Wednesday, January 10, 2018

Where Are The Needed Consumer Protections?

Timeshares have long suffered from a negative image, brought on for the most part by the outdated and heavy handed marketing and sales practices that are still in use, despite what those in charge of ‘spin’ in the industry would like us to believe. 

However, as 2018 dawns, it’s becoming clear that the developers and the national association that protects those developers have carefully crafted an environment where they reign and consumer protections are dangerously close to non-existent. 

We’re not just talking one concerning developer practice here, but rather a carefully orchestrated business model that puts consumers at a clear and some would say, illegal disadvantage.

Consider this:

—At least one major developer, has a clause buried in their contract that bans any owner from starting or joining any class action lawsuit, forcing them instead into arbitration which in their case,
they pre-selected the exclusive filing location or venue, making it costly and inefficient for the consumer and is so knowledgeable about the pool of available arbitrators from experience in using them, that they can in part control the outcome by striking any proposed arbitrator that hasn't previously ruled in favor of the developer. The one shot that a consumer can't compete in that game.

To protect themselves, within that clause the developer states that a consumer may ‘opt out’ of that restriction if they notify the developer within 30 days of purchase. Talk to 100 of their owners, and 99 of them are unaware of this. 

Another developer, now exiting the industry themselves and formerly based in New York City, wrote their contracts in such a way that unsuspecting owners literally gave the developer the right to change the Offering Plan several times annually without owners' knowledge or advisement. Changes were made with the New York States Attorney General’s office as well as with New York City Real Property Records to change the type of deeds the owners held. You guessed it; the changes that were made inevitably favored the developer and put the owners at a disadvantage. 

—Then there is the inability to access or use what you purchased until well after the rescission period. In the United States, there is a legal rescission or cooling off period which ranges from 3-10 days. On the surface, that sounds like adequate consumer protection. But dig a little deeper as I did in this article I wrote for Senior.com(https://senior.com/timeshare-industry-keeps-rescinding/) and you’ll see that while almost all developers pressure you to purchase within the scope of a 2-5 hour sales presentation; promising you the price is for ‘today only’, they are under no obligation, legal or moral, to process the paperwork giving you access to what you purchased within that same legally mandated rescission period. Additionally, developers are getting ‘creative’ in how they give you the legal paperwork concerning the purchase and the rules concerning rescission. Several developers now routinely use a CD ROM or a tablet of some sort, both of which are difficult at best to access while on vacation. 

—Check any timeshare contract and you’ll find the ‘oral representation clause.’ This nifty clause, also known as ‘the salesperson can lie all they want during the sales pitch’ clause allows salespeople working on behalf of timeshare developers to say whatever is necessary to obtain the sale during the course of the 2-5 hour sales pitch and be under no obligation to live up to any of it. To wit; one major developer is telling unsuspecting consumers that they’ll be able to ‘cash in their timeshare points’ at $.30 per. When the owner attempts to cash those points out, they are of course told that no such program exists. 

—Most salespeople extoll the many virtues of timeshare ownership, among them being the ‘full bundle of rights’ that being the ability to use, exchange, rent, sell or will their interest. Ah yes, the ability to sell. What they don’t mention is that in the majority of cases, the resale timeshare market is so depressed that there are hundreds of thousands of owners who are listing their timeshare for sale for less than $1,000 and in many cases for nothing after spending upwards of $20,000 for their ‘piece of paradise.’ (In 2016, the average price of a timeshare was over $21,000)

—The American Resort Development Association (ARDA), funded by timeshare developers and exchange companies among others, has a Code of Ethics. (http://www.arda.org/ethics/) However, several high ranking members of ARDA including at least one serving on the Ethics Committee, have been copied on at least 80 and as many as 100 detailed complaints from one consumer advocate on behalf of owners. ARDA’s response? They have ignored every single complaint. What, I ask you is a Code of Ethics good for if it’s not enforced? The answer of course is ‘window dressing.’ It looks good but is in fact empty. 

Skeptics of the premise that the consumer is clearly at serious disadvantage in timeshare matters will fall back on the old adage ‘caveat emptor’ or buyer beware. Defenders of the timeshare industry will point out that more than 7 million people own timeshare. However, even a cursory look behind the numbers will reveal an industry that consistently struggles against a negative image and furthermore, steadfastly refuses to do anything to change that, relying on the fact that consumers can not possibly read, understand and agree to language contained within mounds of paperwork signed while on vacation. 

The timeshare industry has cleverly written their own rules. I’ve yet to find another product that has been able to do that and whose rules of governance so clearly disregard common legal and moral obligations to the consumer. 

For timeshare and the vacation ownership industry to survive, some drastic steps must be undertaken, including sales and marketing methods of attracting new owners along with creating sustainable owner programs that show consumers that they are indeed a real stakeholder.

Why Timeshare Rescission Laws Are Laughably Useless

Everyone knows that in the US and most other countries, there are so-called consumer protection laws allowing a consumer to cancel or rescind the purchase of a timeshare and receive all of their money back. In the US, these rescission periods range from 3-10 days. 

Let’s forget for a minute that most timeshare developers make the consumer follow quite strict and sometimes arcane procedures to actually rescind. Let’s further forget for a minute that at least one well-known developer goes even further and actually hides any and all mention of the rescission period in a ‘secret compartment’ in the myriad of paperwork given to purchasers. 

Let’s focus on the absolute absurdity of the short period of time that consumers have to cancel. 

To wit:

  1. Purchasers are given either mounds of paperwork or worse yet, a CD/ROM with all the terms and conditions. 99% of the time, the purchase is made while the consumer is on vacation. The odds of a consumer reviewing these terms and conditions are incredibly small. 
  2. The Uniform Commercial Code ‘gives a buyer a right to inspect goods prior to accepting or paying for them, and a buyer is not required to pay for goods that he or she does not accept. More specifically, before making payment, the buyer has the right to inspect the goods “at any reasonable place and time and in any reasonable manner.”’  In the case of deeded-timeshare, how many purchasers actually inspect the physical unit they purchased?  Worse yet, how does a consumer inspect a point-based timeshare?
  3. Shouldn’t ‘inspecting the goods’ include determining if the timeshare operates as the salesperson said it did?  You’d expect this from a watch, a TV, a computer or even a pair of jeans. Not so with timeshare. 
  4. The ‘use’ of a timeshare boils down to two options:  using it at the home resort or trading/exchanging to another refuel, whether internal or external. Furthermore, the use of the timeshare requires an ‘account’ of some sort, generally Internet based, to be activated. Not surprisingly, the developer is UNDER NO TIME CONSTRAINTS TO OPEN OR ACTIVATE THIS ACCOUNT. 

So, the consumer has absolutely no method of adequately inspecting anything. No way of seeing how many points it really takes to get that 2-bedroom condo in Hawaii, no way of seeing just how easy it is to get a studio in Daytona during Race Week. Not even a way of finding out how simple it is to come back to the home resort the following July. 

Now of course I hear you asking, ‘how is this possible?  This isn’t fair!’  The answer of course is that the timeshare laws were written approximately 40 years ago and that the terribly clever people in the industry categorized their nifty little product in such a way that the UCC didn’t pertain to it. 

As a matter of fact, those clever people made sure that the laws covering their nifty timeshare product were specific to only timeshare. 


And there you have it. A legal rescission period that on the surface, is consumer protection. In actuality, it’s a total farce. Except the only ones laughing at this face are those within the industry. Consumers are crying. 

Saturday, August 19, 2017

Exclusive Interview Regarding RCI's Acquisition of DAE

I don't know about you, but I was shocked to read of RCI's acquisition of Dial An Exchange (DAE) last week. I reached out to Francis Taylor, DAE's CEO for an exclusive interview. 

So, Francis---big news in the world of timeshare exchange. What can current DAE members expect both in the short term (3-6 months) and long term? 

Members can expect the same high level of customer service and attention they have always known and come to expect when dealing with our company. It is 'business as usual' and DAE's role won't change from being a service provider in the timeshare industry in the 'Exchange' space. We will continue to operate from our existing offices and keep our website for our members who enjoy working with us via website and online services. Going further forward our members can expect that exchange opportunities will be enhanced as we find our way through this new relationship of having new owners. There are a great many synergies between RCI and DAE and given we both operate in the same space there are some obvious areas in which we can co-exist and support each other to help grow our respective brands. Importantly this will raise member satisfaction levels when it comes to obtaining their desired exchange holidays. 

The companies have quite different business models as I know from working closely with you both for a number of years---what do you see as the biggest challenge to melding those two? Will DAE continue to have their call centers or will those be eliminated?


Yes, we do have very different business models and that's probably why we complement each other's business goals. We attract different demographic audiences.  DAE operates under a 'low cost' business model and we've been able to build on that niche in the market. DAE is primarily focused on direct-to-consumer transactions with individual timeshare owners and HOAs and that has worked for our brand for 20 years. 

So, melding the two is more about how we can collaborate behind the scenes to complement each other’s businesses and strengthening our back office capabilities to both drive our individual business goals and support the industry as a whole. DAE will continue to operate as a separate and individual brand and entity. We will retain different call centers to RCI, our own staff, our own color (we love blue!), our own style of marketing and customer service initiatives, and our own support programs of HOAs, resorts and infustry partners.

Going forward, when a consumer purchases a timeshare interest at an RCI affiliated resort, will they receive an RCI membership, a DAE membership or both? 

I don't expect dual memberships will be offered at time of sale to both as common place. RCI & DAE will compete for our business by offering our individual services, product range, and industry support programs as we currently do now. It's also timely to remember that individual timeshare owners have a choice of who they want to call on to provide an exchange service, just as we do as individuals in all areas of our lives when it comes to purchasing a product or service.



I know in the past there have been some issues with RCI Points members not being able to deposit and then use DAE for an exchange. I trust that these issues will no longer be a problem? 

It's still early days and we have many topics and issues that will need to be raised; examined to see where things sit; what makes sense; how we can cooperate to get the best result for both entities and allow consumers to benefit. As I said earlier, RCI & DAE are different businesses, with different drivers and ways of conducting business. We won't always agree on everything, and we each need to stay true to our own business models and the direction we're reaching to achieve.

Will DAE now begin to affiliate resorts as RCI does? 

DAE is happy with the way we interact and work with resorts. Our point of difference has always been to work with individual owners and do the very best we can for them. We've always found most resorts honor their owners’ wishes when it comes to working with an exchange provider so I'm not sure how much of a change will be considered going forward on this issue. 

Lastly, does this acquisition signal the start of more acquisitions in the future in your opinion? Are the days of the secondary and tertiary exchange companies coming to a close?

That's probably a question for others as DAE isn't looking to acquire another business. As for a future place for different sorts of exchange companies, yes, I believe there is. Our industry is as massive as it is global and humans are funny creatures. We like to have choice, we like working with people or a business with whom we feel a connection and comfortable, and in many cases, we like to work with somebody 'local'. With that said, it's hard to imagine in the 21st century that choice will be a word or option that disappears from our vocabulary!

Many thanks to Francis Taylor who took the time for this exclusive interview in what I can only assume is a busy time for him. 

So, timeshare owners---what are your thoughts on this development?

Thursday, August 17, 2017

Big Changes

As most of you know, I started Timeshare Insights and the blog “The Word From The Timeshare Crusader” with one goal:  to be a catalyst for positive change within the timeshare industry.


I’m pleased to say that I’ve helped a lot of timeshare owners and prospective timeshare owners.  While I’ve garnered some terrific media coverage from such outlets as CNBC, The Chicago Tribune, Senior.com and WGN-TV, it’s not about the media coverage, it was always about helping consumers and attempting to move the timeshare industry forward despite its stubborn intentions to stay stuck in the 1970s.


Today, in 2017 consumers are being ripped off in record numbers, there’s a never ending array of so-called “experts” who are hawking their latest company designed to prey upon unsuspecting timeshare owners and the industry has taken little or no steps to change an outdated marketing and sales structure which continues to foster a sense of distrust with consumers.


Despite that, I believe that timeshare has great potential.


So, it’s time for some changes.


Effective today August 17 2017, The Word From The Timeshare Crusader has been redesigned and relaunched as The Timeshare Crusader Blog and can be accessed directly on http://www.timesharecrusader.com and on Twitter at @TheTSCrusader.  It will have more news, more guest bloggers, more features and will of course; maintain my own independent voice as the main blogger.


I continue to tweet at @LisaLooksAt and will remain as the timeshare contributor at Senior.com.


Additionally, I continue my important work with the National Timeshare Owners Association which is celebrating 20 years of educating, advocating and encouraging responsible timeshare management and ownership.

In conclusion for today:  If you like what I’ve been doing for the past 12 years or so, stay tuned, it’s going to get better and more positive changes are just around the corner.  If you don’t like what I’ve been doing for the past 12 years or so, here’s a quote from Star Wars to get you thinking; “You can't win, Darth. If you strike me down, I shall become more powerful than you could possibly imagine.”

Saturday, August 5, 2017

A Code of Ethics....Good Only if Enforced

Today we hear from a Guest Blogger describing her experiences at a DRI resort and her follow up with ARDA as to alleged violations of their Code of Ethics.

My husband and I feel we have been deceived by Diamond Resorts International, and ask for your assistance in getting justice for our victimization.

In November of 2016 we stayed in one of DRI's timeshare resorts in Sedona, AZ through our Interval International membership. While there we attended a DRI sales presentation. The hotel concierge gave our family of 4 a $150 gift card to a local restaurant for our thanksgiving meal, and in return we were to attend a 90-minute sales presentation. The presentation ended up lasting 6 hours, with our sales agent becoming agitated when we said we needed to leave due to my husband's golf tee time. This violates ARDA's Code of Ethics of "Information".

The sales agent, Karen Calvano, empathized with us about our inability to stay in resorts unless located close to home which is in Houston, TX. She said she knew Interval International did not have many resorts in our area, but that DRI had many resorts, and we would certainly be able to find resorts in Texas, New Mexico, and Louisiana. As it turned out, DRI's resorts in our area are owned by affiliate resorts rather than DRI and costs approximately more points than we were sold. This violates ARDA's "Exchange Program" in which we were over promised on the likely hood to exchange for Diamond’s inventory in our area.

When I looked on the Diamond member website recently, Diamond’s Great Wolf Lodge affiliate property in Texas was available for 26,911 to 66,467 points. If we multiply 26,911 by 20 cents which is the typical cost of maintenance fees, it would cost $5,382 for a one week stay. Booking.com had the same Family Suite available for the same week for $1,700. This is not an unusual scenario. I have searched various times throughout the year.

We attended DRI's "Event of a Lifetime" in January, 2017 which we were told was our member orientation. The “orientation” turned into a high pressure sales presentation quickly with misleading information regarding redeeming our points for 30 cents per point if we paid to upgrade our membership to platinum. When my husband, Dr. Mark Grant, asked to see the price per point in writing, the sales agent pointed to his own written notes to show us that it was legitimate. My husband pointed out the documented literature which showed the amount at 10 cents per point, and the salesman quickly dismissed us to the next sales agent.

According to the ARDA Code of Ethics, this sales agent violated the ethics standard of "Avoidance of False and Deceptive Statements".

Mr. Clements, as you can tell from the brief account I have written, we are in a rough situation with devious minded people who have not followed ARDA's Code of Ethics, and should therefore be forced to let us out of our contractual agreement.

We appreciate your consideration, and assistance!

Sincerely,
Eron Grant


Response from Diamond
I am responding to your concerns regarding availability in Texas and Louisiana. While Diamond Resorts does not own or manage any properties in these states, we do have affiliate agreements with several resorts. These properties offer us limited inventory each year to offer to our members to book with their points. Inventory is typically limited, and prices are set by the properties themselves, and not by Diamond Resorts. These properties are offered on a first come, first served basis in addition to the Diamond Resorts properties covered under your contract.
Diamond Resorts does offer a property in New Mexico, the Villas de Santa Fe. If you would like assistance booking at this property, please let me know and I will be happy to assist.


My Response

My concerns with Karen Calvano stating "DRI has several resorts in TX, LA, and NM" is that when we asked her to show us the properties she said, "Oh we can't do that right now, but we can do that later." After 6 hours of being with her, we were exhausted and never did see the properties.

We explained that we are owners with Marriott and members of Interval International already, so affiliate properties through DRI really don't help us. Plus, the value of your affiliate properties is ridiculous. How does this help us?

What's telling is that the consumer never even heard back from Mt. Clements personally, nor from ARDA as an organization. As a matter of fact, there are close to 100 complaints that I know of personally that have been sent to ARDA and have not been acknowledged, much less addressed

Let me be clear, this is not merely a DRI issue. It's s much larger one. If there is indeed an ARDA code of Ethics and if indeed issues and concerns are brought to the Committee's attention but ignored, what's the point?

As always, constructive comments are welcome.

Thursday, July 13, 2017

Guest Post-Timeshare Thoughts

Some great insights here. Thoughts?

What I have started to think when it comes to timeshare ownership and the future of the industry...

Everyone knows this industry is not well regulated (but obviously needs to be).  Some of the actions and activities of individuals and companies that gets reported in the timeshare world would result in major fines and possibly prison sentences in other better regulated industries.

It appears the industry has long depended on being "self regulating."  It has not done a great job of that but it seems there have always been just enough legit companies that seem to try and deliver a quality product and quality customer experience at the same time they balance trying to make a healthy profit.

I think of a brand like Disney first and foremost.  Also while I know a company like Marriott has their critics, in all my years traveling and staying at their hotel and timeshare properties I always got the impression they were serious about fulfilling their fiduciary responsibilities and providing top shelf customer service and a quality customer experience.  I am sure there are other good examples.

In the past the bad eggs of the industry (the industry's worst examples) seemed to mostly be of the smaller, regional variety.  The negative impact was always minimal and able to be managed before it metastasized.   But the potential problem as I see it is that in the last decade plus, it appears what may be described as large predatory financial engineering companies almost "posing" as timeshare companies have risen and aggressively worked every loophole and non regulation to their own advantage and now are probably guilty of gross violations of their fiduciary responsibility to their customers / owners.  These companies have created vast fortunes for a very small network of individuals at the top of the pyramid.

Ironically though, and looking at historical examples from other industries, it is these very companies likely to bring the whole industry into the national spotlight and to its knees eventually.  Some of these appear to have walked to the edge of doing that already.

As these quasi financial engineering / timesharing companies become increasingly more brazen in chasing profits by any means possible, raising fees rapidly at the same time they are reducing owner benefits, due to their increased sheer size the public outcry will likely increase and just the odds of random probability suggests there will be a gotcha moment or event that will bring increased scrutiny and increased legislation.

If the good timeshare companies try to ignore what the bad ones are doing, they may find someday that their systems and profits and share prices are negatively impacted by the future regulations forced on the industry from the egregious actions of the bad actors in their industry.

Pharma for example is still dealing with the Turing Pharmaceuticals fallout even now 2 years later, and that fallout will likely not dissipate anytime soon.

This is just my still forming hypothesis.  We'll see.

Thursday, May 25, 2017

Stop With The Spin.Just Stop


Lately, there's been some truly laughable advice about timeshares; buying, owning and selling that certain people and certain organizations have been able to get through to the media.

I'm tired of this, so here's my thoughts:

1) ARDA-ROC has positioned itself as 'an alliance of over one million timeshare owners.’

It's not really 'an alliance of over one million timeshare owners' when not a single one of them votes, advises or even participates in anything that they do.

2) Timeshare is a usage product and not something that should be purchased as an investment, but rather as something you buy to save money on vacations.

True on the first two points. Usually false on the third. If you buy a timeshare from the developer then add maintenance fees, reservation fees, usage fees, etc., the average person does not save money.

Usage or not, any purchase for $20K should have some residual value after 5 or 10 years, assuming it's been maintained. Not so with timeshare. Listings abound for $100 or less.

3) You should call your resort to see if they have a take back program

Hysterical. Why a take back program and not a buyback program?  Go ahead, call and let me know what you find out. I have close to 1,600 emails from owners who want out.

4) Work with a broker

Another funny. Did you know that there's at least one major developer whose product will not be handled by any of the brokers in the LTRBA?  Did you also know that the residual value of the majority of the timeshares for sale is so low that if a broker were able to sell it, the original owner would end up paying money for the privilege of getting rid of it?  Doubt me?  Check Sharket.com

5) It's the 'mom and pop drive-inn on the Jersey Shore that have little to no value.'

None of the 1,600 emails I gave from owners wanting out own at a one of those resorts. They own at Bluegreen, Wyndham, Festiva and Diamond for the most part. There's hundreds more who are members of FB groups. Oh, and although they're geographically close, you may want to check out The Manhattan Club saga.

6) Don't list it for $1

GOLDEN. This comes from a spokesperson for an online listing platform that charges both a membership fee and a listing fee that has thousands of listings for $1. This is also the same platform that willingly takes listings from Diamond properties when they know that Diamond does not allow listings in third party platforms and will take punitive action if they are caught.

What does all this mean?

You had better be very careful who you trust with your money and your decisions concerning buying, using and selling timeshare. Question everything. Trust no one blindly. Verify everything. Don't believe something just because it was on the Internet.

Most of all, follow the money.