The timeshare industry has improved its reputation, but it still has room to improve. In recent years, there have been more than a few timeshare lawsuits involving elder abuse and sales and resales.
The lawsuits highlight problems with some timeshare companies and more general concerns about the industry's integrity. Critics of timesharing say that the companies continue to rely on complicated contracts, make it difficult to sell timeshare interests and target older, more vulnerable age groups. They say that older customers lack the understanding or strength to contest their timeshare contracts.
At least two states have taken action against timeshare companies over the past few years, and other timeshare companies have been the target of investigations. European regulators and courts have also scrutinized timeshare companies. Last year, a Spanish judge ruled that in perpetuity (without a distinct end) timeshare contracts violated Spanish law.
All this has created major challenges for the timeshare industry to improve its reputation.
To be sure, in recent years, the industry has become more transparent and user-friendly with large, reputable firms making it easier to find and purchase a timeshare at reasonable terms both on the primary and secondary markets, among them Marriott Vacation Worldwide (VAC) , an offshoot of the famed hotelier, Hilton, Hyatt (H) and Disney Worldwide, a unit of the Walt Disney Company (DIS) .
The problems in selling a timeshare have been particularly vexing for some consumers.
Judi Kozlowski, a timeshare sales agent for the real estate company Remax and member of the Licensed Timeshare Resale Broker Association (LTRBA), says that Hilton offers the best resale program. The LTRBA is a 64-member trade group.
The timeshare industry has its roots in the 1970s when some hotel chains were seeking ways to make use of vacancies. More than nine million households now own timeshares. Timeshare companies make it possible for owners to use other, comparable units within a timeshare company's network or even to trade them.
A recent study by the American Resort Development Foundation found that eight in 10 timeshare owners said that they would purchase their timeshares again. The Washington D.C.-based trade group tracks vacation rental trends.
Still, the number of timeshare lawsuits and complaints regarding some timeshare companies casts doubt on the industry's ability to regulate itself. The problem may lie at least partly with the number of companies offering timeshare units and the seeming reluctance of at least some of these organizations to make resale easy. Resale is no small issue, given the increase of maintenance fees to levels that some owners do not or cannot pay. An Ernst & Young study found that more than one in two units that revert to the owner result from foreclosures. Timeshare owners are unable to meet maintenance costs or sell their part.Consider that:
- New York Attorney General Eric Schneiderman halted sales at the Manhattan Club in New York due to allegedly fraudulent sales practices.
- Tennessee Attorney General Herbert H. Slatery III received a $3 million settlement for victims from timeshare company Festiva due to fraudulent and deceptive tactics that violated the Tennessee Consumer Protection Act.
- Florida based-Westgate is currently under Consumer Financial Protection Bureau investigation for its sales and marketing practices and lost a lawsuit it took all the way to the Supreme Court.
- Diamond Resorts has faced lawsuits from the Diamond Monarch, Hawaii at Poipu and ILX owner groups. A Diamond spokesperson said that he did not think the Diamond sales model was unreasonable. (I am a Diamond customer and have had a negative experience with the company, specifically around resale.)
- Spain has outlawed perpetual timeshare contracts. As a result, The Canarian Legal Alliance has won 15 lawsuits and has over 500 timeshare cases in progress.
Many timeshare owners have used and enjoyed their timeshare year after year without complaint. Others have had lesser experiences. The best advice for those seeking to buy or sell a timeshare is to check with a member of the Licensed Timeshare Resale Broker association LTRBA or a timeshare attorney. Nothing in life should exist without an exit.