Can You File a Class Action Lawsuit Against Timeshare Companies?

Perhaps you first jumped into vacation ownership because the timeshare salespeople painted a beautiful picture of spa-like settings and care-free travel. Or maybe you attended a timeshare sales presentation that felt like it would never end, and you eventually caved by signing on the dotted line of the vacation club contract.

Afterward, you realize you’re stuck in a timeshare you can’t afford, and it doesn’t live up to the promises that were made. After talking with other timeshare owners, they also share stories of high-pressure sales tactics and false advertising. You think, “Someone needs to hold these timeshare companies accountable,” and wonder if you should pursue legal action.

But even if you’ve been manipulated and wronged beyond a shadow of a doubt, timeshare contracts are filled with legal jargon and loopholes, like class action waiver and arbitration clauses. 

In this article, we’ll dive into class action lawsuits against timeshare companies and explain what class action waiver and arbitration clauses are. We’ll also look at the pros and cons of arbitration.

What Is a Class Action Lawsuit?

If you’ve never been involved in a legal battle, you may be wondering what a class action lawsuit is. This is the legal process that occurs when multiple plaintiffs, or people who bring forth a case, file a collective lawsuit against another entity. In the timeshare industry, a class action lawsuit happens when multiple timeshare owners band together to prosecute their timeshare developer.

Examples of Class Action Lawsuits

Let’s look at some examples of class action lawsuits that have been filed against timeshare companies.

In August of 2020, Norman Zwicky filed a class action lawsuit against Diamond Resorts for its inflated annual fees. The lawsuit claimed that customers had been subject to a disproportionate rise in maintenance fees meant to enrich Diamond Resorts International (DRI).

The case alleged that DRI used its power within the timeshare owner’s association to produce misleading budgets. These budgets helped to determine the maintenance fees.

This case is still pending.

In 2013, Tom and Donna Crook, a couple from Chico, California, claimed they were tricked into buying timeshares that put them into debt. They then filed a class action lawsuit against Wyndham Vacation Ownership, accusing the company of targeting senior citizens and using deceptive sales pitches.

A whistleblower from the company, Patricia Williams, also spoke out about the company’s sales practices. According to ABC 7 News, she said some Wyndham timeshare sales representative “targeted vulnerable senior citizens, tricking them into taking out credit cards and using them to buy expensive timeshares.”

However, the Crook’s lawsuit ended up in forced arbitration due to a clause in their timeshare contract.

Another class action lawsuit was pursued against Wyndham in 2019. In this case, multiple plaintiffs banded together on account of Wyndham’s numerous transgressions against consumers. They called out the company for their misleading and deceptive timeshare sales presentations. 

The complaint claimed a misrepresentation of timeshare point values, availability of properties to book, transferability of Club Wyndham points, and booking fees.

But in 2020, an Illinois judge dismissed the case stating the Illinois court did not have jurisdiction over the matter.

As shown in the above examples, class action lawsuits against timeshare companies can be very difficult for the plaintiffs or even be impossible due to forced arbitration, as with the 2013 case against Wyndham.

What Is Arbitration?

According to the American Bar Association, “Arbitration is a private process where disputing parties agree that one or several individuals can make a decision about the dispute after receiving evidence and hearing arguments.”

Essentially, arbitration is when a complaint is settled out of court and left up to a third party to resolve. Unlike a class action lawsuit, arbitration allows the involved parties to keep the case private.

What Are Class Action Waiver and Arbitration Clauses?

Class action waiver and arbitration clauses can be found in various contracts — including employment agreements, consumer contracts within the finance industry, and timeshare contracts.  

Timeshare companies are known for putting arbitration clauses in their contracts. This makes it so anytime an owner has a complaint against the company, they are forced to address it via solo arbitration. 

Arbitration clauses are often accompanied by class action waivers, which restricts timeshare owners from filing a class action lawsuit against their timeshare company. Essentially, when the timeshare owner signs a contract that includes a class action waiver, they’re waiving their right to have a complaint heard in court in front of a jury.

Interestingly, a class action lawsuit has recently been filed that puts arbitration clauses at the forefront. 

In Bedgood v. Wyndham Vacation Resorts, the plaintiffs claim that their contracts include clauses that waive “class actions, jury trials, and punitive damages.” They also note the American Arbitration Association (AAA) asserted that they would no longer administer arbitration claims against Wyndham. According to the AAA, this is because the company doesn’t comply with their policies.

The plaintiffs allege the arbitration clause in their contract says arbitration must take place in Orange County, Florida. However, AAA policies assert that arbitration locations should be convenient to both parties. In their complaint, the plaintiffs say, “Wyndham can not demand arbitration one minute and fail to comply with AAA Rules the next minute.”

The plaintiffs also argue that their contracts with the timeshare developer are voidable and rescindable. They allege fraudulent omission against Wyndham because they weren’t aware that they couldn’t use their timeshare at the destinations they wanted. If this information hadn’t been withheld from them, these customers wouldn’t have purchased a timeshare in the first place.

The case further argues that if the contract is voidable, the arbitration clause can’t be enforced.

This case is still pending. Currently, Wyndham is appealing the decision on their motion to compel arbitration.

The Pros and Cons of Arbitration Instead of a Class Action Lawsuit Against Timeshare Companies

If you lodge a complaint against your timeshare company and are forced into arbitration, there are both pros and cons.

So, as a timeshare owner, what is the benefit of taking the arbitration route? Mainly convenience, time, and money. Choosing traditional litigation requires you to fill out tons of paperwork and go through a lengthy court process that may take years. Not to mention all the attorney fees you’ll have to pay the law firm or lawyer you hire. 

Arbitration tends to make the process much simpler, shorter, and more affordable. But that doesn’t mean it’s easy when facing a powerful timeshare company.

Why do timeshare companies prefer to use arbitration rather than bringing it to the courtroom? Because instead of letting things escalate to public court, arbitration allows developers to keep the matters of the case private. As long as the details of each case are kept from public knowledge, what’s stopping them from doing the same thing to another customer?

Developers also know that there’s power in numbers. So if they’re frequently being called out for their misleading sales tactics, it’s better for them to negotiate with hundreds of individual customers than have them band together in a class action case that could permanently hurt the company’s reputation and cost them millions.

No Class Action Means No Justice!

Class action lawsuits have shed light on the many scams and wrongdoings that timeshare companies have committed. But unfortunately, class action waiver and arbitration clauses are frequently hidden in timeshare contracts and prevent owners from being involved in such cases. Taking away your ability to participate in class action lawsuits might just be your developer’s way of preventing you from exposing the injustices you’ve experienced to the public.

If you’re looking to escape timeshare ownership, you don’t have to be a part of a class action lawsuit against timeshare companies. Instead, reach out to the expert timeshare exit team at Centerstone Group. Our excellent Better Business Bureau rating and hundreds of satisfied customers should show you that we know how to resolve contracts more quickly and affordably than almost any other timeshare exit company. 

Contact us today to see how we can help you.