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Timeshares have long suffered from a negative image, brought on for the most part by the outdated and heavy handed marketing and sales practices that are still in use, despite what those in charge of ‘spin’ in the industry would like us to believe.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