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Gold Key

Friday’s Letter from America: Open Letter to ARDA and Timeshare Crusader

Welcome to this week’s Letter from America. Over the years Inside Timeshare has been running this series of articles. We have heard from so many elderly people, veterans, and serving military personnel, all have told similar stories. These revolve around the lies and untruths members allege are told by sales agents employed by Diamond and other developers to sell their product. The initial response to complaints has always been the same, “We are not responsible for what the sales agents say” and “you signed the contract”.

Today’s article was not going to be published, but due to comments made on various social media platforms which Inside Timeshare posts, it was decided that this Open Letter was the only reply. It was one comment made by the Timeshare Crusader which really did spark this change, in the comment Lisa, who we do have a great deal of respect for, calling consumers “gullible”. Considering the horror stories we have published we felt this had to be addressed. Over-reliance on the oral representation sentence, buried in a lengthy contract, implies the consumer is at fault. Only a biased observer will hold deceptive agents blameless.

ARDA has never appeared to address this issue, and as a reminder about oral representations, we do believe that it is too little too late, a case of “closing the stable door after the horse has bolted”. They also do not go far enough to protect consumers from their ARDA members or sanction them when they allow sales agents to say what they like.

An Open Letter to ARDA and Timeshare Crusader Explaining Why the Victim should not be Blamed

https://memeguy.com/photos/images/hypocrisy--7178.jpg
  • Beth in Arkansas, on behalf of younger people buying timeshares, 
  • Tiffany, on behalf of her elderly parents, 
  • Adam, on behalf of veterans and active-duty military,
  • Bernadette, on behalf of those experiencing serious medical conditions,
  • A timeshare member from 2017 who holds a security clearance  

May 7, 2021

If you are considering buying a timeshare for the first time or you are an owner thinking about adding to your vacation ownership portfolio, ARDA-ROC and the Timeshare Crusader recommend that you consider, at a minimum, the following:

https://www.arda-roc.org/important-information-for-buying-timeshare?fbclid=IwAR0DfjCzkYz4VzvaHkASdv1NO8iBx5ETU7S9URkUjdqzty5Y81cP42mNTho

If ARDA and Timeshare Crusader would take the time to read our articles, they would learn why the victim should not be blamed. We are disappointed, but not surprised, that neither organization holds deceptive timeshare sales agents and managers accountable. On a short vacation, if promised the ability to sell points, rent points, access “equity” or refinance, no one is going to attempt to do that while on vacation. The rescission period is easily dodged. It is easy for those who have not experienced a predatory timeshare experience to judge. 

AARP staff writer Doug Shadel explains in his book Outsmarting the Scam Artists” why the victim should not be blamed. An excerpt from the chapter entitled Ether:

This inability to fully grasp how emotion or “affect” influences our decision-making is crucial to understanding why fraud occurs… Even victims who are interviewed after the fact, criticize themselves….This is because they are no longer inside the situation – no longer having their emotions manipulated and vulnerabilities exposed. The ether has worn off.

ARDA and Timeshare Crusader talk about how financing a timeshare is like financing a house. No, it’s not. Home mortgage rates in the U.S. are at 2.882%. Timeshares are financed at 12% to 19%. If a Barclay credit card is used, the interest rate after the grace period is over 20%. If you buy a house but then decide you don’t like the house, you can sell it. Timeshares are virtually worthless.   

Tiffany: My elderly parents were deceived in 2019. The security clearance holder who shares her similar experience below is not a senior, yet she fell for the same pitch that my parents fell for – you have to give up your deed and buy points. My parent’s “QA” agent kept them for 11 hours. My mother called me during the ordeal. I told her to leave. She said she couldn’t because they had their credit card and driver’s license. They attended because they were told if they didn’t attend, they would be charged for their stay. They were browbeaten into giving up the Gold Key deeds they had owned for years. There was nothing in the contract that would have addressed this falsehood, and after 11 hours without food, water, or necessary medication, they were defeated. Diamond’s response was they sounded just fine on the recorded “QA” closing. They lost the two Gold Key deeds that they had for years, and over $30,000 after being told they had to give up their deed and buy points. The full story:

Tiffany Renee’s parents kept for 11 hours:

https://insidetimeshare.com/fridays-letter-from-america-74/

Bernadette’s Change.org Petition to remove an offensive YouTube: https://www.change.org/Michael-Flaskey-MO-WA-AG-take-down-YouTube

https://insidetimeshare.com/fridays-letter-from-america-the-story-of-bernadette/

Adam Siler [email protected]

Why timeshare presentations should be off-limits to active duty military: 

https://insidetimeshare.com/fridays-letter-from-america-75/

Adam, Bernadette Tiffany: Why Buyers Need to Record the Sales Session https://insidetimeshare.com/fridays-letter-from-america-should-sales-presentations-be-recorded/

Beth in Arkansas: 

I worked as a Covid nurse during the height of the pandemic. My parents gave me 10,000 Liki Tiki points. At a presentation I attended in Tennessee, I was told I had to give the points up because they were so limited. The agent said I could get 5,000 additional points for $4,500. It wasn’t until later I learned I had a $45,000 loan. That’s more than my student loans. I would have never bought the points. Diamond Resorts blamed me. They said on the recorded closing I was informed of the total purchase price. I certainly did not hear that because I would have never signed. I wanted to listen to the recording but they said I could only do so by subpoena. They only provided a transcript in which the QA agent stated the purchase price. I have to trust that the transcript is accurate. I learned that to listen to the recorded closing, I had to get an attorney to send a subpoena, but to send a subpoena, you have to file an arbitration case. I’m 24 years old. It’s too much. I have no choice but to default. My mother is horrified. She thought giving me her Diamond points was a good thing.       

A November 30, 2018 article by a Diamond member with a security clearance:

https://insidetimeshare.com/2018/11/

Timeshare sales can pose a national security risk. For those of us with security clearances, our careers could be in jeopardy if we believe a timeshare sales agent and find ourselves forced to default on a timeshare loan. Since the timeshare sales agent knows they will suffer no negative consequences, if deceptive tactics are employed, they are given the green light to sell by any means, knowing the consumer will be blamed.  

Diamond should want the public to know this. 

At a December 17, 2017 meeting, we asked Davia H about selling our deeded Sunterra timeshare. We had no loan and had tried unsuccessfully to sell it. Davia said there was no way to sell our Sunterra timeshare because we did not have “Full Club Member” benefits. She encouraged us to become “Full Club Members” so we could easier sell the timeshare. Davia said our Sunterra timeshare was worthless. We needed to upgrade to “Full Club Member” benefits to receive “benefits that would increase the value of the timeshare to make it worth buying.” We feel not informing us that timeshare points are worthless was a material omission.  

She used asymmetric information. This is where one party has more or better information than the other.  

Davia advised us to wait six months before trying to sell (to avoid the rescission period) because the value of the timeshare would increase. She said she knew someone who helps people sell their timeshares and could give us her contact’s information. Repeated calls and texts to Davia went unanswered.

Diamond used the recording of the Quality Assurance signing session against us. Why would we ask the question of the ability to make money or sell points if we didn’t know Diamond points were worthless?  The recording of the QA was reported in a Diamond CLARITY press release to be for the purpose of enhanced training. In my opinion, the recorded closing is used as an entrapment.

I signed Bernadette’s petition. We are proof that if you do call Diamond, you will be told, “Sorry, you didn’t bring it up on the recorded closing.”  I sent our complaint to this list of contacts found on our advocacy Facebook page. They didn’t care.   

To: Michael Flaskey, CEO

Barclay’s President’s Office

DR PR Firm

ARDA

ARDA ROC

Association of Vacation Owners

Hospitality

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

This article has been written last weekend and has been set to publish automatically. Inside Timeshare may be back at some point in the next week or so, depending on recovery from surgery.

Have a great weekend.

Friday’s Letter from America

Welcome to our Friday’s Letter from America with an update from our US contributor Tiffany Renee who explains Why the buyer is blamed when told lies by sales agents. This is a subject that has been covered on numerous occasions over the years, with many articles by Irene. This particular problem is not just confined to the sale of timeshare in America, it happens all over the world but is very much a serious problem in the US. Tiffany reached out to Diamond Resorts for comment. They responded placing the blame on Tiffany’s parents. This does make you question Mr Flaskey’s quote in Bernadette’s petition, “And they could have just called Diamond.” We have heard so many times Diamond’s response, “we are not responsible for what our sales agent say”. That as we know is lamest of excuses, they are your employees, they are selling your product and they are representing you, it is your “Responsibility”.

Why the Buyer is Blamed if a Sales Agent Lies 

STAY VACATIONED or else

https://blog.thunderquote.com/assets/uploads/2016/08/B-19.jpg

April 2, 2021

Update from Tiffany Renee

Last December Inside Timeshare published my article about how my parents were browbeaten for 11 hours until they were convinced they had no choice but to forfeit their two Gold Key deeded timeshares that they had loved for years. Their sales agent and Quality Assurance agent told them that if they didn’t give up their deeds my brother and I would suffer dire financial consequences should something happen to them – maintenance fees will increase dramatically – to over $6,000! Their Gold Key maintenance fees were $2,000. The transaction resulted in maintenance fees of over $6,000. My father collapsed when he received the notification. The “QA” agent made them wait while he called the developer of Gold Key to get them the secret special price …. You must buy today…. the special price time period has expired! 

How can this be happening to so many seniors in America?

The full story: https://insidetimeshare.com/the-tuesday-slot-elder-abuse-and-timeshare-sales/

If there is no problem with Diamond Resorts CEO Michael Flaskey making claims that exit companies lied and took $10,000, $12,000, $14,000, $25,000 from Diamond members, then there can be no problem with my making the claim that Diamond agents lied and took over $85,000 in cash and deeds from my parents.

An interview with Diamond members Frank and Betty, ages 88 and 89, parallels the elderly couple interviewed in Mr Flaskey’s YouTube describing how they lost money to exit companies. Betty, a former librarian, said in a USA Today article that she has had insomnia and fainting spells from the stress and has gone to the hospital several times.

Michael Flaskey’s YouTube 

Frank and Betty’s YouTube

Diamond Resorts took approximately $31,000 from my parents and their two deeded weeks. The purchase price was around $88,000 of which approximately $57,000 was credit for their deeded weeks. 

Many years ago they paid $17,600 for a Turtle Cay 2 BR unit and $37,550 for a 2 BR Ocean Beach unit. It was not easy to piece together what happened from the mounds of paperwork, but as of November 28, 2020, it looks like after the up-sell they ended up with 32,500 points of which 24,000 points were credited for their Gold Key deeds. The purchase of 8,500 points is why maintenance fees increased. 

Frank and Betty lost $63,000 to Diamond Resorts and told them they were buying an “annuity” timeshare that would release a survivor spouse from the timeshare liability should something happen to one of them. After the transaction, their cumulative loan balance was $197,000 and annual maintenance fees $19,000.

For Betty and Frank and my parents, fear was used as the bait.  

Then and Now: Why Seniors Need Support 

(STAY VACATIONED letter received from Diamond Resorts March 29, 2021)

Unfortunately, if your account remains in default for 30 days from the date of this notice, the Association will take necessary action to collect the unpaid assessment fees together with late fees and interest…. These actions may include but are not limited to the following: 

  • Send the delinquent account to an attorney, which will result in additional legal fees; 
  • Engagement of a professional collection agency which will result in additional collection fees;

Michael Flaskey said on his YouTube, “They could have just called Diamond.”  

My parents are proof you can’t. 

Bernadette’s Petition

Bernadette in Oklahoma launched a Change.org petition March 7, 2021 asking Michael Flaskey to remove the YouTube in which he, the Missouri and Washington Attorneys General, and the former Arizona Attorney General, criticize deceptive practices by timeshare exit companies. Lawyers are called “storefront clowns,” yet the Missouri Attorney General’s Office recommended Bernadette retain an attorney. Please sign Bernadette’s petition after reading about her Diamond experience:

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

Our experiences are two of over 5,600 accounts from members of our member-sponsored Diamond Advocacy Facebook. The majority of our Facebook members joined to ask for advice about resolving disputes or complaints about Diamond’s sales and marketing practices. Volunteers answer questions as to how to file regulatory complaints. We know there are many who are happy with their Diamond membership and with the sales agents they worked with. Our Facebook consists of mostly members who feel they experienced unfair and deceptive sales and marketing practices. 

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

I initially filed a complaint with Seniors Vs Crime, a project of the Florida Attorney General’s Office. They mediate disputes and volunteers are seniors themselves. I was informed Seniors Vs Crime would not be allowed to help my parents. I was forwarded to the Attorney General’s Office.  Instead of being contacted by someone from the Florida Attorney General’s Office, I was contacted by a doctor Diamond retained who introduced himself as a consultant hired to arbitrate our “allegations.” He blamed my parents.

A staged so-called Quality Assurance contract signing session was recorded. I later learned my parents’ QA agent served four years in jail for burglarizing seven homes, among other charges, yet Diamond’s jury ruled my parents sounded just fine on the recording. 

If the buyer makes the mistake of believing their sales agent, thus not raising a question, the recording is used against the buyer. The buyer is not allowed to record the sales session, and the buyer is not allowed to listen to the recorded closing unless an attorney issues a subpoena. This is unfair. 

Many members have reported that the recording is routinely used against the buyer to dismiss complaints after being coached by sales agents to not saying anything because 1) it’s a new program, 2) I help you on my own 3) they don’t want you buying to make money, and so on.     

Former Arizona Attorney General Grant Woods said in Mr Flaskey’s YouTube “it is infuriating to see members paying money to companies that make them worse rather than better.” 

Washington Attorney General Bob Ferguson warns, “They are preying on people with misinformation…Telling people things that are flat out not true and they are just trying to take as much money as they can from them.” 

Diamond CEO Michael Flaskey grieves for families who lost“$10,000, $12,000, $14,000, $25,000” to exit companies.

I am pregnant with my second child. I have a problem pregnancy and had to be hospitalized at one point during my first trimester. The stress Diamond Resorts brought into my life because of the financial loss my parents suffered has played a part in my baby’s problems. Timeshare medical distress now spans from prenatal to Betty and Frank, ages 88 and 89. 

I end where I began – but adding the other end of life’s spectrum. 

How can this be happening to seniors and pregnant moms in America?   

My motto is based on a concept of unjust enrichment that can be traced to Roman law and the maxim that “no one should be benefited at another’s expense”

“nemo locupletari potest aliena iactura or nemo locupletari debet cum aliena iactura.” 

There is a tendency to blame the victim. AARP Staff writer explains in his book why no one is “smart” enough to outsmart a con. 

https://lh6.googleusercontent.com/afDrSe2gMaKdxWK4j3g7qZXTB9On0ezeP3Z2RFjWmVxL4tYEymOc05ZkK54YMANutYIfUR1ri3LlIZw4zh099_iMN2lMvQvzcYh-a4psrVzw9WJQDETd99NVfnbKxmgDajoDadB1

Understanding the artist behind the scam is a first step in protecting yourself and your loved ones from deceit. After conducting personal interviews with dozens of con artists and studying their personalities, Shadel has found consistent trends in the tactics they use to defraud their prey. What do they all have in common? For starters, a life filled with fast money and women, drugs and alcohol, and lots of lying and cheating. But the most successful cons are also masters of persuasion, using a sophisticated set of psychological tricks and tactics that work time and time again.

Think all victims look the same?  Wrong.  Outsmarting the Scam Artists explains how individual scams are carefully crafted and tailored to meet specific victim profiles.  

That is all for this week with Inside Timeshare, we hope that you have a great Easter weekend and will join us for more news and information on the murky world of timeshare next week.

Friday’s Letter from America: Hilton Acquisition of Diamond

BREAKING NEWS

The Radio 4 program You and Yours will not be broadcasting the MacDonald Resorts segment today as planned, this is due to MacDonald Resorts contacting our reader and making an offer of settlement. Hopefully we will be able to publish a successful conclusion in the future.

Back now to our Letter from America.

Welcome to the end of another week with Inside Timeshare, today’s Letter from America is from an old friend, Irene Parker. It needs no introduction apart from it is a subject that has sparked many conversations, the acquisition of Diamond Resorts by Hilton Grand Vacations. Here Irene explores what this means to Diamond Members.

What does Hilton Grand Vacations Acquisition of Diamond Resorts Means to Diamond Members?

How Private Equity has Influenced Timeshare

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By Irene Parker

March 26, 2021

Several Diamond Resorts members have expressed bewilderment by the announcement this month that Hilton is acquiring Diamond Resorts. Former deeded owners of resorts purchased by Diamond – Monarch, Gold Key, Sunterra, ILX, Amber and others, were told that they had to give up their deed and convert to points. It is likely they will once again be told they must upgrade to have access to Hilton properties. Overall, Diamond members seem to feel Hilton’s acquisition is a welcome development. The transaction is expected to close by summer.

According to HGV CEO Mark Wang:

But when you think about the power of putting the Hilton brand on …. it will, number one, create a tremendous amount of credibility. It’ll allow us to attract customers, higher-quality customers than Diamond was able to attract.

We’re going to be– we’re launching a new brand called Hilton Vacation Club. And Hilton Vacation Club will be positioned just below Hilton Grand Vacation Club, which is an upper upscale brand. And Hilton Vacation Club will be an upscale brand. And the entry price points are significantly lower, about $20,000 lower to– to enter the system.

https://finance.yahoo.com/video/hilton-grand-vacations-ceo-diamond-154939235.html

What does it mean? How will it work?

According to Hilton’s website: 

Accelerates launch of HGV-branded trust product offering: rebrand Diamond’s properties over time to drive revenue growth in a new customer segment

My Comment: Trust-based means properties are owned by a Trust, but that is of no benefit to timeshare members who don’t “own” anything. Buyers of non-deeded points purchase a right-to-use product. They have no beneficial interest in a Developer’s Trust any more than a member of a Country Club or gym club has a beneficial interest in their club’s brick and mortar buildings. 

My question: Diamond’s properties are already in Diamond’s Trusts. Does Hilton plan to buy legacy (older) resorts, modeling Diamond’s business model?

  • Combining HGV’s points-based deeded product with Diamond’s points-based trust structure will allow the Company to cater to a wider audience, attract more new buyers and drive incremental growth in a capital-efficient manner.
  • HGV’s deeded product provides premium pricing, inventory sourcing flexibility, and the ability to pre-sell projects to support strong project-level cash flow, while giving buyers and owners the value of guaranteed availability.

My question: How is availability guaranteed? According to Hilton members I spoke with, availability is guaranteed by means of an advanced booking window. It’s not the same as owning a fixed week that is a true guarantee.     

  • The introduction of a trust product allows for lower barriers to ownership, reduced inventory delivery volatility and inventory recycling, enabling smoother sales and upgrades while providing buyers and owners network and pricing flexibility.

The biggest question on the minds of many Diamond members is – will there finally be a resale value. Rules change, but at last check if you buy Diamond points on the secondary market, you must buy 50% of the number of points you bought on the secondary market, directly from Diamond to be eligible for The Club, to be able to exchange. Will Hilton be so restrictive?   

Inventory delivery volatility reduction must be because points are of almost unlimited supply and eternal. 

Inventory recycling means foreclosing or taking back points. 

“Smoother sales and upgrades” is something Diamond members are very used to and many are wary of. 

One Diamond member expressed Diamond’s pricing flexibility: 

Kona 11/6/18 – Our agent tried to convince us to purchase Hawaii collection points for $11.40 per point, as opposed to $4.79 presented on Oahu the week before. 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.   

  • Integrates Diamond’s innovative Events of a Lifetime® experiential sales and marketing platform that drives strong engagement and Volume Per Guest (VPG) premiums with HGV’s owner base

My Comment: It is hoped Hilton will do a better job of informing the person presented with an EOL that it is a solicitation. 

Volume per Guest is a metric that is often used to show efficiency in sales. Total sales volume divided by the number of tours “guests” that each site has. 

Ex. Site sells 200,000 on a day with 25 guests = 8,000 VPG – This is the expectation for existing owners. (Figures provided by an industry insider)

Many on our Diamond member-sponsored Facebook have questioned how this remarkably high VPG has been achieved. 

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

DRI 7,000-12,000 VPG 

Wyndham 3,000-4,000

Bluegreen 3,000-4,000

Marriott 3,000-5,000

Hilton 4,000-5,500  

https://www.hiltongrandvacations.com/-/media/project/hgv/presence/news-media/press-releases-pdf/hgv_press-release_2021-03-10_final.pdf?la=en

The History and Effect of Private Equity on Diamond Resorts and Timeshare 

It’s not your Grandmothers’ Timeshare

Leon Black founded Apollo in 1990 with partners from Drexel Burnham Lambert, the junk-bond shop led by Michael Milken that collapsed in a scandal. 

https://www.bloomberg.com/news/articles/2021-03-22/leon-black-steps-down-as-apollo-ceo-succeeded-by-marc-rowan

Apollo took Diamond Resorts private in 2016 for $2.2 billion and made a bid to buy Hilton Grand Vacations three years later for about $40 a share. 

https://www.bloomberg.com/news/articles/2021-03-22/leon-black-steps-down-as-apollo-ceo-succeeded-by-marc-rowan

In 2018 – Private-equity firm Apollo Global Management LLC is preparing to take Diamond Resorts public …. Apollo could seek a valuation for Diamond Resorts of around $4 billion and aim to raise in excess of $500 million in the offering, though price expectations are moving around, according to people familiar with the process.

https://www.wsj.com/articles/apollo-plans-to-take-diamond-resorts-public-1524222000

HGV, spun out of Hilton Worldwide in 2017, will buy the Las Vegas-based Diamond Resorts (for $1.4 billion) from funds managed by affiliates of Apollo Global Management Inc., Reverence Capital Partners and others in an all-stock deal.

https://www.streetinsider.com/General+News/Hilton+Grand+Vacations+to+buy+Diamond+Resorts+International+for+about+%241.4+billion/18106449.html?classic=1&fbclid=IwAR138X7CdWS5ffgQB154da07xYABd9pJCmAhgueJ-UzRun8uHFx7FH3puXU

Private Equity v Hedge Funds (Investopedia)

Private equity funds more closely resemble venture capital firms in that they invest directly in companies, primarily by purchasing private companies, although they sometimes seek to acquire controlling interest in publicly traded companies through stock purchases. They frequently use leveraged buyouts to acquire financially distressed companies. Once they acquire or control interest in a company, private equity funds look to improve the company through management changes, streamlining operations or expansion, with the eventual goal of selling the company for a profit, either privately or through an initial public offering in a stock market. 

History Repeats Itself

The first Diamond member to submit an article about their timeshare experience to Inside Timeshare was in 2016. A family of five, with their firstborn off to college, they alleged that they were told if they became Platinum they could offset maintenance fees. The most recent Inside Timeshare article is about a Diamond member who received a $95,678 judgement contesting a $3,995 Sampler trial product. He alleged that he was told he could offset maintenance fees at $.20 per point by charging purchases to a Diamond Barclaycard.  

https://insidetimeshare.com/fridays-letter-from-america-73/

Many Diamond members have reported that they were told that if they did not give up their deed their heirs would be liable for the timeshare. There have been 157 Platinum members who have reported allegations that they were promised the ability to be relieved of maintenance fees, unlock equity, or be able to sell points if they became Platinum loyalty level or bought additional points. 

Do your timeshare math when purchasing a timeshare or upgrading.  Seniors especially need to amortize the buy-in price over their expected lifetime to determine if the outlay is worth the price.   

Thank you, Irene, as usual, you have given us much to think about, let us hope the industry itself wakes up and take notes from what their own members are saying.

Join us again next week as we explore and report on the murky world of timeshare, have a great weekend.

More Breaking News

On Monday Inside Timeshare will be publishing the latest on the Cazorla Group, the majority shareholders of Anfi, it has been announced that the courts have declared the Cazorla Group bankrupt.