our request for cancellation has already been determined, but I will file for the record. If enough people file official complaints, maybe someday a regulator may take notice.   

How can encouraging sales agents to make deceptive statements by blaming the buyer be a healthy business model? It is our word against Daniela’s word. I would like to know, if I had recorded our sales presentation, to be able to provide proof of deceit, would that have mattered?  Of course sales agents know they can say anything by Hilton’s dismissal. The offending agent moves onto the next sale, making the same deceptive claims like a hamster wheel. We’re the hamsters.  

I’ve been told Hilton is not as bad as other timeshare companies. I read they are buying Diamond Resorts. Based on my research, Diamond seems to have even more complaints!  

Why do timeshare companies not act in a way morally responsible? Our mistake was to trust the Hilton brand. We never imagined Hilton agents would deliberately deceive. We did not think we were interacting with the equivalent of a Nigerian Prince asking us to wire money. 

Thank you Ali and a big thank you to our team of volunteers who helped with the editing.

Have a great weekend.

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