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The Tuesday Slot: The Timeshare Industry and Scams Work Hand in Hand

Timeshare has been with us for many years now, the original concept was one that certainly sparked great interest, the quality of the resorts and the guarantee of that quality no matter where you booked. But over the years many timeshare owners have been the victims of some very unscrupulous entities, from resale companies to discount holiday clubs and now exit companies, all promising the timeshare owner a way out of their commitment. So we have to ask the question, is the timeshare industry responsible for the proliferation of the many scams involved around timeshare?

In a way, the industry is responsible, the way it has been sold and the difficulties many owners have on getting out of their contracts when they no longer require the membership has made it very easy for the scammers to take hold and make even more money out of the unsuspecting timeshare owners.

In the early days, timeshare was sold as though it was property, the pitch at sales events was very simple, you could not afford to purchase an apartment abroad just for holidays, the cost was too great. So how about purchasing a “share” in an apartment, along with other “owners” you would split the cost of maintaining the apartment and the resort, these were the annual maintenance or management fees.

At first glance this looks like a win-win situation, you get to “own” a share in a luxury apartment in the sun, a place you could call a home from home. You actually believed that you “owned” the apartment and that according to the sales pitch it would increase in value, just as though you owned it outright as real estate.

This then gave rise to the resale industry, with promises of very inflated prices, but this came at a cost. In order to place your “apartment” for sale, a fee was required to “list” your timeshare on their website. Many of these companies operated by way of cold calls, they enticed the “victim” with promises of quick sales and in most cases for more than you originally paid for the timeshare. Remember, you were conditioned at the original sale that you were purchasing property and it would increase in value.

These companies would also make the promise that if they did not sell within the year of the contract, the initial payment would be returned. Great promise until they disappeared after that year and reemerged under a different name. Thousands have been lost in this way.

Eventually, these began to be replaced by the “holiday clubs”, these were basically discounted clubs where you purchased a membership, it was also a way out of your annual maintenance costs. The “holiday club” when you purchased membership would then take your timeshare, in some cases with the cashback system which supposedly paid for the membership and your timeshare after a specific period.

This particular scheme became infamous through its use by Incentive Leisure Group, selling the Designer Way Vacation Club. This whole scheme was eventually shut down and the cashback scheme was shown for what it really was, a total fraud and in many cases, the “member” still owned the timeshare.

Eventually, these clubs have frittered away, one of the last was the Monster Travel, Monster Credits and Monster Rewards dreamed up by Mark Rowe, who was also well known as a sales rep and sales manager for Resort Properties/Silverpoint. As we know this timeshare company has been shown to be one of the most fraudulent in the history of timeshare.

Rowe even took this one step further, he set up “law firms” who would not only exit you from your timeshare contract but also get you compensation. The only problem here is that to do this you also had to “join” his “club” either Monster or the replacement Jive Hippo.

So this now brings us to the present day, the “exit & claims” companies.

Although there are many cases going through the Spanish courts all brought by genuine law firms, there is on the periphery a growing number of operations that are less than legitimate.

These claim that they will “exit” you from your timeshare contract then claim compensation once the contract is cancelled. There is however a fee that needs to be paid to “exit” you from your contract, in many cases, this can be around £3000 or more.

The vast majority of these “exits” never actually happen, we have over the years seen many companies come and go with “victims” losing thousands and finding they are now in arrears for maintenance fees of around 3 years or more. Their contracts were never cancelled despite what the company told them.

So back to our question, is the timeshare industry responsible for these frauds?

In a way they are responsible, it has been their own greed that has allowed these scams to proliferate and continue. The being locked into contracts that are virtually impossible to get out of, the huge rise in annual maintenance fees and not to forget the biggest problem of all, availability.

All these are problems made by the timeshare industry, it is these problems that make owners/members vulnerable to those who see an opportunity to make huge amounts from scamming them. After all, any industry which basically holds its members to ransom making it almost impossible to “exit”, will always be a catalyst for the unscrupulous.

It is a problem that is not going away, as long as the timeshare industry continues to operate in the same old way, there are going to be those who will take advantage of people’s fears and offer them what looks like a simple solution to their problem. Unfortunately, all it will do is empty your bank account.

If you require any information on any company that has contacted you or one that you have found on the internet, please use our contact page and Inside Timeshare will get back to you.

Start the Week: News from the Courts, Marriott and Anfi Lose Again

Welcome to the start of another week with Inside Timeshare, we start this week with news from the courts with Marriott and Anfi losing in all cases and a payment to a client from Anfi. Last week we highlighted a new “cold caller” and website which we believe to be another “lead generator” for unnamed “claims and exit” companies. Inside Timeshare received an email from a lady who answered an advert for “telemarketing” staff and gave Inside Timeshare some more valuable information.

As we explained in one of the articles, many of the staff are just ordinary people answering an advert for staff, with the situation regarding employment any offer of a job is welcome. Unfortunately, it is these people who are also being taken in by the less scrupulous of these operators, being told what to say and how to get you the timeshare owner to pay up and sign with their company.

Luckily, this particular reader realised within a few weeks that something was not right with this company and found them to be “dodgy”, terminating their employment immediately. The information supplied regarding Independent Timeshare Assistance is rather interesting.

It would appear that a person by the name of Chris Wilson, a name that does ring a few bells, is the one behind it and is actively recruiting new staff with more adverts, these also seem to be based in Portugal.

According to our information, these “clients” are being sought on behalf of a “law firm” based in Scotland. Well we do have our suspicions on who these are and they are not law firms, but more companies set up by ex-sales staff and sales managers from Diamond and others.

Again this does show how careful you need to be, not just as a timeshare owner but also an employee answering adverts for “call centre” staff, you may believe that it is a legitimate job, but you could also be fooled into working for a scam operation.

In a case that has set new records for the speed for the case to go through the courts, Marriott has lost another case at the Court of First Instance Number 4 of Palma de Mallorca. This case has taken a remarkable 6 months to be processed through the courts, a bit of a miracle to those who know the Spanish legal system.

The German clients of Canarian Legal Alliance had their contract with Marriott Vacation Club declared null and void, with the court ordering the repayment of 21,150€ plus legal interest and legal costs.

This also included the repayment of double the amount taken illegally as a deposit within the statutory cooling-off period, in accordance with the law and the rulings of the Supreme Court.

The case was prepared and conducted by the CLA Lawyers Adrián Diaz Saavedra Morales and Christine Ihmann, with Claims Consultant Evi Richter assisting the client throughout the process.

In another case against Anfi at the Court of First Instance Number 2 of San Bartelóme de Tirajana, a Norwegian client of CLA has had their contract with Anfi terminated and declared null and void. They have also been awarded 102,576€ plus legal interest and legal costs.

Again the courts recognised the illegality of the taking of payments within the statutory cooling-off period and awarded double the amount as established by previous rulings and the law.

The case was prepared and conducted on behalf of the client by CLA Lawyer Eva Gutierrez with the client being assisted by Claims Consultant Caroline Castro.

We end today with the good news received by one English client of CLA and their battle against Anfi coming to a successful conclusion. They have now received directly into their own bank account the full award of 17,551€ Anfi were ordered to repay by the courts.

The original case was heard at the Court of First Instance Number 5 of SBT, where the contract was declared null and void and the repayment to the client was ordered, as was expected, Anfi once again filed an appeal with the High Court.

The lawyers are now well aware of these tactics and as soon as the sentence is issued by the Court of First Instance they begin a “provisional execution of sentence”, this then secures the funds on behalf of the client until the sentence is confirmed by the High Court.

We all know that Anfi “plays” the game of appeal in order to delay payment, they are also known to “hide the funds”, in order to claim they have no money to payout. This is subject to an official investigation by the Provincial State Prosecutors Office, this may very well lead to criminal prosecutions.

Thanks to the diligent work and investigations of the legal team at CLA, this client received their payment from monies embargoed by CLA from a tax refund Anfi was supposed to receive. In the end, Anfi will pay, it is just a case of plugging away and “chasing the money-go-round”.

This case was prepared and conducted on behalf of the English Client by Eva Gutierrez with Claims Consultant Jake Kaiser assisting the client during the process.

That is all for today, if you have any questions or comments, or you would like information on a possible legal case or just how to exit, please use our contact page and Inside Timeshare will get back to you.

Friday’s Letter from America

Welcome to the end of another week with Inside Timeshare and another Friday’s Letter from America. This week we welcome back Adam Siler with his article regarding what the Federal Trade Commission really does need to know about the practices used in timeshare sales and marketing. We all know and it is totally apparent that the timeshare companies allow their sales agents to say and do what they want, as long as they get the sales. How many times have we heard Diamond say that “They are not RESPONSIBLE for what their sales agents say” or “you signed the contract”. They don’t care, they have your money and then more by way of maintenance fees and continual upgrades. Things do have to change and they need to change drastically, enjoy Adam’s article.

What the Federal Trade Commission Needs to Know About Timeshare Sales and Marketing Practices 

https://lh5.googleusercontent.com/AYfEKEirNuYJzOLeJIJvTuhF7BAq--wuLMczPdmHUm9F-lblwpxzOdplbnMA1KOk5EE05lt7jYUAqY6A5Iu-F-DHQg2DsVVMnsqNuIdyAmfM1xNoS0sNnRBZT4wMc8BgAiL8eXmC

By Adam Siler

[email protected]

April 9, 2021

A group of concerned timeshare members proposed nine changes or disclosures we feel are necessary to correct unfair and deceptive timeshare sales and marketing practices. We submitted our proposed changes to the Federal Trade Commission. Your feedback would be appreciated. Part of my veteran and active-duty military outreach is to have timeshare presentations declared off-limits for active duty service members. An active duty service member may lose his or her security clearance if they foreclose on a timeshare loan.

Timeshare Sales are #7 on the FTC’s Top Ten Scams list. Anyone who experienced unfair and deceptive practices should file a complaint with the FTC.   

https://www.ftc.gov/faq/consumer-protection/submit-consumer-complaint-ftc

What can the FTC do? 

The FTC protects consumers by stopping unfair, deceptive or fraudulent practices in the marketplace. We conduct investigations, sue companies and people that violate the law, develop rules to ensure a vibrant marketplace, and educate consumers and businesses about their rights and responsibilities…. 

https://www.ftc.gov/about-ftc/what-we-do

I reached out to Inside Timeshare after experiencing deceptive timeshare sales practices in Florida. Since my article was published February 26, I received a sixth report from a timeshare member who described how the same sales agent, who promised me the elimination of 50% of my maintenance fees, told an existing member that if she achieved a new 100,000 point status, she could take 40% of her points and pay all her maintenance fees. The report was submitted by a Secret Shopper who did not buy. 

Multiple complaints against the same agent provide a level of proof, albeit a lower level of proof. It’s all about proof. Timeshare buyers need to record their sales presentation. A recording is clear and convincing evidence. Permission to record must be granted in two-party states.

Standards of Proof

  • Beyond a reasonable doubt.
  • Clear and convincing evidence.
  • Preponderance of the evidence.
  • Probable cause.
  • Reasonable belief.
  • Reasonable indications.
  • Reasonable suspicion.
  • Some credible evidence.

Preponderance of the Evidence according to Justia:

In most civil cases, the burden of persuasion that applies is called “a preponderance of the evidence.” This standard requires the jury to return a judgment in favour of the plaintiff if the plaintiff is able to show that a particular fact or event was more likely than not to have occurred. 

https://www.justia.com/trials-litigation/lawsuits-and-the-court-process/evidentiary-standards-and-burdens-of-proof/

When we asked a company employee about the new 100,000 point program proposed to our Secret Shopper, the truth is that having 100,000 points would allow the member to not have to pay maintenance fees on unused points. Accumulating this many points would require an outlay of $300,000 to $400,000 and points have no resale value. Six similar complaints against one sales agent provide a reasonable belief, indication and suspicion, but without the sales session recorded, had the Secret Shopper signed a contract, her complaint would have been dismissed because of lack of proof. Record your sales session or don’t buy.    

Nine Proposed Changes to Unfair Timeshare Sales and Marketing Practices Based on an Analysis of Common Complaints

1.   A disclosure warns the buyer that if they show their proposal to anyone outside of the timeshare company, they are subject to penalty. This is unfair, especially for those who may be of diminished capacity. Contracts can be for $100,000 or more. Any consumer should have the right to seek a professional opinion or the opinion of a friend or family member.

“Distribution of this information to unauthorized persons, including but not limited to persons not employed by agents of (the company), or to persons not listed on this option, is strictly prohibited and subject to penalty.” 

Our agent tried to convince us to purchase points for $11.40 per point. Just the week before, another sales agent attempted to sell us the same points for $4.79. Manager Brett asked us where the $4.79 came from. We shared the paperwork we had been given. He became rude and threatening saying, “it is illegal for you to have these papers.” The papers had been given to us.   

2.    If the closing (signing) is recorded, the device should not be stopped while an agent explains an item a buyer questions. The question and answer should be recorded.

3.    If a recorded closing can be used against the buyer, the buyer should be allowed the opportunity to record the sales session to prevent agents from coaching the buyer on how to “pass” the recorded signing session. 

4.    The purchase price should not appear as an inflated retail price of all purchases. An additional purchase should be identified on the contract as an “Incremental Purchase” instead of “Additional Equity” as the use of the word equity is misleading. Anyone who has been involved in a traditional real estate transaction would logically assume equity to mean actual cash value rather than vacation time. Timeshare points have little to no resale value. 

In the following complaint, a senior couple believed their sales agent; so they did not question the ability to refinance. Since they did not bring refinancing up on the recorded closing, the company initially dismissed their complaint. That’s how the recording can be used to entrap the buyer.  

Our sales agent explained that we could reduce our monthly payments by getting a HELOC through U S Bank using our “additional point equity” of $240,040 which he highlighted in green. He provided an ad and assured us a rep from U S Bank would call us after five days (the contract cancellation period). We would only have to pay $1,349 for January and thereafter $649. The purchase price was $288,300 less “additional equity” of $240,040 = $48,260 for 7,000 points. We financed: $87,405.85 including a prior loan.

5.    If disputing a contract, the buyer should be allowed to listen to the entire recorded closing without obtaining a subpoena.

6.    It should be disclosed if the QA agent is incentivized. A lawsuit states: 

It is not disclosed to the purchaser that the Quality Assurance employee has a financial stake in the transaction and is compensated based on commission dependent on the number of Quality Assurance presentations given; of which is paid only if the purchaser completes the purchase.

Case 2:18-cv-00903-RFB-GWF Document 3-1 Filed 05/18/18

7.  The buyer should be allowed 24 hours to consider their purchase. 

8.  The buyer should be provided access to the booking site prior to the end of the contract rescission period. Often first-year usage is not until the following year. Buyers don’t even know what they bought because inventory availability cannot be determined by reading the contract.  

9.  The state-mandated Public Offering Statement (POS) (Disclosure Statement) should be presented by the closing agent during the recorded closing, not by the sales agent. This state-mandated document is often hidden in a stack of documents. Two sales agents reported that the policy changed to having the sales agent provide the POS, instead of the QA agent, after the decision was made to record the closing.   

Clearly, timeshare sales and marketing practices have room for improvement. Wyndham has over 1,700 Better Business Bureau complaints and a Pattern of Complaints alert:

BBB files indicate that this business has a pattern of complaints concerning misrepresentation in selling practices. Consumer complaints report that the verbal representations are inconsistent with the written agreement. According to complaints, claims include representations that the purchase is an “investment” and the same as “real estate” in that it will increase in value. Owners report mandatory meetings that they are led to believe are to introduce new features and benefits but result in a sales presentation to purchase or upgrade their points. In some instances, owners are encouraged to complete a survey or questionnaire which results in another sales presentation to purchase additional points.

Bernadette in Oklahoma is a member of our team. She launched a Change.org petition asking that a YouTube be removed. If an Attorney General appears on YouTube warning about exit companies, a YouTube should be produced with an Attorney General warning about timeshare companies.    

https://www.change.org/Michael-Flaskey-MO-WA-AG-take-down-YouTube

Email me if you would be interested in joining our efforts to make timeshare sales more honest and accountable. Too many families like mine have been harmed. 

We seek to provide timeshare members with a way to proactively address membership concerns; to advocate for timeshare reform; to obtain greater disclosure from the company; to advocate for a viable secondary market and to educate prospective buyers.

See the source image

Thank you Adam for your contribution this week and we look forward to receiving your next article.

To all Veterans and Serving Personnel who may have fallen foul of unscrupulous sales agents please email Adam with your story using the email address below. Only together can we influence the industry to change.

[email protected]

That is all for this week, we hope you have a great weekend and join us again next week for more information and stories about the murky world of timeshare.