Four of the Most Common Misleading Timeshare Practices

Four of the Most Common Misleading Timeshare Practices (Source: pexels.com - used as royalty free image)

Timeshare ownership originally rose to fill a need for affordable, reliable travel in the vacation industry. However, over the course of many decades, this once-consumer friendly alternative has become a quagmire and a bit of a black sheep, known more for its aggressive sales tactics and confounding costs than for passing any value on to the consumer.

Today, the timeshare purchasing process is characterized as “the hard sell,” and timeshare interests are looked at more as burdens than opportunities, with just as many consumers trying to extricate themselves from the industry as there are seeking to buy in.

How did the situation get so dire? Much of it comes down to the practices that the timeshare industry has adopted, many of which pressure, mislead, or fail to adequately consumers. Here are four worth noting:

Presenting timeshare ownership as a real estate investment

The timeshare industry is also known as the vacation ownership industry. And that little bit of language really tells you all you need to know: In the vast majority of modern timeshare transactions, consumers aren’t buying deeded, valuable property, but the right to use a piece of property for a vacation. Points and access are all that you you own in a “points-based” or “right-to-use” model of vacation ownership, a system that has been adopted by most major resort developers.

However, it is not uncommon for timeshare marketing materials to emphasize the realty component of timeshare, whether that means focusing on the lux amenities of a resort as you might in a condominium listing, or using rhetoric and imagery that we typically associate with home selling (like “JUST SOLD” signs, as an example). In some cases, resorts may even draw up and record documentation that appears to be a deed – complete with transfer fees and property tax implications – that, when scrutinized closely, actually doesn’t convey ownership. Instead, the dense language boil downs to little more than the right to reserve a unit and/or an increment of time.

Failing to represent the resale market adequately 

Real estate is valuable, and it always has been. In many ways, it’s a fundamental building block for our entire economy. Most people realize that property is a sound investment, which is why so many unscrupulous developers market their points as such, associating timeshares with the benefits of more traditional housing - including resale value, inheritability, or investment potential that in the case of timeshares, often doesn’t exist.

One big reason why? The resale market for timeshares is woefully inadequate to meet consumer needs, leading to a massive loss in aftermarket value. While cars, jewelry, and real estate all hold or even appreciate in value, timeshare interests are all but worthless on the meager secondary market, which, as we’ve highlighted before, has been actively targeted by major resort developers.

The result of this less-than-robust resale market? It is not uncommon to see timeshares being sold for pennies on the dollar on sites like eBay, and an entire cottage industry of timeshare redemption and relief companies has sprung up to meet consumer demands – many of these companies are inefficient and can offer no guarantee of success, however, while other services that offer relief are actually little more than dangerous scams. Some consumers try to rent out their timeshare interest (often with little success), and others turn to attorneys for help extricating themselves from their timeshare obligation. Whatever the case, it’s very rarely smooth sailing for consumers who want to sell or cancel a timeshare, and the chances of turning a profit on an interest – as you might expect with conventional real estate – are all but nonexistent.

Putting pressure on points

When we think of timeshare points, the first thing that springs to mind is an Inside Timeshare article from writer Irene Parker; she spoke to one couple that was encouraged to exchange their deeded timeshare interest for points when their resort was acquired by a larger developer. From there, the family was continually pressured to purchase more and more points; they were even promised that once they reached a certain number, they would be able to use those points to pay down their maintenance fees, which had risen dramatically year-to-year. However, in this developer’s system the monetary value of points drops to pennies on the dollar when used to pay maintenance fees – meaning that this couple would be paying more for less of a result per dollar. 

This story is a stark and important reminder that timeshare points are controlled, set, and valued by individual resort companies; they have no real world value and are all-but completely unregulated. While points do offer greater flexibility and give consumers the chance to spend their timeshare weeks in different locations, the cost of doing so may be incredibly high, forcing timeshare owners to shell out a lot of money, above and beyond their steep interest payments and annual maintenance fees.

The complications of POS/rescission period statutory protections

Timeshare purchasers are protected by certain statutory protections when it comes time to sign on the dotted line. Primarily, we’re referring to:

  1. The statutory rescission period, which varies from five to ten days
  2. The buyer’s receipt of a state filed copy of a Public Offering Statement (POS) or Prospectus, which contains all of the facts, figures, limitations and disclaimers that the state requires be disclosed to a prospective timeshare buyer

While these layers of protection sound good in theory, and ostensibly offer safeguards over the course of the timeshare purchasing process, there’s also plenty of reason to question their efficacy, as certain strong psychological and behavioral tendencies may operate directly in opposition to these consumer protections.

Our own Michael Finn did a deep dive into the limitations of these protections in his recent piece, “Are There Adequate Statutory Protections in Place For Timeshare Purchasers?” His suggestion? That the pressures of one day “see and sign” closing – common for timeshare sales – coupled with the sway of vacation fantasy and the minimal rescission period offered “are some of the thornier and more nebulous nuances of timeshare consumer protection.”

As he writes:

“How many timeshare buyers are of the mindset to go back and wade through their thirty-plus page Public Offering Statement or Prospectus along with their purchase contract, acknowledgements, disclaimers, exhibits and attendant schedules in an effort to perhaps undo their good feelings and vacation fantasy? The new timeshare buyer happily emerges from their closing clutching their newly obtained packet full of documents imagining future family vacations!

[…]

Even if the vacationers have started the process of wrapping up their vacation, they're still busy packing and thinking of the reentry back to work and/or school upon their return home. Will they remember, or even give another thought, to wading through the inches thick closing packet within the minimal time period still remaining after unpacking the suitcases?

What can Finn Law Group do for you?

Given the dearth of other options, turning to an attorney may be your best bet for extricating yourself from an unwanted timeshare obligation. Led by Attorney Michael D. Finn with 45 years of experience, the Finn Law Group is a consumer protection firm specializing in timeshare law. Our lawyers understand vacation ownership as well as the many pitfalls of the secondary market of timeshare resales. If you feel you have been victimized by a timeshare company, contact our offices for a free consultation. Know your rights as a consumer and don't hesitate to drop us a line with any questions or concerns. 


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