Wednesday, August 29, 2018

We Can Not Guarantee Compliance With The Law

After reporting on the timeshare industry for almost 18 years, very little shocks me any longer. 

I nearly fell off my chair when reading this, however. Here is a section of Diamond Resorts’ (at the time Diamond Resorts International annual report dated December 31, 2015. This is unedited, I merely added boldface type to call attention to a few points. VOI stands for vacation ownership interests. 

"We are subject to extensive regulation relating to the marketing and sale of vacation interests... all of the countries in which we operate have consumer protection and other laws that regulate our activities in those countries. The cost of compliance with such laws and regulations can be significant, and we cannot guarantee that we will at all times maintain compliance with all such regulations and other laws.  Moreover, from time to time, potential buyers of VOIs assert claims with applicable regulatory authorities alleging unlawful sales practices by the developers of the Diamond Collections and Vacation Interests salespersons. Actions by regulatory authorities, in response to these claims or otherwise, could result in our having to make modifications to our business practices or policies that adversely affect our VOI sales or other business activities and could have other adverse implications for us, including negative public relations, potential litigation or regulatory sanctions...violations of these laws, policies or principles to which our operations are, or may become subject, may limit our ability to collect all or part of the principal or interest due on our consumer loans, may entitle certain customers to a refund of amounts previously paid and could subject us to regulatory investigations or actions, fines, penalties, damages, administrative sanctions and increased exposure to litigation, and may also impair our ability to commence cancellation and forfeiture proceedings on our VOIs."

What is your takeaway from this?  Like I said, I’m shocked. I can’t imagine any company in any other industry readily admitting what this company just did. 

And you want to purchase a timeshare, why?

Tuesday, August 28, 2018

Everyone With a Keyboard Isn’t an Expert

Mistakes happen. Typos happen. I’ve had more than one pointed out to me. 

I recently came across a blog, which really wasn’t much of a blog at all, from someone claiming to be an ‘Advocate for timeshare owners.’

This is an excerpt of a post from today:

The following is a list of Timeshares that have been successfully transferred in the past 3 years. The original owners happily know longer have their timeshares and are not responsible for any future fee's.

Orange lakes Resort
Hillcrest Lake Resort in Avida Springs La
Bluegreen in Branson Mo.
Diamond Resorts in Scottsdale Az.
Diamond Resorts in Sedona Az
Wyndham Resorts in Shawnee Pa.
Ocean Sands Resorts in Virginia Beach Va.
Spinnaker Resorts in Branson Mo,
Silver Lakes Resort, Kiss. Fl
Woldmark, The Club, Redmond Wa.
Brigatine, La Sammana N.J.
Atlantic Palace. N.J.
Silver Lakes Kiss. Fl

If you know longer use your timeshare then why not add yours to this list?

In addition to poor grammar and atrocious spelling, she can’t even get the correct name of some of these resorts. 

The moral of the story is that you can’t trust everyone who claims to be an ‘advocate’, particularly one that can’t spell or know the names of the resorts she’s claiming to help people with. 

Wednesday, August 22, 2018

Another Shining Example of Exemplary Customer Service-NOT

Another example of what can happen if you believe the timeshare sales staff instead of doing some research before even agreeing to the sales pitch. 

As usual, the resort’s answer was ‘you signed the paperwork.’  Buyers have absolutely no idea what they are signing at the time of a purchase. 

Air Force First Sergeant John Kim and his wife Glory, of South Carolina describe their battle with Bluegreen Vacations. 

“My wife Glory and I realized our mistake when we filed our 2017 taxes. We purchased about $60,000 worth of Bluegreen vacation points financed at 16.99%.  The first purchase was in April 2017 at The Fountains in Orlando, and the second purchase June, 2017. We had been told the June meeting would be an orientation meeting, but it was just an attempt to sell us more points.  We were told at both meetings we could go to our bank and refinance as you would any mortgage. We have learned banks don’t finance timeshares,” explained John. 

In addition, John reports being told-

>Bluegreen points are an investment, like a mortgage. It was emphasized that we were purchasing deeded property (which it is not), so an investment. We have learned Bluegreen vacation points are a right-to-use product, like joining a fitness club. Managers assured us we were making a sound “financial investment” and in years to come, we would be able to sell our portion of Bluegreen for a profit because we would have a deed to Bluegreen Vacations properties.

>We could deduct the interest from the loan on our taxes, as you could with any mortgage. This was not true.

Bluegreen ignored John. Bluegreen does not report nonpayment of a timeshare loan as a foreclosure, only because Bluegreen and credit reporting agencies Equifax and Experian settled with Finn Law Group in a lawsuit that resulted in 11,000 Bluegreen members’ foreclosure entries deleted from their credit reports. 

Other timeshare companies do report a loan default as a foreclosure. The Bluegreen decision ruled that timeshare foreclosures were in violation of the Fair Credit Reporting Act.

Another point to consider is that when the timeshare salesperson tells you to refinance the newly purchased timeshare interest, he or she is not referring to pledging the timeshare interest itself as security because nobody in the financial industry thinks they have any value, however, the danger lies in refinancing and placing a security interest on your residence as with a home equity loan. You save money on interest but you have now placed an undue financial burden on your home and when you come to your senses it’s too late! 

Had you left your home unencumbered it is a very good possibility that you or an attorney on your behalf could negotiate a cancellation of the timeshare loan as long as it stays with the resort.

“We bought in Florida. I understand the Florida Timeshare Division, DBPR, will in all likelihood, echo Bluegreen’s defense with, ‘You need proof and verbal representations are hard to prove.’ With no real regulation, we want our voice heard. Don’t believe a word a timeshare sales agent says. I filed complaints with the Attorney General for the States of South Carolina and Florida, as well as the Federal Trade Commission, the Better Business Bureau, the Fraud Officer of Orlando Florida Police Department, Department of Defense investigative services for the Air Force, Army, Navy and Coast Guard and the AARP Fraud Watch Organization. Nothing happened. Our message – buyer beware.”

John has now volunteered to assist other active duty members about what can happen if they are foreclosed on. The consequences can include losing their military security clearance. 

Monday, August 13, 2018

More Despicable Sales Practices

I’m so freaking tired of hearing these stores. I’m so freaking tired of consumers being scammed. I’m so freaking tired of law enforcement and regulators turning a blind  eye to these practices. 

Today’s hideous story tells of a veteran being scammed. I’m positive that this was not a one off, I’m positive it’s SOP for these guys. I hope you’re as upset as I am. 

Again, I’ve redacted the name of the developer. Why?  They’re on the warpath and from what I hear, they’re out to sue anyone and everyone who sheds light on their horrible ways of doing business. 

So I have a story that I'm sure you have all heard a thousand times. I'm just digging into everything and am realizing I got hustled. 

We purchased our initial membership in January and went to the NAME REDACTED resort during Easter. We went to our meeting and were given the upsell to upgrade. We initially were done and about to walk out when the guy who gave us our update came back and told us that we were part of a veteran's program and eligible to purchase a previous vets account since he had defaulted on it and that this was similar to a short sale. 

We were still out until he stated that the account had equity in it already (red flag I know now) and if there was ever an emergency situation we could sell it back to NAME OF DEVELOPER for the equity amount. I'm now finding out that that was a complete lie. What are our recourse's in situations like this? Who can I file a complaint with? I live in California.

Wednesday, August 8, 2018

Changes Have Come...In Other Countries

While it may seem that things remain status quo here in the US when it comes to timeshare matters, it’s not the case elsewhere. 

Consider that in Spain perpetual timeshare contracts have been ruled illegal. To date, Spain has ruled in favor of the consumer in a whopping 129 Supreme Court victories. 

In Canada, a decision was reached in July of last year (funny how this story didn’t receive much coverage here) that will likely affect all timeshares and owners of timeshares with properties located in Canada. The Federal Court of Appeal set aside the Tax Court of Canada’s decision in the case of Club Intrawest v. Canada. In doing so, the Court of Appeal substituted its own decision to refer GST assessments back to Canada Revenue Agency for reassessment of GST just for services supplied in Canada in relation to vacation homes situated in Canada.  Federal Appeal Court Judges Nadon, Gauthier and Dawson agreed with the Tax Court’s finding that a principal-agent relationship does not exist between the club and its 22,000 members. 

This decision also confirms that members of Club Intrawest (now rebranded Embarc by Diamond Resorts International (DRI)) do not hold beneficial ownership in the real estate and equipment in vacation home resorts and do not control the Club. The Court found that members merely own a right of occupancy in exchange for their resort points. This contradicts sales presentations, financial and marketing materials by Intrawest Corporation (“Intrawest”) and now DRI, to the effect that members have beneficial ownership of vacation homes and control the Club through election of the Board of Directors, responsible for managing the Club’s operations.

The ruling will require the club to pay reassessed GST back-taxes for tax years 2002-2007. The GST/HST tax liability for tax years 2008-2016 is unknown at this time. All timeshare owners with vacation homes in Canada may be impacted by this decision and may also see themselves assessed for back taxes on the supply of services in Canada related to vacation homes situated in Canada.

Also in Canada, a remarkable piece of legislation passed last month known as Bill 178. This Bill was introduced in April of this year and passed in June of this year. 

Although this only covers the province of Quebec and most timeshares in Canada are located in other provinces, the bill is quite an eye opener. 

Here are some excerpts from the bill which are well worth your time: 

Bill 178 defines a timeshare contract as a service contract and not a purchase agreement involving a property transfer.

The Act proposed amendments to the Consumer Protection Act to introduce a protection regime governing contracts relating to timeshare accommodation rights.
The Act introduces rules specific to the making of that type of contract and sets out the compulsory information such a contract must include. It grants consumers the right to resolve the contract without charge or penalty within 10 days of signing it and specifies the circumstances in which that right is extended to one year.
The Act imposes on merchants who enter into a contract relating to timeshare accommodation rights the obligation to establish a payment schedule for each year covered by the contract…..Furthermore, the Act introduces a disclosure obligation related to promotion made by merchants engaged in the business of such contract, prohibits certain stipulations and provides that such contracts may not be automatically renewed.

Division V.3
Contract Relating to Timeshare accommodation rights

187.13 A contract relating to timeshare accommodation rights is deemed to be a service contract

187.14 A contract relating to timeshare accommodation rights must be evidenced in writing. In addition to the information that may be required by regulation, it must contain or state the following, presented in conformity with the model prescribed by regulation: 
(h) the term and expiry date of the contract;
(j) the fees to obtain an accommodation right, their amount on an annual basis if they are calculated on a basis other than annual, and the total of such amounts for the entire term of the contract.
(t) a statement that the merchant may not collect payment from the consumer before beginning to perform his obligation;
(u) the right granted to the consumer to resolve the contract at his sole discretion within 10 days after that on which each of the parties is in possession of a duplicate of the contract; and
(v) the other circumstances in which the consumer may resolve or resiliate the contract, any applicable conditions and the time within which the merchant must refund the consumer.

187.15 Any stipulation that results in the automatic renewal of a contract relating to timeshare accommodation rights is prohibited.

187.16 The merchant may not make the entering into or the performance of a contract relating to timeshare accommodation rights dependent upon the entering into of a credit contract.

187.21 The contract may be resolved at the discretion of the consumer within 10 days following that on which each of the parties is in possession of a duplicate of the contract.

That period is, however, extended to one year from the date on which the contract is made in either of the following cases:
the contract is inconsistent with any of the rules set out in section 25 to 28 for the making of contracts, or one of the particulars required under section 187.14 does not appear in the contract; or
a Statement of consumer resolution and resiliation rights and a resolution and resiliation form that are in conformity with the model prescribed by regulation were not attached to the contract at the time the contract was made.
187.24 Any contract entered into by a consumer, even with a third-party merchant, on the making of or in relation to a contract relating to timeshare accommodation rights and that results from an offer, representation, or other action by the merchant who is party to the contract relating to timeshare accommodation rights forms a whole with the latter contract and is resolved or resiliated by operation of law at the time the contract relating to timeshare accommodation rights is resolved or resiliated.

In addition, the consumer may, with respect to a contract entered into with a third-party merchant and contemplated in the first paragraph, exercise directly against the merchant a recourse based on the non-performance of the contract or on the provision of this Act.

187.25 Within 15 days after resolution or resiliation, for the reason set out in section 187.26, of the contract relating to timeshare accommodation rights, the merchant must refund all sums paid by the consumer under the contract and under any other contract contemplated in section 187.24, including sums paid to a third-party merchant.

229.1 No person may, when making or promoting a contract relating to timeshare accommodation rights, make representations implying that the contract is an investment, unless the person gives the consumer a document showing the truthfulness of the representations.

A contract related to timeshare accommodation rights is considered a service contract. You may resiliate your contract for other reasons, and you have other rights and recourse.

How long before the US sees legislation such as these passed in Spain and Canada?  My guess is a long time the timeshare industry is deeply entrenched in. They’re fighting hard for things to remain status quo. 

Looking to change things?  Speak up.