Friday, February 15, 2019

7 Things You Need to Know Before You Cancel Your Timeshare Contract


1.  As of 2019, there are still only a handful of legitimate timeshare cancellation companies in existence. Here’s why:

Most timeshare owners have a hard time accepting the fact that a timeshare -- something they’ve spent tens of thousands of dollars on – can have little or no tangible value. So when the timeshare eventually becomes a financial burden, their first inclination is to sell it or rent it. Unfortunately, hundreds of companies have sprouted up over the last several years to exploit the misconception that timeshares are easily sold. These companies fall into two categories, the sketchy type that claims they can sell or rent your timeshare (they usually can’t), and the fraudulent type that claims to have a buyer waiting in the wings (they don’t). Both types are fully aware that the odds of someone actually buying or renting your timeshare are extremely low (less than 1%). Why the terrible odds? Because of the glut of timeshares on the secondary market for only a dollar. Think about it: Why would anyone pay you for a timeshare when so many are listed on eBay for next to nothing?  

These timeshare “resale” companies tell you exactly what you want to hear - that your timeshare has real value. People believe this nonsense because they just can’t understand how a timeshare company would be allowed to sell products to the public that are, for all intents and purposes, worthless. When you buy a car, you expect it to lose 20% of its value as soon as you sign the contract, but you certainly don’t expect it to lose 100% of its value. That’s exactly what happens with most timeshares. People understandably have a hard time wrapping their heads around that.

So the first thing that timeshare owners need to do is face facts - namely these:


* The IRS values most timeshare as worthless.

* No legitimate charity wants your donated timeshare. Period.
* Timeshares spend millions to influence both Democrats and Republicans in state
   government. That's how they stay in the good graces of regulators.
  
2.  Even if you sell your timeshare on eBay for a dollar, you’re still responsible for payment to the timeshare company if your buyer ever stops making payments.

You heard it right. Most timeshare companies structure their contracts so the original owner can only transfer the timeshare by way of a quitclaim deed. But a quitclaim deed merely transfers title; it doesn’t transfer the legal obligation to pay a monthly mortgage or an annual maintenance fee. So while the new owner will have legal title, the original owner will still be on the hook for any payments due for the life of the timeshare.

In other words, if you are the original owner, you will always be ultimately responsible for payments. So if you do sell your timeshare for a dollar, make doubly sure the person to which it is transferred is someone you can trust to make timely payments for the rest of your life, not theirs. And remember, those never-ending maintenance fees increase an average of 8% per year, so there’s a high likelihood that your buyer will eventually tire of making payments. When that happens, your timeshare company will find you and demand payment in arrears.

What’s more, the use of quitclaim deeds has also allowed fraudulent charities to trick unsuspecting timeshare owners into thinking they've transferred title to the charity as a donation. Instead, the charity will take your “donation fee,” and simply stop payment to the timeshare at some point in the future, leaving you, the original owner, on the hook for payment.

So if you can’t sell it or rent it, and you can’t even give it away, what can you do?

3.  The only foolproof way to rid yourself of a timeshare is to legally cancel the contract.

This means that you must negotiate directly with the timeshare company and convince them to issue an official release. Timeshare cancellation companies do this by holding timeshares accountable for the misdeeds of their salespeople, which include FTC and FDCPA violations, omissions of fact, and outright exaggerations. We’ve put together a list of companies who have a good track record of doing just that:

Primo Management Group (Orlando, FL)
Seaside Consultants (Encinitas CA)
Timeshare Compliance (Aliso Viejo, CA)
Sapphire Cancellation (Orlando FL)
National Cancellation (Springfield MO)
Resolution Timeshare Cancellation (Madison NJ & Orlando FL)

Whatever company you choose, make sure their method is to negotiate directly with your timeshare. A legitimate company will ask you to sign a limited power of attorney, which gives them authorization to speak to the timeshare on your behalf. They should also keep you updated of their progress each and every month throughout the process. 

Again, this is the only foolproof and legal way to cancel a contract. Stay away from any company that promises to transfer your timeshare to some mysterious third-party, or sell your timeshare, rent your timeshare, or donate your timeshare.

4.  Most timeshare companies - with the possible exception of Disney - use unlawful  sales tactics.

Ever wonder why you can’t go down to your local timeshare store to buy a timeshare? You can’t, because the only way to sell a timeshare is to bait you with a gift, wear you down with high pressure sales tactics, and do it all within the confines of a hotel conference room. 

Here’s how the whole thing works:

So you’ve taken the bait and you’re sitting in a big hotel conference room with a lot of other people for a 90-minute presentation. The first few minutes are actually kind of fun. The hotel is beautiful, and your host speaker is charismatic and funny. His purpose is to create a game-show atmosphere to get everyone loosened up. He’s good at what he does.

While this is happening, however, you and your spouse are being watched, either from behind the stage or on a closed-circuit camera. The people watching you are the company’s top salespeople, and they’re looking for body language and facial expressions that match up with past successful sales. This ensures that the best salespeople are assigned to those unsuspecting couples with the highest likelihood of buying.

After about 30 minutes of fun and games, the speaker adjourns, and your new salesperson  either joins you at your table, or suggests a separate room for the remainder of the presentation. For the next hour or so, she digs for as much personal information as she can, in order to use it later to close the sale. You don’t want to seem rude, so you open up a bit and talk freely, especially since you’ve already been treated to a comedy show of sorts, not to mention the free gift you’re about to receive just for showing up.  

Then, suddenly, you are shocked when she hits you with an asking price, a price so outrageously high, that you couldn’t possibly spend that kind of money on a timeshare. You say “No way, I can’t do that”. But unbeknownst to you, that’s exactly what you’re supposed to say. Nobody buys on the first outrageously high offer.

Next comes your big mistake: You don’t immediately get up and leave right after the extremely high asking price. Instead, like most people in this situation, you feel obligated because of that free gift. But here’s the key: By not leaving, you are establishing an unspoken agreement between you and the salesperson. It's purely psychological, but powerful nonetheless. The agreement is that your only objection is price, and that you would buy if the price were right. Otherwise, why are you still listening to the presentation? 

Thirty minutes later -- or in many cases several hours later -- the price is lowered to only a fraction of the original offer, and this is where you finally say, “What the heck, Honey. We deserve more vacations!”

Up until this point, you’ve been subjected to a lot of psychological manipulation, which is not unlawful. However, once you sign that contract, the timeshare has very likely violated consumer protection law. At no point in the presentation did your salesperson inform you of critical information that any reasonable person would want to know when buying a timeshare. You were most certainly not informed of the existence of the secondary market where timeshares just like yours are listed on eBay or next to nothing. At no point were you informed that the IRS values your timeshare as worthless, regardless of the final price you paid. Chances are good that you were also given an unnecessarily high interest rate as well. Your salesperson probably told you that she personally owned a timeshare herself, when in fact she never has. You were not informed of ever increasing assessment fees and maintenance fees. Chances are good that you were rushed through the contract without actually reading it, after having been passed from one sales person to another (rotation sales) in order to mentally wear you down.

How do we know all these things occurred? Because our clients tell us. We know how timeshares are sold.

5.  Timeshares use their ‘A’ rating with the Better Business Bureau to give you a false sense of security.

Truth be told, it’s fairly easy to get an ‘A’ rating with the BBB. That’s partly because the Better Business Bureau is not actually a government bureau; it’s a private company that charges fees for accreditation. The fees can be so expensive that even companies like Starbucks and Microsoft choose not to pay the BBB, and instead remain unaccredited. So just because a company is accredited, and just because a company has an ‘A’ rating with the BBB, doesn’t necessarily mean it’s a good company.

Instead, look to see how many complaints and bad reviews are listed on the timeshare’s BBB page. While I am critical of the ease with which timeshares can maintain their 'A' ratings with the BBB, I still hold the BBB in high regard because of the dependable way in which they document official complaints and bad reviews. So compare the ratio of negative to positive. Most timeshares have a ratio of one good review for every 25 bad reviews on their BBB page. That’s a red flag regardless of the timeshare’s ‘A’ rating.


  Timeshare companies plan ahead for the possibility that you will eventually cancel your contract. Here’s how they do it:

Timeshares are fully aware that cancellation companies are just a google search away from every customer they have. So they know that a certain percentage of customers will eventually figure out how to have their contracts cancelled. This is why they encourage you to open up a new credit card to fund your down payment (often a Barclays or PayPal Credit). Once you do that, the timeshare is guaranteed to receive that money immediately, before you realize your mistake and decide to contact a cancellation company. You can also expect a very high interest rate, regardless of your good credit, in the hope that you will secure a home equity loan at a lower rate, which pays off the timeshare company before you figure out how to cancel the timeshare.


7.  Even legitimate cancellation companies will give you a quote based on how much money they think you have available to spend.

How do cancellation companies gauge what you can spend? By asking you for your monthly timeshare mortgage payment amount, or your annual maintenance fee amount. While it’s certainly not illegal to negotiate the highest possible price for one’s product or service, I consider this practice to be very ‘used car sales’ like. You tolerated that sort of thing when you got into the timeshare; you shouldn't have to tolerate it getting out.   

Monday, February 4, 2019

The 5 Most Boneheaded Mistakes You Can Make with a Timeshare

1. Paying a company to attempt to sell or rent it.
Even though the IRS values most timeshares as worthless, and hundreds of timeshares can be had on eBay for next-to-nothing, some people just can’t believe that the timeshare for which they paid tens of thousands of dollars, isn’t worth the paper their contract is printed on. This is why so many re-sale companies are able to pick the pockets of so many timeshare owners.
If you still think that someone out there might want to buy or rent your timeshare, just do this: Call any timeshare company and tell the salesperson that you would like to pay full price for any of their timeshares – with only one condition: tell the sales rep that within thirty days of your purchase date, you would like the right to sell that same timeshare back to the timeshare company for the asking price of only one dollar.
Any company selling a legitimate product would gladly jump at such a proposal because it would be foolish not to. Your car dealership would take you up on that. Your realtor would. So why not your timeshare company?
Hmmm, I wonder why..
2. Getting a low-interest loan to replace your high-interest timeshare debt.
Timeshare companies 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 a cancellation agency. 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 high interest-rate strategy encourages customers to transfer their high-interest timeshare debt over to a low-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.
3. Paying a down-payment when purchasing a timeshare.
When a potential customer balks at putting money down on a timeshare (and most do), the timeshare company has a solution: get the customer to open up a new credit card with a third-party provider (often Barclays). Once the timeshare debt has been transferred to such a card, the timeshare company is paid off entirely, and will feel little to no pain when the customer eventually figures out how to escape their contractual obligation.
Most people haven’t the slightest idea how to dispute a credit card purchase of a timeshare, and that’s why most disputes of this nature are won by the timeshare company.
4. Letting the timeshare salesperson begin the negotiation by establishing a ridiculously high asking price.
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 ‘ridiculously high asking price maneuver’ is hands-down the most effective technique used to separate people from their money. It’s used by all timeshare salespeople, regardless of the timeshare company they work for.
Salespeople use this technique for two reasons, both of which are critical to getting the sale. By starting off extremely high (knowing full well that similar timeshares are available on eBay for only a dollar) the salesperson establishes a price point by which all subsequent lower offers can be compared. This technique invariably leads to the following exchange between husband and wife:
“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 $5,000 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 has the ability to make the customer believe they’re getting a great deal by lowering the price due to bogus discounts. These discounts usually take the form of a supposed foreclosed property, a trade-in, or the fact that the customer is a veteran or first responder. These sneaky tricks also plant seeds 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.
5. Paying a cancellation firm if you are over 65 and on disability or a limited fixed income.
In all my years of experience, I have never once encountered a timeshare company that wouldn’t release a senior citizen who was on a limited fixed income. The optics are just too awful – even for timeshares.
If you fall into this category, my advice is to save your money and not hire a cancellation company. The worst thing any timeshare can do is put a negative mark on your credit. Federal law protects seniors of limited means from wage garnishment and lawsuits filed by timeshare companies. So unless you are trying to dispute a credit card purchase related to your timeshare, or you need your credit protected, there’s no need to pay any cancellation firm to protect you, including Resolution Cancellation, should you fall into this category.
It’s not illegal to take advantage of people who are unaware they don’t need your help, and so even the legitimate cancellation firms will take money from fixed-income seniors. 
By Stephen Lasser