For the many years that I’ve worked for the Arkansas Real Estate Commission, a consumer group that has consistently been a target of unethical activity is timeshare owners who wish to sell their timeshares. Many persons who purchase timeshares eventually find that their lifestyles no longer match the vacation product they purchased several years prior. It’s sort of like the Corvette, purchased while a teenager, that subsequently has to be traded in for a minivan as family obligations overcome the need for speed. The difference is that there’s always a secondary market for the Corvette, while the resort industry has struggled to develop a successful secondary market for timeshare. This has opened the door of opportunity to unscrupulous individuals willing to take advantage of the owners.
Many people own timeshare property and find it fits their vacationing needs quite well. Our office has worked with the American Resort Developments Association (ARDA) for several years about the lack of a secondary market for timeshare and companies conducting fraudulent timeshare exit activities. Timeshare owners who wish to sell their vacation property should visit the ARDA website on selling a timeshare www.arda.org or www.ardaroc.org. ARDA has also published helpful information for owners who wish to sell their timeshare at www.responsibleexit.com.
In a recent press release entitled Timeshare Industry Fighting Back to End Exit Fraud ARDA states “The timeshare industry, the American Resort Development Association (ARDA) and ARDA Resort Owners’ Coalition (ARDA-ROC), have united to stop the misconduct of those deceiving timeshare owners into paying for illusory timeshare exit services through fraudulent means.” The release states that Castle Law Group has ceased business operations following federal lawsuits brought by developers against the company after the Tennessee Supreme Court disbarried attorney Judson Wheeler Phillips, founder of the Castle Law Group, on a myriad of charges relating to consumer fraud complaints around timeshare exit activities. Also according toARDA, another matter prosecuted by Wyndham Destinations against American Consumer Credit (ACC), among the largest of timeshare exit companies, resulted in ACC filing bankruptcy on September 7, 2018.
Robert Clements, ARDA Vice President of Regulatory Affairs states: “The constant pressure that our member companies, owners and federal and state agencies are putting on disreputable timeshare exit companies has again produced a positive result for the consumer,” . ARDA-ROC Chairman Ken McKelvey states“A top priority for our industry and owners, and for law enforcement and other agencies, is to protect consumers from dishonest individuals or companies trying to take advantage of them. These actions send a strong signal to criminals that fraud and deceptive activities will not be tolerated by our industry and it tells consumers that we take the actions of these individuals very seriously.”
Arkansas encountered problems with vacation property resale in the nineties as advance fee scams started popping up across the state. While the sales angles differed from one operator to the next, the basic business model started with obtaining a list of timeshare and resort lot owners. Next, a call center was created by hiring inexperienced salespersons who did and said whatever their employer told them to in order to obtain the property owners’ credit card information. The caller would then charge the owners a fee ranging from $300 to $700 to list their properties. Working together, the Real Estate Commission and Attorney General managed to shut down the advance fee scams where the properties were only being listed for the advance fee but seldom sold. Less than one percent of properties listed by many of these companies were ever sold.
Fortunately, there has been some positive movement by the industry to address timeshare resale issues. Owners who wish to sell their timeshare should begin by contacting the timeshare company to ask whether they have any in-house programs to assist owners in this regard. Legitimate timeshare companies do not want their property owners scammed by a less than scrupulous reseller. Our office recently received a call from a timeshare owner who was on the verge of writing an $8,000 check to an outfit that promised to get her out of her timeshare that she no longer used. Upon learning which company the timeshare was with, we found a contact for her. The timeshare representative informed her of an internal program by which they would assist owners by offering two options to dispose of the timeshare property. While neither option provided a return on the owner’s investment, they were viable opportunities by which the owner could dispose of the timeshare with little or no expense. In another similar situation with a reputable timeshare company, we discovered that company also had an in-house program to assist owners in disposing of their timeshare.
As for the companies that claim to assist Arkansas timeshare owners to rid the owners of their timeshare property, the consumers should also ask the sales representative whether they have an Arkansas real estate license. The Arkansas Real Estate License Law requires persons who perform activities in Arkansas involving the sale or transfer of timeshare properties to hold an Arkansas Real Estate License. If they do not hold a real estate license, the consumer should contact the Real Estate Commission at (501) 683-8010 and provide the details of the situation to a Commission investigator. While a real estate license does not guarantee that the person is offering the consumer a legitimate option, it does provide some protection for the consumer. Also, the Arkansas Real Estate Commission has the authority to impose a civil penalty up to $5,000 against any unlicensed person who illegally performs “unlicensed real estate activity” in the state or Arkansas.
Additional information can also be found at the Arkansas Attorney General’s website at www.arkansasag.gov by entering“timeshare” in the search field.