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Timeshare owners fight for money back in landmark legal case that could open the floodgates to claims
Disgruntled timeshare owners are fighting for compensation in a landmark legal case that could open the floodgates to claims.
In the first case of its kind in Britain, 487 members of a timeshare exchange club say they’ve been cheated out of the best holidays. Click here to read more.
We submitted a claim in the Spanish Court against Macdonald Resorts Spain S.A. Leila Playa Club for the nullity of the purchase contracts signed in 2003 and 2008 on the grounds of breach of the Spanish Timeshare Law 42/1998, as the Resort did not comply with their statutory duties of providing a general description of the proposed accommodation, and information on the consumer´s right of withdrawal. Furthermore the resort made an infringement of the maximum period of 50 years that a contract of this type can be made and the consumers signed the contract under misrepresentation. To support the claim, we provided, among other documents, the purchase contracts.
Regarding misrepresentation, Macdonald Resorts said in their defense it was not a misrepresentation as the claimants knew and understood the product. They also defended that they did not infringe the maximum period of 50 years as the Law 42/1998 is not applicable in the present case because their system was created before the enactment of that statutory instrument.
The Judge rejected the Resort’s contentions:
“In relation to the applicable law to the present case, we must look at the Law 42/1998, in which the contentious contract should give the claimants the right to use more than one accommodation, for a fixed price, for more than three years, permanent but without the owner condition, therefore we are clearly facing a contract that confers a personal right to use multiple accommodations for a fixed period superior to three years but inferior to 50 years. This is the type of contract stated as null and void by the article 1.7 of the Law 42/1998. The aforementioned purchase contracts are therefore null and void
About the defendant pleading of the inapplicable law, the judge said it has to be rejected on the grounds that any previous systems similar to timeshare that exceeds the limit by the law should be deemed fraudulent and null and void (art. 1.7); the D.T. 2ª is inspired on the respect of the acquired rights, it covers the timeshare rights acquired before the law came into force according to the agreed system, but in any way allows the rights not transferred to infringe the legal rules; these must respect the new law ( STS 477/2014, 15th January 2015)
The judge found the purchase contract did not comply with the requirements of the artículo 1 Law 42/1998, as the Resort did not provide the description of the different accommodations that consumers could use, nor the real possibilities to make a reservation.
Furthermore, the Judge said that we are in the frame of an unilateral contract, where the supplier (Resort) sets the terms and conditions, without there being real equality between each party. The clients were offered products and advantages without respecting the necessary cooling off period, nor the necessary time lapse between the explanation of the product and the signing of the contract.
The claim was allowed and the judge found the contract null and void on the legal grounds of an infringement of the Spanish Consumer legislation. The same reasoning appears in another case (Sentencia de la Audiencia Provincial de Málaga 7th November 2005) in which the Court of Appeal ruled the contract should be deemed null and void on the grounds that the vendor did not comply his legal obligation in order to provide information to the consumer about the accommodation and services offered.
The Judge also said that the clients were not correctly informed of the contract terms and conditions; the documentation given did not abide with the requirements to ensure the client was informed correctly.
We claimed that Macdonald Resorts had to pay compensation for the delay in the payment, this being, the legal interest of the owed sum since the interjection of the demand until the payment was completed.
- The contract between both parties is deemed null and void, plus any other annexed to said contract.
- Macdonald Resorts must reimburse the clients the sum of 11,839.22 pounds, plus the accrued interest since the 17th of September of 2015 until the payment is completed.
- Macdonald Resorts Spain S.A. Leila Playa Club must also pay the costs incurred in this instance.
For over 50 years, large numbers of British people have been investing their earnings in to a timeshare interest. They enjoyed the security of knowing that they could go back to the same spot each year with the familiarity of a place they can class as a ‘second home’.
So what went wrong?
As the years went by and Timeshare rose in popularity, regulation wasn’t such a big issue, and Timeshare resorts found more and more ways they could extract money out of unsuspecting holiday makers. The schemes became more hair-brained and methods of selling became more aggressive with lots of little details hidden in the small print of contracts that weren’t brought to the buyers attention until they decided they wanted out – and realised they couldn’t.
It is estimated that a large number of Brits are cancelling their timeshare on a daily basis, and last year, the EU ruled that 12% of Timeshare contracts are illegal. No wonder so many people are claiming compensation and refunds when you see how Timeshare law has been breached again and again following the tightening up of regulations.
A report published by the Council of the European Union in January this year states that 38% of consumers who tried to exercise their right to withdraw within the 14 day cooling off period still experienced problems in cancelling their contracts. This high figure shows that there are shortcomings in the enforcement of this provision under the EU Directive 2008/122/EC of the European Parliament
Even the whole ‘points’ system idea is waning with the general public. Why commit yourself to years and years of financial obligations when the variety of holidays available online can compete with the best Timeshare ‘offer of a lifetime’.
It would be nice to say that Timeshare fraud and bad practices no longer exist and it’s true that the industry is a lot more careful about how they sell a contract to consumers, but we see the effects of years of mis-selling and misrepresentation, and judging on the amount of illegal contracts out there as ruled by the EU, we are going to be busy for some years to come.
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Westgate has once again come under fire following their recent defeat over a legal battle alleging high-pressure sales tactics. Their appeal was also turned down by the U.S. Supreme Court.
Now a probe has been launched by Federal Consumer Watchdogs to gather information about Westgate’s timeshare selling or finance tactics. The purpose is to see if Westgate’s sales staff are guilty of violating federal law.
A written statement was given by Westgate’s attorney in response to questions about the probe. “Westgate cannot comment on the pending investigation except to say that it believes that it is in compliance with all consumer protection finance requirements under the CFPB’s jurisdiction,” Saft said.
An order recently released by the Bureau states “Consumer complaints that the Bureau has obtained suggest that sales representatives made statements directly relating to financing.”
Attorney’s representing victims in the Tennessee case against Westgate said that they had also heard complaints from other Westgate clients and Industry watchdog groups have also accused Westgate of hiding important documents in secret compartments of folders, which has been denied by Westgate.
Westgate is well known for its extravagant owners – David and Jackie Seigel and their well-documented history of wealth and troubles, including the drug related death of their 18-year-old daughter last year.
Although the probe is still in the initial stages, documents are been gathered and studied to see if they will investigate further. Having started in September, the federal regulators met a Westgate in October to discuss the extent of the scope and what they were looking at.
Identities of anyone who worked for Westgate on or after September 1, 20012 were requested (except if they just worked as a greeter), although Westage allegedly withheld identities of their staff, according to the Bureau.
Westgate is also arguing that the Bureau should give more specific information about the nature of the probe as it is too broad. The Bureau responded by saying that the probe looks into possible violations of the “Fair Debt Collection Practices Act, the Electronic Funds Transfer Act, the Fair Credit Billing Act, the regulations that implement those laws, or any other federal consumer financial law.
Like many unsuspecting couples, Robert and Jessica Johnson of Massachusetts were taking a stroll along the boardwalk one fine day in August. They were approached by timeshare salespeople who pitched and then persuaded them to buy a vacation ownership at the Ocean Beach Club Resort, which was then owned by Gold Key / PHR Hotels and Resorts.
What the couple did not know was that Gold Key had agreed to sell its timeshare business to Diamond Resorts International, a deal which was worth $167.5 million. The deal was announced on August 17 and was closed on August 19.
The Johnsons are now suing Gold Key in the federal court for $500,000 in damages. This is after they had attempted to get out of their timeshare by cancelling within the seven-day legal cooling off period, and sending a certified letter to Gold Key seeking to void the contract worth $25,450, within this period.
When contacted for comment, Gold Key did not respond to questions. Neither did a spokesman for Diamond Resorts comment when asked about the lawsuit, saying that neither the company nor any of its entities were named on it.
Although the Johnsons say they can’t remember exactly the day they heard the sales pitch, they signed the contract (which was dated Aug 24) on Sept 4 and had it sent back to Gold Key by Sept 8. They say that this is the day they heard about the purchase by Diamond Resorts. They went online and researched the company and then decided to cancel so sent a certified letter with the return receipt signed by Gold Key on Sept 9.
According to the lawsuit, which was filed on March 1, Gold Key has continued to harass the Johnsons with phone calls and demands for overdue bills for a timeshare which they say they cancelled. Although Gold Key has since been bought by Diamond Resorts, the defendants are still named as Gold Key and Ocean Beach Club LLC.
The couple’s correspondence has been entirely with Gold Key, said the couple’s attorney Neil Koslowe. The company even mailed the deed to their timeshare recently, which he considers strange considering the sale was last year.
Koslowe defends the half a million in damages sought in consideration to the lower price of the timeshare by saying that it’s to act as a deterrent.
“If you ask for $10, they won’t stop doing it,” he said.
Louis Wolff, an 81 year old man has claimed in court that he has been a victim of credit card fraud and been charged over $50,000 for ‘membership services’ by Diamond Resorts International.
Wolff, who sued Diamond Resorts on March 8 in Superior Court, claims that he suffered abusive sales pitches on the phone as well as in person, which lasted for up to five hours. He said that DRI and six affiliates used high-pressure sales tactics to open credit cards in his name and run up bills on them before he had even realised what was going on. Despite the $50,000 DRI took from him, he says he was continually harassed for upgrades to his membership.
Wolff’s attorney, Eric Ridley said “He’s just a senior, with sort of the normal cognitive challenges that comes from being a senior. You get to an age where you become more susceptible, more trusting and maybe a little less discerning. It’s not uncommon thing.” Ridley continues to say that his client is typical of many people his age, in that they are more susceptible to high-pressured sales meetings, which can be overwhelming for them and can make them give in much more easily to pressure.
Ridley said that Diamond Resorts send buses to elderly peoples’ communities to take them to Nevada. Once they get a name, there will be a huge influx of phone calls to get them to buy. Wolff says that this is what had happened to him.
On their website, Diamond Resorts state that they have a different way of selling. They sell points, which can be used to stay in a number of the company’s resorts. However, there seems to be a common complaint amongst members that that the points go down in value or even disappear if they are not used quickly enough or that they never seem to have enough to acquire the holiday they want.
One Diamond timeshare owner says that “Diamond is much more ambitious, aggressive and downright nasty in their sales presentations compared to Marriott and Westin. Diamond just has an amazing reputation of being tough on people.”
A 77 year old Grandmother from California was passed a voided receipt for a $4,840 charge to her credit card. Diamond were so sure she would upgrade during the 5 hour high-pressure sales meeting that they charged her card in advance, even without her approval.
Thanks to consumer protection laws in California that protects seniors, Wolff is seeking compensation, rescission of contract, and punitive damages for elder abuse, unfair business practices and fraud.