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Roadblocks Timeshare Regulators Face in Tackling Deception

Timeshare regulators: attorney showing a REGULATION document

The timeshare industry has a reputation for being shady, to say the least. The fact that you’re reading this only underscores the doubts many have about the legitimacy of timeshares. So why is an industry that’s trapped millions of consumers into lifelong contracts still worth multi-billions of dollars? Shouldn’t there be timeshare regulators in place to stop the persistent cycle of timeshare scams?


Even though protections are in place for timeshare buyers, the industry cunningly navigates through loopholes. But in the shadow of the hurdles confronting timeshare owners, a beacon of hope emerges.

 

By delving deep into the underpinnings of rampant timeshare deception and celebrating the victories of vigilant timeshare regulators, we can help shield consumers from the devastating impacts of such deceit.


Unraveling the Government’s Role in Timeshare Oversight

Consumer protection exists to safeguard the well-being and interests of prospective purchasers. Whether we’re buying a simple loaf of bread or a million-dollar condominium, we should be able to buy with confidence, free from the concern that misleading advertisements or deceptive sales agents might deliver a product vastly different from what we thought we were acquiring. 


Yet, in our imperfect world, businesses sometimes circumvent state laws and regulations to engage in dishonest practices that take advantage of unsuspecting consumers.


How does this unfold in the context of timeshare regulation? Let’s explain by diving into the timeshare acts set forth by federal and state governments. 


At the national level, the Federal Trade Commission (FTC) and the Truth in Lending Act guide timeshare developers and consumers. The FTC can take action against timeshare developers that violate consumer protection laws. The Truth in Lending Act ensures transparency about the costs of credit associated with financing a timeshare.


Most states implement their own laws for timeshare transactions. This encompasses contract disclosures, rescission periods, cancellation rights, and timeshare resales. States without specific timeshare regulations must rely on general consumer protection laws to combat deceptive practices.


Despite the presence of timeshare laws and regulatory agencies designed to protect consumers, why do questionable sales and marketing tactics persist? The government aims to curtail the misconduct of timeshare developers. But several factors influence its effectiveness.


Jurisdictional Challenges

When developers have timeshare offerings in multiple states and countries, enforcing the regulations we’ve discussed can be challenging. This complexity often requires cooperation between jurisdictions to oversee and enforce regulations effectively—a loophole that unscrupulous timeshare companies frequently exploit. 


Since each state has its own laws, with some being stricter than others, developers might take advantage of these variances by favoring areas with more relaxed regulations. 


For instance, Americans purchasing timeshares in Mexico encounter added difficulties due to different property laws. This makes contract termination much more challenging. Regrettably, most consumers aren’t aware of these intricacies until they’re already entangled and it’s too late to cancel.


Lobbying and Economic Impact

Like many industries, the timeshare sector employs lobbyists to champion its interests. These lobbyists, known for their proactive and assertive demeanor, reflect the aggressive strategy that developers urge their employees to use during timeshare sales presentations. Their sway can influence how laws are drafted and enforced.


The timeshare industry significantly contributes to the local economy, particularly in tourist-focused regions. If laws limit people’s ability to buy timeshare interests in these areas, it can potentially decrease tourism revenue and result in job losses at timeshare resorts. Given these significant economic implications, lawmakers may be cautious about imposing stringent timeshare restrictions in popular tourist destinations.


Lack of Consumer Awareness

Timeshare regulators: client reading some documents

Sometimes sneaky timeshare sales tricks go unnoticed, and without substantial evidence or public outcry, lawmakers might overlook them. Lawmakers also place responsibility on timeshare purchasers to thoroughly read and understand contracts before signing, so things like future maintenance fees or special assessments don’t catch them off guard.

 

Buyers are also encouraged to be cautious if a salesperson is pushing too hard. Relying on common sense when evaluating timeshare plans, however, isn’t always effective against developers who are master manipulators.


Success Stories From Timeshare Regulators’ Measures

Undoubtedly, timeshare owners encounter difficulties when trying to use the laws we discussed to shield themselves from timeshare fraud. But that doesn’t mean timeshare regulators and the measures they’ve put in place are always ineffective. In fact, there have been several successful actions taken against unethical business practices in the timeshare industry.

 

In 2016, a significant regulatory action highlighted Diamond Resorts International’s deceptive practices toward its customers. The timeshare company was ordered by the Arizona attorney general to pay $800,000 in compensation to consumers who claimed they were misled by its sales approach.

 

The accusations centered on misrepresentations about the benefits of timeshare ownership and inaccuracies regarding annual maintenance fees. These fraudulent acts by Diamond likely netted them tens of millions of dollars from timeshare sales. The settlement prompted the company to enhance its business practices in hopes that potential buyers receive clear and accurate information during the sales process. But if timeshare regulators don’t intensify their efforts and discourage such practices with stringent penalties, this behavior is likely to continue.


Another key move against timeshare fraud was the FTC’s Telemarketing Sales Rule (TSR). In 2010, the FTC made an amendment to the TSR that stopped telemarketers from giving misleading information about timeshare sales. Why? Because many timeshare owners were being tricked by resale companies promising fast sales at high prices. 


These companies charged big upfront fees, often in the thousands. Sadly, after paying, many owners found that their timeshares weren’t sold. Thanks to the TSR amendment, companies can’t charge until after the timeshare is sold.


In 2016, the FTC took action against Timeshare Mega Media and Marketing Group. This company reportedly lured folks into paying big fees with the false promises of selling their timeshares. The outcome was a settlement where the company had to pay back the impacted customers. 


In 2013, the FTC tackled another scam by Universal Timeshare. The company had promised sales for upfront fees but didn’t deliver. Thanks to the FTC, they reached a settlement to refund the misled consumers.


State regulators have been making strides in the timeshare industry too. In Florida, the Attorney General cracked down on shady timeshare resale tricks when they caught a company called Pro Timeshare Resales charging sellers upfront fees without delivering on promises. The company agreed to pay back the affected consumers and revamp how they do business.

 

The Missouri Attorney General sued Martin Management Group, a timeshare exit firm, for misleading consumers and charging big fees without following through on their services. In California, the Department of Real Estate keeps an eye out for timeshare resale fraud, regularly stepping in when companies or individuals break state rules.


What Actions Should Timeshare Regulators Take in the Future?

Despite some successes by timeshare regulators, individuals continue to fall prey to unscrupulous practices within the timeshare industry. What if we held these deceptive timeshare companies accountable and cracked down on their manipulative marketing strategies?

 

One step timeshare regulators could take: implementing stricter regulations on timeshare presentations. Instead of allowing timeshare management companies to subject attendees to pitches that go on for hours, perhaps a mandatory time limit could be established. 


As a part of this regulation, perhaps salespeople could be obligated to maintain records of who has attended their presentations as well as the time they arrived and left. They may also need to be prohibited from using coercive tactics, such as withholding personal items like driver’s licenses or credit cards, to pressure individuals into staying at a presentation or signing a timeshare contract.


How can timeshare regulators further fortify consumer protection against the potential financial pitfalls of timeshare ownership? One approach might be to offer contract flexibility. Right now, timeshare companies are able to ensnare customers in perpetual agreements. Instead, maybe timeshare contracts should be required to come with an expiration date. This would give timeshare owners the option of ending their timeshare commitments at the end of the contract or renewing it.


Another enhancement to timeshare regulations could be the introduction of a mandatory 24-hour waiting period before a contract can be finalized. This would grant customers ample time to thoroughly review the agreement. Requiring timeshare salespeople to have a real estate license would also be beneficial. This would ensure that they adhere to the ethical standards expected in traditional real estate transactions throughout the sales process. Lastly, intensifying penalties for timeshare companies engaging in deceptive practices would bolster protection for timeshare owners.


With more safeguards by timeshare regulators, consumers would be further protected and have the freedom to make informed decisions about their participation in timeshare ownership.


Overcome the Hurdles of Timeshare Regulation With Confidence

Employees cheering their colleague

Timeshare regulators, like the Federal Trade Commission (FTC) and state attorneys general, play pivotal roles in protecting consumers from timeshare fraud.

 

However, the industry’s vast landscape introduces complexities in regulation enforcement. Differing state laws, powerful lobbyists, and the big role timeshares play in the economy add to the challenge. The efforts against deceptive practices, combined with state-level initiatives, highlight the ongoing battle to uphold consumer rights. 


Achieving a transparent timeshare market is a tough journey. But you move a step closer to a future free of timeshare deception when you turn to Centerstone Group for guidance on a responsible timeshare exit.


Centerstone Group is a full-service advocacy group dedicated to supporting victims of fraud, high-pressure sales, and misrepresentation in the timeshare sales process. We boast the most comprehensive and time-tested resolution process in the timeshare exit industry. 


Our swift services, competitive pricing, and impressive 4.79-out-of-5-star rating and A+ grade on the Better Business Bureau distinguish us as the premier choice for your timeshare exit requirements. Contact us for a complimentary consultation.

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