Monday, May 29, 2017

Of the Four Types of Timeshare Relief Companies, Only One is Truly Legitimate.

When searching for a way out of a timeshare, the timeshare owner will invariably happen upon any of four kinds of timeshare relief companies: those that claim to sell your timeshare, those that claim to transfer your timeshare, those that claim to donate your timeshare, and those that use a licensed timeshare attorney to negotiate directly with your timeshare. Of these four types, only the attorney negotiating with the timeshare is a legitimate strategy.

In this series of posts I will talk about all four types, and explain why the illegitimate types are allowed to stay in business.We begin with those companies that claim to sell your timeshare.

They're called timeshare resale companies, and most of them must change their name every couple of years due to all the bad press they get from unhappy customers. The pitch is simple: Send us a few hundred bucks and we'll sell your timeshare for you. There's just one problem; the timeshare almost never sells. In fact, the odds that it will are well under 2%. But these companies will take your money anyway. They stay in business because their contracts are carefully worded so as not to guarantee anything. They will never go away for one simple reason: a sizeable number of timeshare owners refuse to believe that their timeshare has no value.

And so, every year, thousands find out the hard way.

Come back next week for my thoughts on timeshare transfer companies...

Sunday, May 21, 2017

The Top Ten Tricks That Timeshares Pull (By Tom Heehler)

Trick #2: Get customers to pay off their timeshare mortgage before they figure out they've been taken


Timeshares know that a certain percentage of customers will eventually figure out that they can negotiate out of their contract by using a law firm or an attorney-staffed agency such as PMG. That's why timeshares use a couple of sneaky tricks to get as much money as possible from their customers as quickly as possible. One such trick involves the interest rate charged. Usually it's pretty damn high. I'm talking anywhere from between 13% to 22%. This interest-rate strategy encourages customers to transfer their high-interest timeshare debt over to a lower-interest bank loan, which pays off the timeshare instantly. Once the timeshare has been paid off, it doesn't really matter if the customer figures out how to cancel their timeshare contract, because the timeshare already has its money. What's more, those customers who are unable to refinance, and who never realize the extent to which they've been deceived, will pay dramatically more money to the timeshare over a ten-year period, often more than twice the original purchase price.

A second strategy involves having the customer open a new credit card with a third-party provider such as Barclays, and putting the down payment (or even the entire amount) on that credit card. Often the customer is made to believe that the new credit card is issued by the timeshare itself, when it is actually a third party credit card. Once the timeshare debt has been transferred to the card, the timeshare is paid off entirely, and will feel little to no pain when the customer eventually figures out how to escape the contractual obligation.


Wednesday, May 17, 2017

The Top Ten Tricks That Timeshares Pull (By Tom Heehler)

When you help people out of their timeshare contracts for a living, you spend a lot of time listening to stories about sales presentations. The following list of timeshare tricks is based on hundreds of conversations with as many clients. I consider these to be the most effective techniques used to separate people from their money. Most of these tricks are used by all timeshare salespeople, regardless of the timeshare company they work for. We’ll kick off today with trick #1:


Trick #1: Starting out with a ridiculously high dollar amount.
The salesperson does this for two reasons, both of which are critical to getting the sale. By starting off  extremely high, the salesperson establishes a dollar reference point by which all other offers can be compared. The technique usually results in the following exchange between husband and wife after their purchase:

“If we hadn’t held out as long as we did, Honey, we would have paid $50,000 instead of the final price of $15,000!”

(Little does the customer know, the salesperson would have accepted $7,000 as the final price.) This trick is pure psychology: $15,000 sounds like a small number and an awesome deal when compared to $50,000 – no two ways about it.

Second, by starting out high, the salesperson now has the ability to make up an excuse for lowering the price, to make the customer believe they are getting a steal. This excuse usually takes the form of a supposed foreclosed property or a trade-in.  Rarely is this actually the case, but the salesperson will lie and say it is. This sneaky trick also plants a seed in the customer’s mind that their timeshare can be given back to the timeshare company in the future, which is simply not the case.

Friday, May 12, 2017

Ask Tom Heehler: Why Should I Have to Pay an Upfront Fee or Retainer?

When hiring an attorney or an attorney staffed agency, a potential client is often asked to pay an upfront fee or a “retainer.” Many clients wonder why they should have to pay such a fee, particularly when they have not yet received any benefit from hiring the attorney. What happens if the case settles shortly after paying the retainer fee and before the attorney has done much work?

Pro-Upfront Fees

There are a number of very reasonable reasons an attorney might want to request the upfront payment of a retainer fee. It compensates an attorney for the use of his or her name, reputation, and expertise, even if only because the attorney's name gains leverage for the client and allows the case to settle more quickly. In fact, having the right attorney can sometimes achieve a settlement after only a phone call or a letter. There is obviously value to this benefit, and from a fairness standpoint, it only seems appropriate that the attorney should be compensated for use of his or her reputation.

Similarly, the fee compensates the attorney for agreeing to be on standby for the case. By doing so, regardless of the course of events in the case, the attorney is potentially foregoing other gainful employment and business opportunities in order to remain available when needed for the lawsuit. 

Of course, retainer fees also protect an attorney after the work has begun. For example, if the case proceeds and work is required of the attorney, the attorney can use the retainer fee to defray costs as s/he performs necessary work on the file. Similarly, should a disagreement arise or some other unforeseen circumstance that would make it impossible for the client to pay the attorney as originally agreed, the retainer fee ensures that the attorney receives at least some compensation for the time devoted to the matter. 

Anti-Upfront Fees

Of course, there are a number of arguments against collecting an upfront retainer fee, as well. For example, some clients might be put off by the idea of prepaying for someone's services, and look elsewhere for another attorney who does not charge a retainer fee. Naturally, that means the best instance in which to charge a retainer fee is when the attorney is specialized in a hard-to-find discipline, the number of attorneys in that field/location is very low, or the attorney is exceptional in some other way (board certification, particularly well-known in the community, etc.). Just as in economics, scarcity often creates value, and this gives exceptional attorneys an advantage when negotiating retainer fees.

Another argument against retainer fees is that some clients fear that if little or no work is done by the attorney before the case settles, the client will have effectively paid for nothing. Of course, as noted above, the counter-argument is that the party is buying the opportunity to work with the attorney and utilize his or her reputation. Failing to pay the retainer fee for fear of paying for “nothing” is a one-sided view that does not take into account the attorney's sacrifices in agreeing to forgo other work in order to take on the case and, of course, the attorney's reputation value. Indeed, the opportunity cost of not paying the retainer fee to retain an attorney may be much higher than the fee itself! Nevertheless, many attorneys are willing to forgo a retainer fee or refund it if little or no work is done on the case prior to settlement.

The final argument against retainer fees is that some clients, when presented with two similarly qualified attorneys, may tend to choose the one who does not charge a retainer fee. Not collecting a retainer fee may actually serve as a way for newer attorneys to get into the marketplace and compete against more seasoned attorney lawyers with well-developed reputations. 

Common Practices for retainer Fee

If an attorney does decide to charge a retainer fee, there are some common practices that may be wise to observe. For example, the retainer fee is often based on a multiple of the attorney's hourly rates and the number of hours the attorney reasonably believes could be expended in a set period of time. Alternatively, the fee could simply be an arbitrarily selected number, but must usually have some relation to the matter at issue and will often be regulated by the bar association of that state.

Remember, actual time spent on the case is usually tacked on in addition to the retainer fee, and the retainer is merely a deposit. Nevertheless, many attorneys will use the retainer fees to pay off the initial charges on a matter until the fee is depleted. At that point, the attorney will usually switch to a standard hourly billing arrangement, or may request the payment of another deposit before work can continue (a replenishable retainer).

Conclusion

The choice to charge a retainer fee or not is ultimately the attorney's preference in most cases. While the bar association or other governing bodies may occasionally mandate certain deposits and fees, this is the exception, not the rule. An attorney's choice of whether to charge a retainer fee, and how much that fee should be, may have certain pro's and con's, so it is important for the attorney and anyone evaluating an attorney, to determine whether that individual is sufficiently qualified, experienced, and well-known to warrant charging such a fee and how much a reasonable amount is. Naturally, most attorneys are willing to work with a client to figure out the best approach that will be fair to both the lawyer and the client, but understanding the attorney's relative value and scarcity in the marketplace can give each side additional leverage in any resulting negotiation.

Reprinted from HG Legal Resources.org