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!

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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.


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