Another Warning For Timeshare Owners

I certainly hope some of you frustrated timeshare owners are taking the time to read this. 

It’s come to my attention that there’s a Facebook group that’s ostensibly about so-called timeshare cancellation. From what I can ascertain, it’s run by, no surprise, a self-proclaimed timeshare exit company.  They’re not using their name however, but individuals are answering inquiries asking owners to DM/PM them.

While this is troubling enough…if you’re going to run one of these pages, at least have the faith in your company to use the company name, there’s something that’s even more worrisome.

It’s timeshare owners themselves.  The sheer number of people chiming in claiming to have ‘the answer’ is troubling, but nothing in comparison to the misinformation being amplified. 

I can not stress this enough…before you entrust the very serious and very complicated matter of exiting your timeshare, PLEASE do your due diligence.  At the very least, contact your developer but NOT the sales department.  Talk to Owner Services or whatever that department is called at your resort.  Even if they don’t offer a reasonable exit strategy, and most of them don’t, they’ll be able to answer a question.  Check online reviews. E-mail me if you want with a quick question.

If you need a reminder as to why you shouldn’t blindly trust an unknown person with such a serious matter…chances are that’s EXACTLY how you got into your timeshare mess to begin with.

Stay safe.  Stay informed.  And stay tuned…big news for you and The Timeshare Crusader will be announced soon!  

2021 Recap

 I’d like to say that things greatly improved in timeshareland this year. But they didn’t. Again. 

So, here’s my list of the Top 5 Timeshare Related Stories of 2021:

1. Exit Companies 
2. Mergers and Acquisitions 
3. Same Old Sales Practices 
4. Still A Dearth of Exit Options 
5. A Giant First Step 

Exit Companies 

Exit companies are not going anywhere. Despite the AGs of several states filing lawsuits against any number of these scam outfits, consumers throw them millions each year. Timeshare Exit Team and Timeshare Termination Team were two of the biggest names. The former pulled their advertising from Dave Ramsey and incurred the wrath of the Washington’s AG. The latter abruptly shut their doors in July leaving thousands of owners up the creek. No doubt 2022 will bring more actions against these two outfits. Despite the media coverage that I and media outlets give these stories, serving as a strong warning against paying these firms a dime, they continue to proliferate. 

Mergers and Acquisitions 

The biggest acquisition news of the year was Hilton Grand Vacations’ of Diamond Resorts. Full details have not been worked out, much less released despite the unscrupulous timeshare sales staff pitching everything under the sun in an attempt to scare and up sell existing owners. Welk Resorts was acquired by Marriott, marking the end of a well known and fairly successful independent developer. I predict more M&A activity in 2022. This is not good news for consumers as it means fewer choices and less chance of a timeshare developer to really break out and do something wonderful. 

Same Old Sales Practices 

Day in and day out, I receive emails and read posts on social media sites about 4 hour sales pitches, credit checks being run without consent and timeshares being pitched as investments. Add to that the fact that owners can’t access their information online until significantly after their rescission period has ended, thereby creating tens, even hundreds of thousands of owners dealing with the harsh reality that the truth isn’t quite what the salesperson said. I’ve said it before and I’ll say it again…since there’s nothing overtly illegal about these disgusting tactics, educating consumers and stopping them from attending these pitches is the only way to stop them. 

Still A Dearth Of Exit Options

The industry could, if it wanted to, put an end of the entire exit industry. Instead, only a handful of developers offer beleaguered owners a way out. The entire secondary market continues to be suppressed by the developers. It continues to baffle me why any self respecting developer would allow their product that was sold for $20,000 yesterday to be ‘worth’ less than $2,000 today. Or why every single developer doesn’t offer an exit strategy that isn’t an insult. 

A Giant First Step

I conclude this year end post with an item that may be a little egotistical, but one that’s important nevertheless. ARDA, the trade association for the timeshare industry took a monumental positive step earlier this year by partnering with me to create this document https://www.arda-roc.org/important-information-for-buying-timeshare  As far as I know, it’s the first time they’ve ever worked with someone outside their enclave and the first time they’ve ever addressed the oral representation clause that relegates all but the most egregious consumer claims directly to the garbage. There’s a melancholy coda to this story…since that important document was released, ARDA has not taken the opportunity to continue this relationship by working with me on any number of issues despite the fact I’ve suggested a number of consumer facing projects. I continue hold out hope. 

Lastly, there will be some exciting news to announce within a few days. Stay tuned. 

The Case Of The Mysterious $1,000 Bribe

Last week, a Diamond Resorts owner reported that she was offered $1,000 off of her annual maintenance fees if she and her husband attended a 60 minute update regarding Hilton’s recent acquisition of Diamond. 

You know where this is going, don’t you?

Let’s start with the fact that timeshare salespeople know about as much as I do about the details of the Hilton/Diamond deal. Meaning nothing. Nothing has been publicly announced. Timeshare salespeople have absolutely no inside information. 

Now let’s ask if this owner got this offer of $1,000 off their annual maintenance fees in writing. I know you’ll be as stunned as I am to find out that nothing was in writing. By stunned I mean of course about as stunned to find out that the sun rose this morning. 

At the end of the update, which of course was nothing more than a sales pitch revolving around the ‘fact’ that these owners would be at a lower level once Hilton fully took over-which could be alleviated by buying thousands of dollars worth of more points today-no one including the Quality Control person and the VIP Lounge person had any idea about this $1,000 offer. I don’t know about you, but I can’t stop laughing/crying at the titles of those people. Quality Control?  VIP Lounge?  Just another example of how nefarious companies use these titles to give off the air of importance to their customers when in reality, there’s no quality control and no one is a VIP. 

Let me say that the person who offered this offer that doesn’t exist should be fired. Immediately. 

But again, some of the burden falls on the consumer. This person is an owner and already has experience with this timeshare developer promising things that never materialize. And yet, they took the hefty and quite unrealistic bribe without demanding it in writing. 

While the owner in question refused to purchase additional points, they should never have attended the pitch at all. 

The problem of course, as with so many timeshare related issues, is that no actual laws are being broken to my knowledge. Lies are being told, but the only recourse seems to be shining a light on them. Which is exactly the point of this post. 

A Broken Paradigm…But Which One?

Over the weekend, I read the regular litany of complaints about high pressure timeshare sales tactics. 

Yawn. 

Don’t get me wrong…the high pressure, the misinformation, the nonsense of the ‘today only price’, the running of credit without prior approval…I’ve heard every single one of them. And it needs to stop. 

But does it really need to stop?  It’s obviously working for the developers or else they’d stop it. For all the bitching and complaining by consumers, reporters and consumer advocates; it’s still working. 

For every consumer that stands up at the end of the mandated 120 minutes, there are at least 7 that stay for who knows how long. For every consumer that does their advance homework and knows that the $20,000 timeshare the salesperson is hawking is available for $1,000 or less on the resale market. For every one person that understands the resale market, there are at least 10 that think that $20,000 is a good deal because the salesperson originally said it was $45,000. For every consumer that understands that the resort update is a sales pitch and not required, there are at least 12 that go along with the pitch the ‘concierge’ gives them. 

You’d be hard pressed to come across anybody who either hasn’t heard about these antiquated practices or personally encountered them. 

And yet every single day, timeshare sales centers around the country are filled with consumers sitting across little round tables listening to the same tired pitches. And for the past 20 or so years since I stumbled into this industry, an average of 10% of those consumers purchase something. 

So is the timeshare paradigm broken?  Not even close, buster. Not even close. You know what is broken?  The customers’ paradigm. Change that and I guarantee you the developers will change immediately. 

Some Good News…And Some Questions

Earlier this month, North Carolina became the first state to regulate self-proclaimed timeshare exit companies. A few of the key provisions are:

Timeshare exit companies may not advise or suggest timeshare owners to cease making payments on their timeshare obligations

Timeshare exit company contracts must provide timeshare owners with a right of rescission

Timeshare exit companies cannot charge timeshare owners for a transfer or exit service that amounts to foreclosure or repossession

Timeshare exit companies are not entitled to a fee for a transfer or exit service if the timeshare owner procures their own transfer or exit

Written evidence of the transfer or exit must be provided and include the method of transfer or termination, along with legal documents

Timeshare exit companies must escrow the fee charged to timeshare owners

While this is certainly a step in the right direction, I can’t help but think this would be unnecessary if there was a legal provision in place that mandated that every…every…timeshare developer have an exit option for every…every…paid in full timeshare interest.

No more hiding behind the “you didn’t purchase it directly from us” excuse. No more telling media outlets that there’s an exit option when depending on the time of day, there’s a ton of exclusions. No more “here’s the number of a reseller” when an owner calls and wants to be released. 

And the exit option has to be either free or a reasonable amount. What’s a reasonable amount?  No more than one year of current maintenance fees. 

Several questions spring to mind about this. 

>Why has this taken so long?  

>Why was one of the leading timeshare law firms working on this with the North Carolina Real Estate Commission and not ARDA-ROC?

>Why hasn’t the North Carolina Real Estate Commission looked into promises made by the timeshare developers at the point of sale as well?  Namely charging consumers upfront for a product/service that will not be available until well after rescission?  

However, it’s Friday. Let’s end the week on a positive note. This is a good thing for timeshare owners. 

Way Too Little…Way Too Late

Several days ago, I saw a tweet from Responsible Exit…the consortium of a handful of timeshare developers who claim…I say ‘claim’ because I’ve heard both good and bad reviews…to provide a way out for owners…saying “Want to exit your timeshare? Maybe you should consider learning how to best take advantage of the benefits available as an owner. ⁣⁣Contact your developer to learn more about how to get the most out of your ownership.”

I almost spit out my iced tea. 

“Maybe you should consider learning how to take advantage of the benefits available as an owner”?  Seriously?  And then suggesting that the beleaguered owner contact the developer?!?  Are you kidding me?

The same developers who disguise their never ending sales pitches as “information sessions”?  The same developers whose only answer to frustrated owners is to buy more?  The same developers who routinely employ salespeople whose knowledge of the timeshare industry consists of nothing more than what management wants them to know?

Now, there are some developers who do provide owners with some continuing education.  They are to be commended. I recently saw that both Wyndham and Marriott were offering some virtual sessions and of course, DVC is way ahead of other developers. 

But the vast majority of developers collect their money, shove new owners out the door with some phone numbers, a link to their website and some paperwork and then continually try to get them to buy more so that the owners will be able to do what they were initially told their timeshare would get them. 

After years of not getting adequate information, after years of rising maintenance fees and after years of being lured by the unscrupulous self-appointed exit companies; NOW the developers want owners to come to them to learn all about the many benefits of ownership and how get the most out of their timeshare?

Way too little…way too late. 

Guest Post From Attorney David Hancock

This is a well thought out post written by attorney David Hancock addressing the perils of consumers engaging with self-proclaimed timeshare exit companies. 

By accepting referrals from timeshare-exit companies like Timeshare Exit Team and Atlas Vacation Remedies, lawyers harm their clients.

By involving a timeshare-exit company in a client’s representation, these lawyers endanger a client’s attorney-client privilege, and they make it more difficult for a client to terminate his or her financial obligations to a timeshare developer.

Timeshare Developers Are Aggressive Litigators

Major timeshare developers aggressively litigate cases against timeshare-exit companies like Timeshare Exit Team, a.k.a. Reed Hein & Associates.  

Reed Hein, for example, has been sued in federal court by (a) Diamond Resorts, (b) Orange Lake Country Club, (c) Welk Resorts, (d) Westgate Resorts, and (e) Wyndham Resorts.  In all five of those cases, the timeshare developer also named as defendants the lawyers who accepted referrals from Reed Hein. In each case, the developer alleged that the lawyers were part of a scheme to defraud their own clients. Each developer therefore argued that the lawyers had forfeited the protections that lawyers typically enjoy. These arguments were generally successful.

The Attorney-Client Privilege

The lawsuit between Orange Lake Country Club and Reed Hein is a good case study.

In that case, Orange Lake sued Reed Hein — and Mitchell Sussman and SGB Law. Sussman and SGB Law were sued because both had accepted thousands of client referrals from Reed Hein.  In October 2018, a federal court ordered SGB Law to hand over to Orange Lake thousands of email messages and other communications between the law firm and Reed Hein customers whom SGB Law claimed to represent. The court rejected SGB Law’s arguments that the communications were protected from disclosure by the attorney-client privilege.

The court started its analysis with black-letter law: Communications between lawyers and their clients are privileged only when the communications are confidential. A third party’s involvement in an attorney-client communication destroys any claim of privilege.

Because Reed Hein was involved in the communications between SGB Law and the consumers whom Reed Hein had referred to the law firm, the court rejected SGB Law’s claim of attorney-client privilege. The court ordered SGB Law to hand over to Orange Lake the law firm’s communications with thousands of affected consumers.

The court rejected the argument that Reed Hein and SGB Law could somehow circumvent the law requiring that privileged communications be confidential:

The court is not persuaded by SGB Law’s argument that Reed Hein and SGB Law “envisioned a relationship whereby privileged material would be freely exchanged.” What Reed Hein and SGB Law “envisioned” is irrelevant.

The Scam Continues

Reed Hein persisted in its misbehavior.

In October 2019 — one year after the court had ordered SGB Law to disclose attorney-client communications to timeshare developer Orange Lake Country Club — Reed Hein employee Chasity Porter submitted a sworn declaration in a lawsuit filed against Reed Hein by Westgate Resorts.

Incredibly, Porter swore to the following:

If Reed Hein decides to hire a law firm for a customer, Reed Hein and the law firm specifically intend to create a relationship under which privileged relationship is freely exchanged. As such, the law firm, customers, and Reed Hein all intend that the attorney-client privileges and protections apply to all three parties in the agency relationship — the law firm, the customers/clients, and Reed Hein.

The results were predictable. In March 2020, the court ordered SGB Law to produce to thousands of attorney-client communications to Westgate Resorts.

Consumers Suffer

In August 2019, SGB Law lawyer Thomas Breen testified to the negative consequences that consumers suffer when a timeshare developer is able to access a law firm’s files and identify the specific individuals whom the firm represents. According to Breen, timeshare developers are less likely to release a customer from his or her financial obligations when they learn that a customer is associated with a timeshare-exit company.

Breen testified that timeshare developers are willing to “use individuals as pawns in some kind of a competition with Reed Hein.” To prevent those individuals from concluding that Reed Hein has delivered value, timeshare developers are willing “to pummel them financially even further than they already have — to prove a point with Reed Hein.”

Summary & Solution

The take-away for consumers is simple: Timeshare-exit companies are part of the problem in the timeshare industry.

Lawyers who accept client referrals from timeshare-exit companies are also part of the problem. These lawyers deprive their clients of multiple protections that clients are supposed to enjoy — including the right to privileged communications with their lawyer. Having deprived their own clients of this basic protection, these lawyers are unable to effectively fight timeshare developers.

The bottom line: By accepting client referrals from timeshare-exit companies, lawyers convert themselves into part of the timeshare-exit scam.

The solution is simple and straight-forward: If a consumer is interested in terminating legal financial obligations to a timeshare developer, he or she needs an independent lawyer who refuses to work with timeshare-exit companies.

Postscript from me:  All of these nefarious self-proclaimed exit companies could be shut down permanently if timeshare developers did the right thing. Offer a respectful way out for fully paid owners and stop suppressing the secondary market.