Business

Timeshare industry is 'in a war'

Its enemy? Companies that say they can cancel your timeshares

Orlando Sentinel/TNS

The Wyndham Bonnet Creek Resort in Orlando, Fla., is part of the company’s Club Wyndham vacation ownership program of time shares.
Orlando Sentinel/TNS The Wyndham Bonnet Creek Resort in Orlando, Fla., is part of the company’s Club Wyndham vacation ownership program of time shares.

After Patricia and John Palombi paid $25,000 for an Orlando timeshare they immediately regretted, the Jacksonville couple desperately searched for a way out.

A company that said it specialized in timeshare exits promised it could help — but it would be another $11,000.

The Palombis agreed, beginning a year-and-a-half-long battle with the company, Vacation Consulting Services of Missouri, that they claim ran off with the money and left them in limbo.

It’s the kind of situation that has been at the heart of an increasing number of lawsuits filed by timeshare giants over the past several years, including Orlando-based Wyndham Destinations and Diamond Resorts of Las Vegas, that are directly going after the timeshare-exit industry.

Timeshare-exit companies promise to help get owners out of their timeshares for large, upfront fees of several thousand dollars.

The companies work with lawyers who send the timeshare companies a form letter on the consumers’ behalf, the lawsuits claim, and instruct people to stop paying their annual maintenance fees or their mortgage on the timeshare.

Oftentimes, that can lead consumers to unknowingly default on their timeshare payments or pay exorbitant amounts of money for a service that, in many cases, they could have received for free if they just called the timeshare company directly.

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“It was a mistake to ever engage in this,” Patricia Palombi told the Orlando Sentinel.

“We should have researched other companies. We didn’t do it. We trusted these folks, and I would like nothing better than to see them out of business.”

The Palombis were lured to a timeshare-exit company presentation in November 2016 through a mailed invitation, three months after returning from a vacation in Hawaii where they had purchased a timeshare with Hilton Grand Vacations Club at the Parc Soleil resort in Orlando near SeaWorld.

“They made a good argument for getting out of it because of the fact that you are going to pay these maintenance fees for the rest of your life,” John Palombi said.

“And even if you die, your grandchildren will have to be spending money on this.”

The retired couple was promised a solution in three to six months, so they paid.

But it would be almost impossible to get back in touch with the company as the process extended for more than a year. At times, the Palombis said they placed as many as 50 to 80 phone calls to the company, with no response.

It wasn’t until May 2018 that the Palombis said they got word that their timeshare, which was fully paid for, was no longer in their name.

The final cost for the ordeal, including the cost of the timeshare and the annual maintenance fees they had to continue paying while the process went on, was about $40,000.

The couple has decided not to sue the company, but Wyndham did sue Vacation Consulting Services in September with similar allegations.

Vacation Consulting Services did not respond to a request for comment.

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“I just had no clue that there were that many people out there trying to steal money by lying,” John Palombi said.

The shame of it has been such that, as of when the Palombis spoke to the Sentinel, they hadn’t told their kids what happened to them.

An increase in lawsuits

But the Palombi’s situation is by no means unusual.

The Florida Office of the Attorney General has received about 500 consumer complaints every year for the past few years related to timeshare relief-type companies, said spokesman Whitney Ray in an email.

In 2018, that number was down slightly to about 450 complaints, potentially due to a push by timeshare companies to go after timeshare exit companies.

“The industry has come together to find a solution for consumers,” said Robert Clements, vice president of regulatory affairs at the American Resort Development Association, the trade group that represents the timeshare industry.

In 2018 alone, Wyndham has filed six lawsuits in Florida against exit companies.

Bud Bennington, a lawyer with Shutts and Bowen who has represented Wyndham and Diamond in many of the cases, said he’s currently involved in about a dozen active lawsuits against timeshare exit companies.

Diamond alone has prosecuted 12 lawsuits around the country, six of which have led to injunctions against the companies, the American Resort Development Association said.

Red flags, the timeshare industry said, are if an exit company requests a large upfront fee, guarantees success or solicits potential clients.

The challenge when it comes to filing lawsuits, said Wyndham CEO Michael Brown, is that exit-company owners may open numerous companies with the same address and phone number, making untangling the web difficult.

“When one closes down, another opens up,” he said. “The companies are run by a single individual or two or three.

“When it’s time to close down an entity, it’s easy enough for an individual or group of individuals to, in effect, disappear from the landscape.”

‘A war’

But the billion-dollar timeshare industry is not blameless in the whole ordeal, said Brian Rogers, owner of the Timeshare Users Group, a network of about 100,000 timeshare owners across the nation.

“They are both in the same cesspool, as far as we are concerned,” Rogers said.

“The industry itself created these scammers. They wouldn’t exist if the industry itself didn’t practice the way that it does.”

The leader in the exit industry, Timeshare Exit Team, came to be about seven years ago because the timeshare industry wasn’t transparent about what options — if any — owners had to get out of their timeshares.

CEO Brandon Reed since has grown Timeshare Exit Team to about 30 offices and more than 30,000 clients across the country, with ads on the radio and the endorsement of finance guru Dave Ramsay. It charges about $4,000 to $5,000 to clients on average.

“There wasn’t an exit industry before,” Reed said. “We created the word exit (company).”

The growth of the exit industry has been much to the chagrin of companies such as Wyndham, the global leader in the timeshare industry.

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In 2015, Wyndham instituted its Ovation program to provide consumers with a way to exit their timeshares.

For timeshare owners who have paid off their mortgage — that’s the $25,000 figure on the Palombi’s timeshare, for example — they have several options to exit.

If the mortgage has not been paid, the options are few, but Wyndham said it’ll work with owners in “hardship situations.”

Since the program started, about 17,000 people have used it, Brown said. Now, all the major timeshare companies have their own, similar programs.

All of it has been a result of changing trends in the timeshare industry, which dates back to the 1970s.

In recent years, owners who have had their timeshares for several decades have started to look for a way out due to changing circumstances in their lives — but haven’t found options.

“If you were to go back five to six years, the industry wasn’t as prepared to provide an easy off-ramp to owners,” Brown said. “... In the absence of a lot of clear programs, people filled that vacuum unfortunately in the wrong way.”

But that’s not the way Reed sees it. He describes what Timeshare Exit Team does as a consumer service.

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“If someone really tried hard to get out of their timeshare, they might be able to get out of it just by bugging the resorts, calling the attorney general,” Reed said. “I could also clean my gutters, but I don’t.

“We are a service that people don’t want to do themselves.”

Reed added that he’s glad to see timeshare companies have gone after “bad actors” in the exit industry.

Timeshare Exit Team has an A- rating from the Better Business Bureau, but also has been put on notice due to what the BBB has identified as a pattern of complaints related to the company.

Timeshare Exit Team responded to the BBB early this month that it was addressing those concerns.

Reed’s company is among those that have been sued by Wyndham and others — a total of four times, Reed said. In the Wyndham suit filed last week, the timeshare giant claims Timeshare Exit Team deceives “hundreds of Wyndham owners into knowingly or unknowingly paying defendants.”

“It’s been a war, we are in a war right now,” Reed said. “They are coming together and saying, ‘We are going to take out exit companies.’”

A victory

So far, the timeshare industry has won a major battle in that war.

In August, the Supreme Court of Tennessee disbarred Judson Wheeler Phillips, a senior partner with Nashville-based Castle Law Group and founding member of the conservative Tea Party group, for working with timeshare-exit companies to scam consumers.

In its decision, the Board of Professional Responsibility of the Supreme Court of Tennessee said, “Mr. Phillips consented to disbarment because he could not successfully defend himself on charges alleged in a petition for discipline that included 18 disciplinary complaints and 91 additional pending disciplinary complaints.”

Clements, with the American Resort Development Association, said more is coming. He expects to see high-profile filings by attorneys general against timeshare exit companies early next year.

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“Castle Law to me is the poster child of what’s going to happen to this industry,” Clements said.

“The time is coming to an end for people who give that service.”

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