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
By Adam Siler
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.
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….
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.
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.
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.
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.
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.
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.