Timeshare 'Exit' Company Allegedly Deceived 32K Owners
ORLANDO, Fla. – More than 32,000 people have been allegedly deceived by Timeshare Exit Team, the biggest player in the so-called timeshare “exit” industry, according to a lawsuit filed last week by the attorney general in Washington state.
Attorney General Bob Ferguson says the company’s large upfront fees have swindled consumers out of thousands of dollars with the promise of freeing them of their timeshares, but has failed to deliver on more than 17,000 cases. Timeshare Exit Team’s highly publicized 100% money-back guarantee is also a sham, the attorney general’s complaint said, luring consumers into a false sense of security only to continuously deny refunds.
Established in 2012, Bellevue, Washington-based Timeshare Exit Company was an early entrant into the nascent timeshare exit industry. Owner Brandon Reed told the Orlando Sentinel in 2018 that they “created the word exit [company].”
But Ferguson claims in the suit that in the past eight years, the company’s practices violated the Consumer Protect Act. Timeshare Exit Team denies the allegations.
Timeshare exit companies typically work with lawyers who send timeshare developers like Orlando-based Wyndham Destinations and Diamond Resorts of Las Vegas a cease-and-desist letter on consumers’ behalf indicating their interest to exit their timeshare. The service requires an upfront charge typically between $4,000 and $5,000, Timeshare Exit Team previously told the Sentinel.
But what often happens, Ferguson claims, is businesses like Timeshare Exit Company don’t inform consumers that they can just do this themselves by calling their timeshare provider directly – most major timeshare developers now have exit programs – saving them thousands of dollars.
The process has led many consumers to unknowingly default on their timeshares for failing to make payments, damaging their credit.
In a 68-page complaint that cites everything from the company’s marketing expenses to its internal manual, Ferguson claims Timeshare Exit Team is spending $1 million a month in advertising to attract new customers instead of managing its extensive case backlog. The suit claims employees are instructed through a section in the manual called “I Could Have Just Done This On My Own, I Want My Money Back,” to not offer refunds when customers claim they exited their timeshares on their own.
According to Ferguson: Of the estimated 38,000 exits Timeshare Exit Team has been contracted to perform since 2012, the company has only delivered on about half. Allegedly, more than 4,600 of the cases have been outstanding for more than three years.
If the attorney general’s office is successful, the court may impose penalties of up to $2,000 per violation of the Consumer Protection Act on Timeshare Exit Team.
For its part, Timeshare Exit Team said in a statement it strongly disagrees with the allegations leveled in the complaint, adding that, last year the company set up the Coalition to Reform Timeshare to “fight for the rights of timeshare owners everywhere.”
The Washington Attorney General’s office said it has received more than 90 complaints from Timeshare Exit Company customers and the Better Business Bureau began raising the alarm about Timeshare Exit Team in late 2018, when it posted a warning on the company’s BBB page citing a pattern of more than 300 complaints.
In a response at the time, Timeshare Exit Team said it was addressing the concerns, including changes to its contract and refund request process.
“Some timeshare developers have instituted numerous practices to harass the Timeshare Exit Team for helping timeshare owners find relief from their unwanted timeshares,” Timeshare Exit Team said in a statement to the BBB. “As a result, business practices and strategies created and employed by the Timeshare Exit Team have had to adapt and shift often.”
But according to the lawsuit, the problems have persisted. The attorney general claims the fees Timeshare Exit Team collects up front can be as high as $8,795 for work that is then largely outsourced to third party vendors for as low as $500, allowing the timeshare exit company to pocket the majority of the payment.
The exits that are successful, Ferguson said, are through programs timeshare developers are already offering.
Those programs are a result of the growth of timeshare exit companies. Without an avenue for timeshare owners to drop their contracts, companies like Timeshare Exit Team cropped up to fill the void. Now, timeshare developers have started to create programs to let owners leave their timeshares – if they’re paid in full.
In a statement, CEO Brandon Reed called the claims that customers can get out of their timeshares on their own “flat-out factually incorrect.”
Timeshare developers are also suing timeshare exit companies themselves. One of the most aggressive in that space is Diamond Resorts, which has numerous properties in Orlando and which already successfully shut down Tennessee-based timeshare exit company Castle Law Group.
“We’ve known about this deceptive scheme for years. That’s why we have also filed lawsuits against Timeshare Exit Team and other similar companies to stop them from victimizing our members,” said Mike Flaskey, CEO of Diamond Resorts, in a statement. “These so-called ‘timeshare exit companies’ take advantage of people by charging massive upfront fees and then don’t deliver anything in return. We’re pleased to see the state of Washington lead the fight here.”
Of course, many critics argue that it was the timeshare industry’s own deceptive policies and sales tactics that opened the way for abuse from other parties.
Lisa Ann Schreier, a timeshare consultant and writer of the unaffiliated blog the Timeshare Crusader, said that high-pressure sales pitches, one-day price guarantees and limited price comparison options contribute to much of the confusion around timeshare purchases.
“Most people buy this on a whim, based on a two-, three-, four-hour sales presentation. They don’t know what questions to ask. They don’t understand that this is a deed in perpetuity. They don’t understand that it’s not nearly as easy to use as the sales person makes it out to be,” Schreier said. “You don’t buy anything based on the way you buy your timeshare.”
Developers’ attempts to create an exit ramp for consumers is a start, she said, but consumers still have to jump through hoops.
“There has to be some systemic change on the part of the industry,” she said. “If there were more remedies offered then there would be no need for the exit companies to be in existence to begin with.”
As for timeshare exit companies, she said the test of whether a company is reputable is easy: “Anyone who promises you an easy out is lying. This is not an easy thing to do whatsoever.”
© 2020 The Orlando Sentinel (Orlando, Fla.), Chabeli Carrazana. Distributed by Tribune Content Agency, LLC.