Washington Post Exposes Timeshare Developer Sales Tactics and Misrepresentations in Sedona!7/30/2011
If you have ever been approached by a pushy OPC (Off-property contact) trying to entice you into a mandatory timeshare sales presentation, you'll appreciate the authors candid explanation of her experience in Sedona, Arizona.
Follows are excepts from the article along with additional comments from me in italics. I encourage you to READ THE FULL ARTICLE BY CLICKING HERE. "...while vacationing with my film-obsessed son, I thought it only natural to stroll into the free-admission Sedona Motion Picture Museum... (a) museum attendant stopped us and soon revealed the true purpose of this pseudo-attraction. The museum was partly a marketing device to entice tourists to timeshare pitches at a 14-year-old resort development (Sedona Pines, a RCI points based timeshare) affiliated with RCI (a timeshare exchange company).... Like slow-witted sheep, my son and I had walked clear-eyed into a booby trap...." The author goes into a very detailed explanation of her experience, and the high pressure sales tactics used to entice her to decline a potential "developer swap" that would have taken her Marriott timeshare week and $6,000 in exchange for a 30,000 annual point RCI membership based out of the Sedona Pines Resort (similar RCI point ownerships are often sold on eBay for less than $100. and there is currently a 42,000 annual point ownership for Sedona Pines advertised on Redweek.com with an asking price of $900.). She eventually paid $1,295. for a one time allotment of 30,000 RCI points (estimated monetary value of approx $450 to $550 as a rental transaction) just to escape the sales presentation. She exposes two of the biggest "almost lies" that are used in many developer sales presentations: Timeshare Developer Sale Weasel Misrepresentation #1 in this Sales Presentation... "Points members pay no annual maintenance fees, which make traditional timeshare ownership so expensive, he said..." This is a blatant twisting of the truth by a developer sales weasel in an attempt to deceive. While there are no "maintenance fees" associated with an RCI points account- there are in fact maintenance fees that are associated with the underlying timeshare interval which generates the annual point allotment. In this particular instance, if she would have agreed to the purchase she would have still been responsible for annual maintenance fees to Sedona Pines of approximately $450. per year. She would also have been responsible for the required fees to RCI described below (information taken from http://www.rci.com/CDA/Common/Documents/DisclosureGuidePoints.pdf). SUBSCRIBING MEMBERSHIP AND TRANSACTION FEES. Network Dues and Subscription Fees (“Network Dues”) are payable to the Network each Use Year. The 2010 Network Dues are: 1 year: $124 USD 2 years: $229 USD 3 years: $319 USD 4 years: $409 USD 5 years: $499 USD Each time a Member makes a transaction, a transaction fee is charged. Transactions include but are not limited to making a Reservation, canceling a Reservation, saving RCI Points, or making an External Exchange Reservation. The ranges of 2010 transaction fees are as follows: Reserving Member’s own Vacation Time for 7 nights only: No Charge (This means that you use the exact underlying ownership on your deed or resort contract. In other words, you are not charged a transaction fee if you do not use your RCI points account, but are still responsible for the annual dues to RCI). Home Resort Priority Reservation for 7 nights only: $40 USD (This means that you simply trade your full week for another full week at your home resort. This is often something you could do at your own resort for free (floating timeshare weeks) before you "converted" to RCI points.) Reserving Vacation Time other than Member’s own Vacation Time or Home Resort Priority Reservation: For 7 nights or more: $139 USD For 6 nights: $119 USD For 5 nights: $109 USD For 4 nights: $99 USD For 3 nights: $79 USD For 2 nights: $59 USD For 1 night: $39 USD (This is the fee you pay when you make a reservation. Also, it's not shown here but many individual resorts also charge a housekeeping fee on top of this fee.) RCI Points Partner Inventory Reservation: Fees vary by product type. (There are various services including rental cars, airline tickets, gift cards, etc.) Guest Certificate: $59 USD (You pay this if you allow family or friends to use your reservation.) Points Transfer: No Charge Point Borrowing: No Charge Points Rental: $0.02 USD per point (This is a per point fee charged to you if you need a few extra points to secure your reservation. You can rent one-time usage points equal to half of your annual allotment each year. This is normally much cheaper than adding another small point package ownership to your portfolio.). Points for Deposit: $26 per use, limit 4 uses per year (Points for Deposit is a program where an RCI points owner can deposit up to four RCI weeks intervals into their RCI points account each year. When a RCI Weeks resort converts and joins the RCI points program- you are no longer allowed to use that ownership for points for deposit, but instead must pay the resort developer any amount they determine as a conversion or upgrade fee. This is often a very nasty surprise to timeshare owners who were sold a combination portfolio advertised as RCI points but which actually contained one or more points for deposit intervals.) Point Saving: If Reservation Made During Use Year: No Charge If No Reservation Made During Use Year: $26 USD Points Extension: 13,999 points or less: $39 USD; 14,000 points or more: $99 USD Membership Transfer Application: $100 USD RCI Vacation Protection: For 5 nights or more: $49 USD For 3 – 4 nights: $39 USD For 1 – 2 nights: $29 USD Call Center Domestic/International External Exchange: $194 USD RCI.COM Domestic/International External Exchange: $179 USD (These are the fees charged to RCI weeks members for exchanges. If you talk to a person, it costs more!) http://www.rci.com/CDA/Common/Documents/DisclosureGuidePoints.pdf What all this means is that the salespersons statement of "no maintenance fees" would have resulted in about $700. in fees each year for ownership, membership, and a full weeks exchange. Timeshare Developer Sale Weasel Misrepresentation #2 in this Sales Presentation... "With flexibility, you could always find a destination for 7,000 points or fewer, he said, thus stretching your vacation time to as many as three, maybe even four weeks." The author herself found out just how difficult it was to accomplish this: "I’ve spent many hours on the RCI Web site trying to pull the same kind of magic that The Starter achieved — spinning 30,000 points into a series of luxurious getaways. But because I’m not so flexible and usually take vacations along with millions of other regular Americans, I found that my 30,000 points would get me just about what I could expect with II — one week’s stay in a given destination. Many of the nicest places require double my points for prime vacation weeks. I used virtually my whole allotment to book a summer week in New Hampshire, and when I had to reschedule unexpectedly because of work, I discovered to my horror that I would lose 75 percent of my points because I hadn’t bought a $49 “vacation protection” plan." This developer almost-misrepresentation is a true staple in the industry sales pitch. The promise of "Endless Vacations" by using getaways and last call offerings to travel at pennies on the dollar prices. While these programs exist, members often find that the destinations available are not nearly as desired as the sales person would have you believe. The other big issue for members is that while the point cost of booking the reservation goes down the closer you get to the usage dates- often the travel expense to get there goes up and eats away any savings you would have enjoyed. The above example is just another illustration of a common-sense truth! Consumers should never agree to any type of purchase when confronted by a high-pressure sales presentation or a threat of a "today only" offer. Consumers should never buy or sell a timeshare on impulse. Timeshare ownership is often a lifelong commitment with annual fees and associated costs of ownership that should only be purchased after a period of careful consideration, research, and due diligence. During this frustrating period of ridiculous political gridlock, it's refreshing to see something that was actually accomplished by legislators that may have a positive impact on the public.
This year, the Florida legislature passed and signed into law HB 883, which became effective on June 2, 2011. This bill included the "Tourist Safety Act of 2011" which was written to try and stop the practice of individuals entering hotel lobbies without the permission of hotel management, and passing out unsolicited advertisements. The Tourist Safety Act of 2011 provides that any person who, without permission, delivers, distributes, or places, or attempts to deliver, distribute, or place, a handbill at or in a public lodging establishment commits a misdemeanor of the first degree and can be fined a minimum of $2,000 for a second violation, or $3,000 for a third or subsequent violation. This law will hopefully give local authorities a better opportunity to stop "pizza flyer scams" which advertise (and sometimes even deliver) a pizza to hungry tourists in an attempt to steal personal and credit card information. In an earlier scam report, Vacation-Times.org received reports that this type of scam was making its rounds through the Disney resort area in Orlando, Florida. The Federal Trade Commission is reporting that a federal court has agreed to temporarily shut down a company which the FTC claims allegedly charged consumers thousands of dollars by falsely claiming they had buyers lined up for timeshare sales. According to court papers filed by the FTC, the Orlando, Florida-based defendants, who operated out of mail drop addresses in places such as Las Vegas, Boston, and Orlando, contacted consumers trying to sell their timeshare properties and told them they had buyers for their properties. In order for the sale to proceed, the defendants charged consumers up to $3,150 – either as an “earnest money deposit” to commit them to the sale, or for sale-related expenses – which, consumers were told, would be refunded when the sale closed. The defendants instructed consumers to pay by cashier’s check or money order sent by overnight delivery, and to immediately sign and return a “sales agreement” or “seller’s document” that would be mailed to them.
The complaint alleged that the “sales agreement” was merely a marketing contract for advertising the property, not a sales contract. Consumers who signed the contract and sent their payment to the defendants often were not contacted again, and consumers’ properties were never sold. Consumers who called the defendants were given the run-around, and refund demands were routinely ignored or denied. National Solutions LLC appears to have used numerous aliases and was also doing business as Blue Scape Timeshares International, Country Wide Timeshares, Countrywide Timeshares MA, Landmark Timeshares, Propertys Direct, Quicksale Propertys, Sun Property Networks, Sun Property’s, Universal Propertys, and VIM Timeshares; Landmark Marketing LLC, Blue Scape Timeshares, Country Wide Timeshares International, Propertys DRK, Quick Sale Advisers, Quick Sale International, and Universal Propertys International; Red Solutions LLC, also doing business as City Resorts, and Resort Advisors; Enterprise America, LLC, also doing business as American Timeshares, Exit Week, and Resort Advisors International; Investments Group of Florida, LLC, also doing business as Resort Advisors AM; Multiglobe LLC, also doing business as Universal Propertys The lawsuit also names the individuals as Leandro Velazquez; Samuel Velazquez; Joel Velazquez; Kiomary Cruz; Edgar Gonzalez; Vicente Virgilio; and Aaron Weiss. Reports of poor customer service have unfortunately been posted in several online discussions about many timeshare developers, but a new issue reported on ConsumerAffairs.com may be one of the worst examples (it the claim is in fact true- as always read everything online with a healthy dose of skepticism!) of a lack of effective communication between an individual owner and their resort management company.
... “They stated that my account had a balance of $526.82, which included a late fee of $25.00 and interest of $34.14,” Kristine, of Northbridge, Mass., told ConsumerAffairs.com. “I explained that this had all been paid except for the $100.00 check that was returned to me. They looked at the records on my account and said they did not receive five checks that I had in my bill pay account.” But Kristine said she called her bank and obtained copies of the five cancelled checks. Kristine said she was told it was too late, the unit was already in foreclosure. If Kristine has the cancelled checks, and there are no other issues, it seems strange that there is no way to stop the foreclosure, whose timing seems a little suspicious, to say the least. It doesn't appear that Kristine will get to the bottom of this without a lawyer...." What many timeshare owners don't understand about vacation ownership programs is that when purchasing a non-deeded membership such as The Club from DRI, consumers don't always receive many of the common protections that are taken for granted with fee simple deeds. "Foreclosures" and "membership cancellations" can happen very quickly. A foreclosure process that would normally be expected to take months in traditional real estate can instead be simply a matter of clicks on a client service management program. On a positive note for Diamond Resorts, there appear to be two employees who are both willing and able to assist DRI owners resolve any communication issues such as the example above: Chief Experience Officer patrick.duffy@diamondresorts.com Executive Resolutions jeff.shelton@diamondresorts.com If you believe that you have been a victim of poor customer service with Diamond Resorts International, or that your timeshare ownership has been improperly foreclosed or cancelled, I would strongly urge you to take the time to attempt to contact either of these individuals and explain your situation to them. You may find that it is simply a matter of communicating with someone empowered by the company to actually assist you and resolve the problem. A timeshare developer never intends to alienate or frustrate their clients (remember- most developers earn a management fee every time you pay your annual fees), but as with any large commercial business there can sometimes be a perceived disconnect between the individual consumer and the company's managers. Kudo's to Diamond Resorts for creating positions to try and Article Sheds Light on H.E.S. Systems Hiring Practices- 20 Employees were Work-Release Inmates!7/18/2011
Authorities will also have to answer some interesting questions about the recent swat team raid on H.E.S. Systems for possible telemarketing, timeshare, and credit card related consumer fraud that is estimated to have swindled more than $8.5 million dollars from consumers.
Follows is an excerpt from an article in the Orlando Sentinel. http://articles.orlandosentinel.com/2011-07-13/news/os-orlando-police-timeshare-scam-sear20110713_1_time-share-scam-orlando-police-raid-time-share-owners "...70 employees were working in the second-floor office, east of Bennett Road. A few were detained after a check of everyone's identification, and some said police took their cell phones and other electronics. About two dozen workers watched from across the street after being released, many angrily denouncing the raid and police. No one was arrested. Twenty of the employees are Orange County work-release inmates, corrections spokesman Allen Moore said. The company had passed a background check, and there had been no problems in the year that it had been authorized to employ people in work release, he said. As of Wednesday, H.E.S. Systems is no longer part of the program. Police said the company has had several incarnations under different names. None was doing legitimate business, investigators said....." I have left a message with the Orange County Correction Department Media Relations Team to request information relating to the total number of work-release inmates that are currently employed by telemarketing copanies, but as yet have not gotten any type of response. Authorities State H.E.S. Systems Served as Credit Card Processor for Millions in Timeshare Scams7/14/2011
Another report on the police raid of HES Systems in Orlando states that this company may have been involved in processing credit card charges for a number of timeshare scams that may have totalled more than $8 million in fraudulent activity.
See the WESH video by clicking HERE. Police also stated that the same group ran a credit card scheme that promised to lower interest rates for a $995. upfront fee, but consumers reported that once the fee was charged, no service was performed and no refunds were given. My question is quite simple: Is the credit card institution that provided the vendor account also responsible for being a party to this fraud? There must certainly have been many attempts by consumers to charge back the fees that were debited that should have alerted the financial companies to the potential for fraud. Often, these scams involve some type of delay tactics being employed to allow at least 90 days to pass from the time of the original charge. Most credit cards will only allow chargebacks within that first three month window- and automatically reject them after that point.. However, common sense would say that if a company creates hundreds of chargeback attempts after that 90 day window closes- that some type of investigation should be done to ensure that consumers are not simply being swindled. Since the vast majority of telemarketing scams involve payments made by credit card- perhaps our legislators should look at creating oversight that automatically reports high percentages of chargeback requests to state investigators- whether or not those requests are granted. The only way to effectively target scammers is to do so financially. There will always be individuals who seek to steal from others regardless of the eventual consequences. Impacting the flow of money may be a very effective way to combat these boiler room operators! An online source has indicated that a potential consumer scam is originating from Chicago with promises that consumers have won a "free gift". In reality, the article claims that the telemarketing campaign is simply trying to lure consumers into attending a high pressure sales presentation for timeshares and vacation packages.
..... "The phone message assures you that they are not telemarketers, that they know you are on the "Do Not Call List" and obviously they wouldn't be calling if they weren't legitimate, they say, and tell you that you have won a prize.".... If you believe that you have been a victim of consumer fraud perpetrated by a company operating out of Illinois, you can report the crime to the Illinois Attorney General at http://illinoisattorneygeneral.gov/. Consumers can also report telemarketing and Do Not Call violations at the website of the Federal Communications Commission at http://esupport.fcc.gov/complaints.htm. Another Orlando telemarketing office has been raided by authorities for allegedly defrauding consumers out of millions in fake timeshare sales and upfront fees.
Radio station WDBO reports that Orlando Swat Team members executed a search warrant at 4401 East Colonial Drive, confiscating records and equipment used by a telemarketing operation. WFTV Orlando also questions whether the business is even licensed..... "It's unclear if H.E.S. is licensed because WFTV could not find any records with the state, but the 70 people who work in the business claim it is licensed. The telemarketers defended the business and said they don't sell timeshares or vacation packages. "We are a legit company. We help people get out of credit card debt. Police say it's timeshare. They are totally wrong," said H.E.S. employee Jamie Magsam...... No information has been found to further identify the business or its owners at this time. If you believe that you have been a victim of consumer fraud perpetrated by this telemarketing group, please report the crime to the Florida Attorney General's office at http://myfloridalegal.com/timeshares. Timeshare Owners File Suit Against Manhattan Club Developer for Fraud & Breach of Covenant7/14/2011
Cranesnewyork.com is reporting that a group of timeshare owners have filed a lawsuit against the owners and operators of the Manhattan Club, a well known New York timeshare. For years there have been complaints and discussion groups debating the perceived lack of availability for timeshare owners, fueled in large part by ever increasing annual maintenance fees reportedly just under $2,500.
Allegedly, while owner availability can be difficult to obtain- there are numerous non-owner rentals offered on various websites including Expedia, Travelocity, and others. " “The sponsors and other entities are being sued for committing fraud,” said Steven Blau of the law firm of Blau Brown & Leonard, which represents the plaintiffs. “Timeshare owners paid valuable money and they are not being permitted to use the apartment, even if they are requesting the unit nine months to a year early.” The lawsuit filed on June 28th claims that the developer “intentionally and fraudulently engage in the continuous and unconscionable practice of overselling the occupancy capacity of the 286 time-share units by renting them throughout the year to the general public through Expedia, Hotel.com and other Internet-based travel websites,” according to the lawsuit. “As a result, a significant percentage of holders of flexible timeshare ownership interests are precluded from reserving the use and occupancy of their time-share units…and are routinely told by defendants that ‘availability is on a first-come first serve basis' and ‘there are no available [units].'” The Palm Beach Post is reporting that another group of timeshare con artists is being targeted by prosecutors in a criminal complaint posted July 7th in the United States District Court in West Palm Beach.
James Michael Tomasso, Wensley Robin McFarlane and Nicholas Charles Higgins have been accused of conspiring to commit wire and mail fraud through telemarketing call centers operating under a variety of business names including Euroamerican Timeshares LLC, E.A.T Sales LLC and National Timeshare Liquidators, the complaint said. The report states that these timeshare scams are estimated to have bilked consumers out of more than $3million in upfront fees, without selling or transferring any timeshare interests as promised. If you believe that you have been a victim of any type of consumer fraud perpetrated by these individuals or companies, please take the time to report the crime to the Florida Attorney Generals office at http://myfloridalegal.com/timeshares |
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