Berkley Group Inc. of Florida allegedly violates federal and Florida consumer laws when it tries to get people to purchase timeshares, says a recently-filed lawsuit.
According to the complaint, Berkley Group violated the Telephone Consumer Protection Act and Florida’s Unfair Debt Collections Practices Act from 2011 through 2013. Specifically, the complaint alleges unfair debt collection practices, the use of recorded voices multiple times to entice consumers to buy the timeshares, and invasion of privacy.
After being advised that the Finn Law Group represented the timeshare owners, Tatyana Yeremenko, Yuriv Yeremenko, and Karen Davis, and to direct all correspondence through the law firm, the company allegedly ignored the repeated requests and continued to contact clients directly.
“Our main goal is to get the clients released from what we see as an unfair lifelong contract obtained via deceptive business and sales practices,” says Michael Finn, senior partner of Finn Law Group in Largo, Fla.
The Yeremenkos purchased a timeshare unit in Grandview Resort in Las Vegas. Davis bought a timeshare unit at Vacation Village at Parkway resort in Kissimmee, Fla. After the purchases, the timeshare owners were called using an automated dialing system to collect debts.
The lawsuit, Yeremenko, et al. vs. The Berkley Group Inc., et al. (Case No. CACE-13-028175), was filed in December 2013 in Broward County, Fla. The Berkley Group has not filed its response, says Finn, but he expects a motion to dismiss to be filed soon. If the court denies the motion to dismiss, Berkley Group would have to file an official response to the allegations.
Pattern of consumer complaints
Because of a pattern of allegedly fraudulent business practices, the Better Business Bureau revoked its accreditation of Berkley Group in November 2013. The BBB cited a pattern of complaints from consumers alleging high pressure and misleading sales tactics from Vacation Village Resorts, which is owned by Berkley Group.
Consumers reported they were not free to leave timeshare presentations after several hours and that the sales representative created a false sense of urgency to buy timeshares. More than 200 complaints have been filed with the BBB against the company.
The company responded to the complaints by saying they do not show evidence of misrepresentation or wrongdoing and that Berkley Group will not release timeshare owners from obligations. Berkley Group said representatives of the company a meal with families invited to resorts. These representatives provide details of ownership programs, but that families are not pressured to sign.
Consumer groups, FTC advise caution
The FTC and the Public Interest Research Group urge consumers to beware of timeshares and prepaid vacation plans. Ed Mierzwinski, consumer program director at PIRG, says, “Some timeshares are good products, but most aren’t. That’s why they are often sold with a lot of high pressure, deceptive tactics.” He advised consumers to refrain from buying during a sales presentation and to think through the purchase.
With summer upon us, and the much-deserved vacation time that comes with it, I often get questions from friends about timeshares. Is it a good idea? How will it affect my credit? What should I watch out for?
As anyone who has had the pleasure of sitting through a timeshare sales pitch can attest to, they sound like the perfect way for just about anyone to buy in to a vacation property. And who doesn’t want a vacation home? But before signing on the dotted line, make sure you understand what you may be getting yourself into.
So, What Is a Timeshare?
A timeshare is a form of shared ownership of a property by several owners. You have the privilege to use the property for a particular span of time each year. Typical timeshares include ownership of a condo, cabin, hotel room, RV or houseboat. There are two types of timeshares: a deeded interest where you actually own a share of the property; or a right-to-use interest that grants you use of the property but no formal ownership.
The tricky part of timeshare ownership that many do not realize upfront is that you have the responsibilities of a full-time homeowner, yet you only have fractional usage — and possibly not even property ownership.
Don’t sign on the dotted line before you consider these lesser-known responsibilities of timeshare ownership that have been known to cause folks credit trouble.
1. Timeshare Association Fees
Just as you may have homeowner association dues, special assessments, taxes and utilities on your primary home, you may have the same type of obligations for your timeshare. Also, if for whatever reason you can no longer pay or you become delinquent on your dues, taxes and fees, the timeshare association can put a lien on your ownership share of the property. This can obviously hurt your credit as well as affect your ability to sell your timeshare or use your credit for other purchases like a new car.
2. Mortgage Payments
If you decide to mortgage your timeshare ownership you will have to make your mortgage payments until the debt is repaid. If you get behind on your timeshare mortgage you can be foreclosed upon, just as if you stopped paying the mortgage on your primary home. A foreclosure will severely damage your credit and will remain on your credit report for seven years.
3. When It’s Time to Sell
I have had numerous people tell me about their difficulties in selling their timeshares when they either no longer want them or cannot afford them. For example, a friend bought a $20,000 timeshare and has been trying to sell it for $10,000 and still can’t get rid of it. She’s considering just giving it away so she can be free of the responsibility, the mortgage and all the fees. But then she may also have a mortgage on her credit report stating “deed-in-lieu.” So while she thinks this sounds simple and is only a loss of funds from the sale, it will affect her credit. In fact, according to a FICO study, a deed in lieu of foreclosure can cause a big drop in credit scores – sometimes nearly as bad as a foreclosure.
Keeping current on all your credit obligations, on time and as agreed, is crucial to maintaining good credit. Whether you have a timeshare or are considering one, it’s a good idea to stay on top of your credit so you can be aware of problems as they come up, and take care of them before they do greater damage to your credit. You can check your credit reports for free once a year through AnnualCreditReport.com. There are also many resources that give you your credit scores for free, including Credit.com (where you can also get a breakdown of what’s affecting your credit and how you can improve it).
So be smart when considering the purchase of a timeshare, and make sure you fully understand your rights and responsibilities. And in the meantime, enjoy the summer!
For More Information see Allyance Partners.
NORTH MYRTLE BEACH — Tony and Carrie Mendoza walked into the Wyndham Vacation Resorts office here in September hoping to sell four timeshares they had purchased years ago back to the company that had sold them. They walked out of the office unknowingly owing more than $18,000 to a credit card and finance company they say they’d never heard of.
“Wyndham pulled the wool over our eyes,” said Carrie Mendoza, 80, whose 86-year-old husband, Tony, is a World War II veteran. “The people at Wyndham work with this stuff every day. They talk so fast and flip pages so fast that only they know what’s going on.”
Documents show the Mendozas signed up for a program called Pathway by Club Wyndham – promoted by the timeshare company as an easy way for owners to sell back their unwanted vacation plans and eliminate the monthly maintenance fees. The Mendozas say they do not remember signing the documents, but they do not dispute that the signatures are theirs.
Timeshare critics say in lawsuits filed in Florida, California and other states that the program and Wyndham’s sales techniques are deceptive and target elderly victims.
“Timeshare sales are commission driven; the sales people get 20 percent of the deal,” said Mike Finn, a Largo, Fla., lawyer whose firm specializes in timeshare lawsuits. “They [the Mendozas] went in there thinking they were going to get help, but the sales guys just saw them as meat on the table.”
Patrick Mumford, the Mendozas’ lawyer, is out of the office until later this month and unavailable for comment.
Alicia Dickson – a consumer affairs specialist in Wyndham’s legal department – did not respond to email and telephone requests for comment. Dickson reviewed the Mendozas’ documents after receiving a letter from Mumford asking the timeshare company to justify the $18,000 debt “ or, otherwise, dismiss or waive [it].”
Dickson responded to Mumford by saying “we regret to hear of Mr. and Mrs. Mendoza’s concerns and apologize for any service challenges and inconveniences they may have encountered,” but the contract they signed binds them to the deal.
Lindsay Hodges, Wyndham’s corporate communications manager, told The Sun News on Friday that the company is “committed to providing a positive resolution for the Mendoza family.”
“Providing world-class customer service is our top priority and we strive to do all that we can to deliver a great experience to our owners at every interaction,” Hodges said. “We regret that their situation did not reflect this.”
The Pathway program
Wyndham requires timeshare owners to purchase an additional 105,000 points – the “currency” owners use to pay for their vacation stays – to join the Pathway program. Once they are in the program, owners can ask Wyndham to buy back their timeshares. Wyndham is not obligated to buy the timeshares but, if the company chooses, it will purchase them for 20 percent of their stated value.
In the Mendozas’ case, Wyndham paid $13,779 for timeshares the couple had purchased since 1996 for more than $68,000.
To make them eligible for that buy-back, Wyndham signed the Mendozas up for a Visa credit card and a Bill Me Later credit account – with a 19.99 percent annual interest rate – to cover the $18,125 cost of joining the Pathway program.
The Mendozas said they had no idea they had signed up for those credit accounts until months later when they started getting bills in the mail.
“It was never our intention to buy any additional timeshares or anything else that would cost us more money,” Tony Mendoza said.
Carrie Mendoza said she would not have agreed to the buy-back program if she knew it came at such a steep price.
“Our travel days are over,” she said. “We need the re-sale money to allow us to purchase medications and to keep us going for as long as the good Lord lets us remain on this earth.”
Documents show the Mendozas did indeed sign up for the credit accounts and agreed to all of the terms of the Pathway program, including the purchase of additional points. But the couple says they were pressured into signing documents before they read or fully understood them.
“When they have a large stack of papers with the pages flipped back and the back page ready for our signature without us being able to read the pages before that . . . and they encouraged us, saying, ‘Oh yeah, it’s OK, go ahead and just sign here’,” Carrie Mendoza said. “And very fast [they] flipped another page at us.”
The Mendozas say they did not get copies of all the documents they signed until their lawyer requested them months later.
Contracts hard to beat in court
Court documents show the Mendozas are not alone.
A lawsuit filed last year against Wyndham by a Wisconsin couple claims the timeshare company “trains its sales employees to arrange and procure loans through various credit cards and the Bill Me Later program without customers’ knowledge or consent.” Wyndham denies any wrongdoing in that lawsuit, which is pending.
A separate class-action lawsuit filed in California claims Wyndham deceived buyers into purchasing additional timeshare points through the Bill Me Later credit account “so that the charges would not be readily apparent.” The lead plaintiffs in that case, like the Mendozas, “were not aware of the purchase of additional points until they received their credit card statement,” according to the lawsuit.
Barbara Figari, the lawyer representing Wyndham customers in the class-action lawsuit, said in court documents that the timeshare company targeted her clients with deceptive and misleading sales pitches because of their age.
“The fraudulent practices and false representations were being targeted toward seniors,” Figari stated.
Wyndham has denied any wrongdoing in that case as well, and a judge ruled this year that Figari’s claims cannot be heard in court but must be resolved by an arbitrator, as stated by the contracts her clients signed.
Finn, the Florida lawyer, said it is usually futile to try to fight a timeshare contract on legal grounds.
“The contracts are damned hard to beat,” he said. “The timeshare attorneys figured out how to beat the system before they sold their first timeshare. Once you sign the contract, you’re usually stuck with that timeshare for the rest of your life.”
South Carolina consumers have five days to cancel a timeshare contract, and that cancellation has to be in writing and sent by certified mail with a return receipt. Once that time period expires, consumers have little recourse for cancelling a transaction due to buyer’s remorse.
The S.C. Department of Consumer Affairs, the state agency charged with protecting consumers’ rights, does not investigate timeshare complaints but forwards them to the state’s Real Estate Commission. The commission can’t adjudicate contractual disputes and is mostly limited to licensing violations.
Timeshare complaints are among the most common received by the commission, with 283 of them lodged in 2013, according to commission spokeswoman Lesia Kudelka. Of that amount, the commission declined to investigate 226 complaints due to a lack of jurisdiction or insufficient evidence to support a legal violation. None of the cases ended with a public disciplinary order against a timeshare company or sales agent.
Consumer advocates say the commission’s oversight of the timeshare industry is hampered by the fact that state law does not require individual sales agents to be licensed as long as their company is registered with the state. South Carolina is one of 12 states that do not require timeshare sales agents to obtain a license.
That leaves many consumers with a largely unsympathetic court system as their only hope.
“If you go in front of a judge and he asks, ‘Did you sign this contract?’ and you say, ‘Yes,’ you don’t stand a chance,” Finn said.
Mumford, the Mendozas’ lawyer, appears to agree in a March 21 memo he wrote about the Little River couple’s case.
“Unless Mr. and Mrs. Mendoza deny that the signatures contained thereon are theirs, the documents on their face appear to be very much in order,” Mumford states.
A little caution can save money
Finn has said one approach is not to pay the credit card or Bill Me Later bill. That’s because those finance companies have “recourse agreements” with Wyndham for most of the accounts opened to make timeshare purchases. Under those agreements, the finance companies perform minimal credit checks on consumers because Wyndham guarantees the payments.
“They’re not relying on an individual’s credit as to whether they should make the loan,” Finn said, referring to the finance companies. “They’re relying on that recourse agreement they have with Wyndham.”
Finn said he has been able to get companies such as Bill Me Later to cancel debts for more than 100 of his clients by sending a letter outlining what he says are the timeshare company’s deceptive sales practices.
“When Bill Me Later gets my letter, they take it to Wyndham and say, “Give us our money back’,” Finn said. “The best way to get their attention is to tell them my client is not going to pay you any more and you cannot contact them any more. I create a situation where they have to come to my table.”
Finn’s services aren’t cheap – he charges a flat rate of $5,000 for each case – but he said business is booming.
“I started focusing on timeshare cases three years ago, and I’ve been the busiest during those three years than at any other time during 43 years in practice,” he said.
Pam Bondi – the attorney general in Florida where many of the timeshare companies, including Wyndham, are headquartered – said a little patience and caution on the front end can save consumers thousands in timeshare and legal fees.
“The salesman may try to give you the impression that the papers have to be signed that same day,” Bondi said in a news release. “Remember that you always have the right to leave the sales office, and come back later. Read your contract to determine what cancellation rights you have after you have signed the papers. Before buying a timeshare, you should consider whether you will want to return to the same vacation spot each year. Remember that once you buy it, you may not be able to sell it due to a depressed resale market.”
It’s advice the Mendozas say they wish they had taken.
“They had a lot of places where we were told to initial or sign,” Carrie Mendoza said. “We trusted them, and that was our biggest mistake.”