Timeshare fraud, and high-pressure sales tactics, angry consumer reviews and videos on YouTube are hardly the first impression that the industry would like to make, with prospective buyers. At Aconsumercredit™, we specialize in assisting timeshare owners with cancellation of their contracts.
Every day we hear the kind of stories that challenge our belief in business integrity. The timeshare industry isn’t “all bad,” but the instances of fraud and consumer abuse are well documented, with thousands of new online complaints every year.
Wouldn’t it be nice if the timeshare industry sat up, and paid attention to what consumers were really saying? We share ten ways that timeshares could become more consumer friendly, and fair to both prospective buyers and members.
1. Change the Commission Structure for Timeshare Sales Professionals
One of the most prolific problems in the timeshare industry, is the reputation it earns through fraudulent sales practices. Consumers understand that timeshares often outsource sales to different teams. But why are sales teams that represent a reputable timeshare, allowed to use disreputable (bordering on illegal) tactics, to get consumers to sign a contract?
No matter how big or small the vacation club or timeshare corporation is, they cannot pretend for a moment that they do not receive complaints regarding the behavior of salaried or contract sales professionals. Why are the complaints not investigated by the resort? And if they are, why don’t we hear more about firing sales staff, for harassing potential buyers?
If the timeshare industry took a stand against high-pressured and unscrupulous consumer sales tactics, it would help. And if the resort receives complaints about an unreasonable sales experience (one that borders on legal duress), they should make reparations to the buyer. Or make it easy for that buyer, to rescind the contract.
2. Be Honest About Future Resale Values
Let’s say that internationally, about 10% of timeshares are valuable, and in demand. These resorts are in choice destinations, and feature top of the line spa like accommodations, making them highly desirable to timeshare buyers. Where demand exceeds supply, and you are one of the lucky owners in a high-caliber resort, you may be able to recoup some of your purchase price, through resale. But on average, even the most coveted resorts sell at 30% less than what the owner paid for it initially.
There are examples of people getting 100% of their investment, out of a timeshare sale. They are rare, but it does happen. From those infrequent cases, the timeshare industry perpetuates a myth that you can always get your money out of your timeshare. Sales professionals are coached to make consumers believe, that the investment value is always safe; that the timeshare will always be worth what they paid for it, or more.
Tell that to the hundreds of people listing their timeshare for transfer and sale on eBay, starting at $1.00. Stop spinning the few positive sale stories, into a standard expectation and assurance to timeshare buyers. Less than 2% of timeshares sell successfully. There is just too much inventory, and too many costly, high-fee timeshares to choose from.
3. Limit or Cap Increases to Membership or Maintenance Fees
For our team, it is frustrating and disheartening to hear so many timeshare nightmare stories, on a weekly basis. It is also hard to hear how maintenance fees can double, triple or even quadruple in a year, because of factors that the timeshare owner can’t control.
Those factors can include:
Hurricane and tropical storm damage
Bankruptcy or merger of the resort
Inadequate liability insurance acquired by the resort
Unnecessary upgrades to the facilities or accommodations
Imagine signing a legally binding contract, for reoccurring monthly and annual costs, that you must carefully budget for. Now imagine, that those costs can go up without warning, and without any kind of limit (unless capped in your contract). Owning a timeshare is a risk game of rolling the dice, with your household budget. And that game backfires on thousands of good families, every year.
4. Inform Timeshare Owners of Red Week Demand and Availability
One of the ways that timeshares sell the vacation opportunity of ownership to a consumer, is to remind the buyer of December holiday’s, March break and peak summer vacation periods. Whether you plan to surf, or ski at a choice resort with your family, chances are you will want peak weeks. Those are called ‘Red Weeks’ by timeshare companies, and they are a big problem most consumers do not understand, until after they have signed a timeshare agreement.
Red means stop. The most popular dates are not only pre-booked in advance, they can be booked up more than a year or two in advance. What good is it to own a timeshare, when the only time you can visit your tropical paradise, is during the monsoon season? It sounds funny and absurd, but that is what many timeshare owners face. Paying for something that is impractical and almost impossible for them to use.
While timeshares can’t really control when people want to vacation, or create more empty rooms and condominiums for those periods they can be honest. If there is a wait list for certain red weeks, the potential buyers should be advised before they sign the contract. Other incentives such as extra weeks, free trades and reciprocal agreements with comparable resorts should be offered, to compensate for the inconvenience of blacked out periods.
5. Stop Charging Inflated Penalties and Fees for Late Payment
It is normal for any business to charge a nominal fee for late or missed payments. That fee is intended to both discourage late payment, and to compensate for additional administrative time, to get the account back in good standing.
Most timeshare owners that fall behind in their fees, do so for two reasons: 1) the resort has angered them and refused to mediate a problem, and the timeshare owner has stopped payment, or 2) the timeshare owner is going through financial transition or hardship, and is unable to pay.
Both reasons for non-payment require compassion, and ethical customer service policies. Timeshares should resolve issues with consumers, not ignore them, while continuing to chalk up compounding fees and penalties monthly. And if financial hardship is an issue, a timeshare should be willing to pause payments, and be part of the solution (not the problem) for the owner.
6. Reduce or Eliminate Balloon Payments on New Timeshares
On of the most misleading and deeply psychological sales practices in the timeshare industry, is the requirement to purchase a new timeshare with an upfront balloon payment. Why is it necessary? Frankly, it’s not. It’s simply a valuable lump sum revenue source for the timeshare; a useful one if the resort is new and under construction in phases. Why get investors to pay the costs, when you can pre-sell units with $25,000 or higher payments?
7. Help Crack Down on Fraudulent Timeshare Resale Companies
The biggest and most frequently occurring instances of fraud, involving consumer timeshares, is in the resale market. In the last two years alone, we’ve seen cases that range from $30 million to hundreds of millions of dollars, where unsuspecting consumers were mislead by fly-by-night resale companies.
When a consumer hears about a resale scam, or a fraud charge, they immediately distrust the entire timeshare industry. We want to be clear, that we know many timeshares that work hard to serve their customers, and adopt fair business practices. There are good ones out there. But the entire industry suffers every time a resale fraud is brought to light.
Another reason why reputable timeshare companies should address fraudulent resale scams, is competition. Increasing, timeshare companies are launching their own member sale or rental services. In fact, those services have been around for a long time. But direct marketing by phone and mail is relentless, particularly by resale fraudsters, and Americans lose millions of dollars per year on timeshare resale scams.
Wouldn’t it be great if the timeshare industry did something about it? We think so too.
8. Offer More Options for Timeshare Cancellation
Personal needs change, and so do financial obligations in life. We know why timeshares take the hard line, when it comes to refusal to cancel contracts; they are guarding their revenue stream. But how many people have been scared away from buying a membership from a high-integrity resort, because of the proliferation of horror stories.
Start on YouTube if you want to see what cases of real timeshare cancellation look like. You will see single parents, seniors and retirees, young families and divorced individuals who all found themselves in the same position. They needed to exit their timeshare, and were given no upfront options from the resort. Instead, they are often met with aggression, or ignored completely, rather than having their complaints or needs met by the resort they have been a customer with for years.
9. Be More Transparent About Fee Increases
Condominium owners can request estoppel documents at any time, that demonstrate the reserve fund amount, annual fees and revenues, costs of repairs and more, in an itemized list. Legally, timeshare resorts are required to do the same for their owners.
Our timeshare cancellation clients have shared cases where fees have increased exponentially, without a detailed rationale. And some resorts (according to our clients) have ignored requests for a summary of costs, or other information that would demonstrate the need for increased maintenance fees. Not only is that ethically incorrect, from a business perspective, it is also illegal.
10. Give People Time to Consider Buying a Timeshare
For the average consumer, a timeshare is something that they thoroughly enjoy and find value in. While consumers are shopping for a reputable timeshare opportunity, they shouldn’t have to feel as though they are fighting off an aggressive sales experience. Let’s be honest, most timeshare sales pitches feel more like an attack than a purchase proposal.
Give people time to consider the offer. Allow for an opportunity to talk to family members, or even show the contract to a lawyer to address any concerns. Let the buyer feel like they have been given resources to make a responsible purchase decision. Stop bullying and pressuring people, using outlandish and unethical practices, to get that contract signed.
If timeshares took our suggested ten steps, they could figuratively transform the industry by setting an example of service focused consumer care. Some may argue that profits depend on the aggressive sales practices that the industry has traditionally employed. We think that the best and most integral resorts, can set a new standard of sales and retention, by treating buyers with respect, and by providing excellent customer service and flexibility, for the duration of the contract.