WMBF Investigates: Trapped in a timeshare
MYRTLE BEACH, SC (WMBF) - The dream of vacationing in fancy resorts while making lasting memories from the coast to the mountains entices many to join a timeshare program.
In South Carolina, the timeshare sellers are part of a multibillion-dollar industry. A 2015 study found the industry created $130 million in local and state tax revenue and employed close to 20,000 people.
Nationwide, the industry is growing, with sales volumes reported increasing for the eighth straight year in 2017.
However, for some buyers their initial dream doesn’t always work out as hoped. Reversing the decision isn’t always so simple.
Patti and Danny Carey were vacationing in Orlando when they decided to attend a timeshare meeting. They said they weren’t looking to buy, but one thing led to another and they walked away with a timeshare.
At the time they said they thought they could use it to go to Aruba with their family once a year, but that wasn’t the case. The couple had to pay additional money to travel there, so they only ended up going once.
The Careys said they used it one other time for a trip to Las Vegas, noting they could have gotten a better location and deal if they hadn’t gone through their timeshare.
Now, nearly two decades after their purchase, the Myrtle Beach couple wants out.
“I'm not knocking a timeshare; there's a lot of people that do enjoy it. We're just not enjoying it. We don't use it,” Danny Carey said.
For the Careys, they found getting out of the contract wasn’t as simple as getting in. As they’ve looked for an exit over the years, the bills have continued to add up.
The Careys said the maintenance fees continue to go up every year and if they miss a payment, their credit score is affected.
The couple estimate they pay around $1,200 annually for maintenance fees. Over the years, they said that’s added up to $14,000, in addition to the $10,000 they paid for the timeshare.
“We don't really care about the timeshare. We just want to walk away from them and stop the payments,” Danny Carey said.
Patti and Danny Carey claim that the salesperson wasn’t forthcoming about the commitment they were making.
“They say we don’t buy it back. None of that was explained to us obviously when we bought it,” Danny Carey claimed.
With no luck with the timeshare company, the couple spent $500 on a business in 2005 who promised to advertise their unit to renters and buyers.
“Never got a renter. Nothing,” Patti Carey said.
A few years later, in 2012, the couple paid $900 to a different company promising similar services. Again, nothing.
A year later that same company was sued by the Florida Attorney General for deceptive and unfair trade practices. The business, International Timeshare Exchange, was permanently banned from operating a timeshare resale advertising service and ordered to pay nearly $1 million for customer restitution.
This isn’t the only timeshare reseller that has been punished in recent years.
Just this month both Washington and Missouri’s attorney generals have filed lawsuits against timeshare exit companies.
Washington state’s attorney general filed a lawsuit against the Timeshare Exit Team and Reed Hein earlier this month. The lawsuit claims the companies have, “unfairly and deceptively contracted with more than 32,000 consumers looking to be rid of their unwanted timeshares and have collected millions of dollars in upfront fees from consumers in the process.”
In Missouri, attorney general Eric Schmitt claimed Martin Management failed to terminate customers timeshares or refund customers.
Last year, Real Travel was sued by the Arkansas Attorney General for “deceptive, high-pressure sales tactics” and for costing consumers around $136,000.
Sid Connor is a consumer lawyer in Surfside Beach who handles cases related to timeshares weekly. He said he runs into just as many issues with the timeshare exit market.
“It is difficult for people to know and believe that there is an out,” Connor said. “So, it's just hard to figure out and it all goes together in one big pot to make it just a terrible mess for people.”
In recent years, some timeshare companies have created their own resell programs to decrease the number of customers signing up with potentially noncredible exit companies.
Allen Farmer owned a Wyndham timeshare for 15 years.
“Unfortunately, you can't even just say, ‘Hey, I'm not, I'm, I'm going to stop paying,’” he said.
He eventually got out of it after paying off the initial $20,000 contact. He said he didn’t do it through a third party.
“I never did, but I came close because I was so desperate to, but I never got to the point of desperation that I wanted to pay money cause I'm kind of frugal,” Farmer said.
He said he was eventually able to sell it back to Wyndham after he made his payments and tried for three years.
A spokesperson for Wyndham said the company established it ‘Ovation by Wyndham’ program in 2015 to help owners get out of their timeshares.
“At Wyndham Destinations, we understand that our owners’ lives and circumstances may change over time. It’s natural for a small percentage of people to exit and we are committed to putting our owners first by providing simple, safe and secure exit options for those who have fulfilled their vacation ownership goals," a spokesperson said in a statement.
Wyndham said owners should call them first if they are interested in exiting their timeshare.
“As the leader in the industry, we are also committed to protecting our owners to ensure they aren’t taken advantage of by fraudulent exit firms and unscrupulous resale companies that may aim to mislead owners and, in many cases, damage their credit and cost them thousands of dollars in ‘fees’ for illusory timeshare exit services," a spokesperson for the company said in a written statement.
Diamond Resorts, who the Careys are contracted with, also have a program for customers to avoid third-party businesses.
Diamond Resorts’ ‘Transitions’ program allows members to get rid of their membership through Diamond Resorts if they meet certain conditions like having their initial investment paid and making sure their maintenance fees are up to date.
"We're very concerned about the activities of so-called 'timeshare exit' companies that often defraud timeshare owners by charging big upfront fees but then do nothing in return. While we know that the vast majority of our members love their vacation ownership, we also recognize that life circumstances change and some members may want to transition out of their ownership. We want to make sure our customers know they can work directly with us to make any changes to their vacation ownership instead of falling victim to scams,” a Diamond Resorts spokesperson said in a statement.
Transitions was started in 2016 and a spokesperson said the Careys should qualify. The Careys said they were unaware of the option but are exploring it now.
“We just want to move on, just walk away, you know, and be done with it,” Patti and Danny Carey said.
There is no evidence that the Careys or Farmer were ever intentionally deceived. Still, both agree they didn’t fully appreciate what they were signing up for.
“Like you're going to be able to use a week here and a week there and you know, they don't really mention the maintenance fees as much. They don't mention, you know, the policy of if you want to get out of it,” Danny Carey said.
The Coastal Carolina Better Business Bureau said it received more than 24,000 inquires about timeshare companies and 141 complaints in the last year throughout its 15 counties spanned across South Carolina and North Carolina. The BBB said it only received one complaint about timeshare cancellation companies of its 2,000 inquires.
The South Carolina Attorney General’s Office said it does not handle timeshare complaints. Instead, that responsibility falls with the Real Estate Commission and Department of Consumer Affairs.
In the last two years the state received 100 complaints on timeshare companies, a majority that relate to an allegation related to deceptive practices, according to a spokesperson for the state’s Department of Labor, Licensing and Regulation.
State law does outline penalties for violations of businesses but a spokesperson with the state said the Real Estate Commission, “cannot execute criminal or civil remedies such as prosecution of a criminal offense or the civil remedy of voiding a contract.” The commission can issue fines.
In 2018, the Better Business Bureau recommended the timeshare industry increase honesty and transparency and establish easier exits.
Exiting a Timeshare
Connor said there is hope for consumers who are looking to get out of their timeshare contract.
He pointed to South Carolina’s Vacation Time Share Act.
“That’s how we get out of purchasing a timeshare because of the misrepresentations that were made,” he explained. “One of the biggest violations of the timeshare statute at the timeshare industry is guilty of, is the failure to tell the consumer exactly what it is they’re buying.”
Part of the law states 11 things timeshare sellers cannot do:
1. Use a promotional device like a lodging certificate or discounts without disclosing it is for soliciting the sale of vacation time sharing plans
2. Use a promotional device to obtain the names and addresses of prospective purchasers without the information will be used for soliciting the sale of the vacation time sharing plans.
3. Misrepresent the amount of time the accommodations and facilities are available.
4. Misrepresent or deceptively represent the location of the accommodations.
5. Misrepresent the size, nature, extent, qualities, or characteristics of the accommodations.
6. Misrepresent the nature or extent of services incident to the accommodations.
7. Make misleading or deceptive representations about the contents of the contract or the purchaser's rights, privileges, or benefits under it.
8. Fail to honor and comply with all provisions of the contract with the purchaser.
9. Misrepresent the conditions under which a purchaser may exchange his rights to an accommodation in one location for rights to an accommodation in another location.
10. Include in a contract a provision purporting to waive a right or benefit provided for purchasers pursuant to this chapter or seek or solicit such a waiver during the effective period of these rules.
11. Do any other act of fraud, misrepresentation, or failure to make a disclosure of a material fact.
Connor said the public offering statement (POS) is a key piece of documentation that explains in detail what customers are signing up for. He said the POS explain what ‘points’ equate to, and provides a list of resorts, along with the rights and obligations associated with the purchase of the timeshare.
Timeshare sellers are required to provide this information to customers before signing the contract.
Connor said sometimes this information is provided in a flash drive or a link to a website. But according to Connor, “ lot of times your companies never give the consumer the public offering statement in a form that they can read,” or say, “hey, before you sign these documents, open your iPad, I'll show you how to get to the public offering statement and then you have a chance to read it. I'll give you 10 minutes, 20 minutes, whatever you need before you sign these documents.’”
Connor recommends reaching out to an attorney who is licensed in the state where the timeshare was purchased. He also said customers should research the law themselves.
Another part of the law is there is a five-day window where consumers can cancel their timeshare plan by notifying the seller in writing. Beyond the five-day window, Connor also said usually the actual closing doesn’t take place for six months and during that time consumers can withdraw their attorney waiver and hire an attorney to help.
· Don’t act on impulse or under pressure
· Study the paperwork outside of the presentation
· Research the track record of the company and ask for a maintenance budget of the property
· Ask about your ability to cancel the contract
If you want to get out:
· Act fast if you aren’t satisfied
· Do the work yourself to get out of the timeshare commitment
· Send a letter through certified mail to the company stating you’d like to cancel your purchase and keep copies of the letter.
Tips for working with resellers:
· Research the company
· Ask for all information in writing
· Deal with only licensed real estate brokers and agents
· Ask about fees and timing. It’s preferable to do business with a reseller that takes its fee after the timeshare is sold. If you must pay a fee in advance, ask about refunds.
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