The concept of timesharing vacation property is a relatively recent phenomenon. Timesharing is defined generally as “joint ownership or rental of property (such as a vacation condominium) by several persons who take turns occupying the property.”1 Wisconsin has created its own statutory definition for timeshares.2
Timeshare sales presentations tend to be arduous, hard-sell experiences for consumers. This article provides an introduction to timeshares, describes a typical sales presentation used to sell timeshare vacation interests, and reviews some of the most effective statutory remedies available to Wisconsin lawyers to obtain relief for those defrauded.
The Nature of Timesharing
Vacation timeshares come in many varieties, originally consisting most commonly of the right to vacation at the same location during the same time every year. More recently, the most common type of timeshare provides for the theoretical right to vacation at multiple locations at different times of the year. Some timeshares are tied to a specific piece of real property and others are not. Some vacation timeshares are simply memberships in clubs. The current trend is the sale of symbolic “points,” which are sold under the premise that the owner can use the points at a multitude of resorts at the time of the owner’s choosing.
Mary Catherine Fons, Marquette 1984, has operated the Fons Law Office, Stoughton, since 1994. She represents consumers who experience unfair, deceptive, and predatory sales practices, debt collection practices, and other economic practices in the marketplace. Reach her by phone at (608) 873-1270.
Popular tourist areas in Wisconsin, such as the Wisconsin Dells and Door County, have, since the 1980s, been the locations of many timeshare properties. Timeshare sale prices often range from $10,000 to more than $100,000, and the price does not include the cost of perpetual annual maintenance fees. Timeshares are usually sold within hours of the customer first learning about the product.
Traditional methods of advertising, such as television, radio, billboards, and print ads, are almost never used to sell timeshares. Instead, timeshare sellers market timeshares by targeting consumers individually with the promise of a gift, in exchange for attendance at what is usually described as a 60- or 90-minute presentation or informational meeting. The promised gifts range from restaurant gift certificates or credit card merchants’ gift cards to resort stays and three-night cruises. This sales and marketing method has been used by timeshare sellers in Wisconsin and around the country for more than 30 years. The structure of the presentations consumers attend to receive the gift have not changed significantly during that time and, although customized to an extent to respond to each consumer’s particular circumstances, all follow the same general pattern.
Structure of a Timeshare Sales Presentation
A typical timeshare sales presentation3 proceeds on a recognizable path. One sales representative (being paid strictly on commission) is assigned to each couple who has agreed to attend in exchange for a gift. Many sales reps and consumers paired together meet individually in a large sales room at individual tables. There is a lot of talking, noise, and activity in the sales room. Each sales rep first spends a good deal of time “getting to know” the couple he or she is matched with by asking questions about their families, work, and vacation habits, and then claims some common link with the couple on one of these topics in an attempt to form a bond on that topic.
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Some examples of this technique are that the sales reps claim to have been in the business or industry one of the consumers works in or to have served in a branch of the military the consumer served in or to be vegetarian like the consumer or to have the same rare disease as the consumer. The consumers will be asked to reveal what a dream vacation would be for them, and the sales rep will explain that the program being sold will get the consumer on that dream vacation, whatever it is.
The sales rep may talk about vacations he or she claims to have been on using the timeshare program being sold and often has photos to show of the family vacations. Sometimes another sales rep will appear who, coincidentally, has just gone on the consumers’ dream vacation by using the timeshare product being sold. The sales rep will usually describe the ease of using the timeshare, claiming that it will take only one phone call, or one attempt at an online reservation, to be able to vacation virtually anywhere at any time. The sales rep usually talks in vague general terms about the value of “owning” this, whether it is one week every year, a membership, vacation points, or club membership. Potential customers are usually given a tour of the property and the top-level accommodations.
Up to this point there has been no discussion of the cost of what is being sold. Instead, the sales rep will work hard to get the consumers to make an oral commitment that they are interested in what they have been told and shown so far. Only after getting the oral commitment will the sales rep mention a price.
If the consumers balk at the price, the sales rep may disappear to talk to a manager and come back with a reason why the sales rep would be able to get the consumers a discounted timeshare if they act quickly. Some of the oft-stated reasons for the discount available just at that moment are that someone just died to make that timeshare available, someone just traded it in, there is a deal only for that day, the salesperson is a big shot who can finagle things for the consumers, or the seller had been offering a lower price earlier that week or month or year and the sales rep will, or did, beg his or her manager to allow him or her to offer the consumer that deal now.
Countless complaints have been filed with state and federal consumer protection
agencies against timeshare sellers and myriad lawsuits (individual and class
actions) have been filed in state and federal courts.
If after these tactics the consumers are still balking at making a purchase, the sales rep will explain that the consumers must meet with the rep’s manager because the manager will be aware of even better deals that are available. The manager will come over to the table where the sales rep and the consumers have been sitting and start upping the ante and the pressure, offering additional incentives or seemingly better prices to encourage the consumers to make the purchase immediately.
Consumers have reported being the subject of open ridicule by managers for not being smart enough to recognize the great deal being offered. Others report the manager using tactics such as playing one spouse against the other (“you can see your husband wants to buy this, why would you stop him by not also agreeing?”) or openly shaming one partner (“doesn’t your wife deserve to go on nice vacations?”). As the promises and pressure mounts, it is very common for folks to be kept four, six, and eight hours for the 60- to 90-minute presentation they agreed to attend. Often much time is spent investigating and waiting to learn whether the couple will be lucky enough to be granted credit for the purchase even when the timeshare seller actually does not have any credit requirements and anyone who agrees to buy is allowed to buy or arranging credit terms or a credit card for the consumers for a down paymentor for the entire purchase price.
The entirety of a timeshare sales presentation commonly consists of spoken representations made to the consumers. It is only after the consumers orally agree to make the purchase that the staff prepares dozens of documents for the consumers’ signatures. The documentation is presented as an afterthought – and treated that way – rushing the consumers through the signing in a small fraction of the time it took to make the oral presentation. The customers are often exhausted and hungry when presented with documentation that commits them to pay a sum of money usually exceeded only by a house or auto purchase and also commits them to perpetual yearly maintenance fees, which increase regularly.
The purchase frequently involves a 10-year payment schedule pushed on the consumers in two to eight hours of nonstop chatter and confusing talk. The transaction documentation usually contains a provision somewhere in one of the dozens of documents presented that provides that the consumers are not relying on any spoken statements by the sales staff for their decision to make the purchase, when in reality the consumers are relying solely on the spoken statements made by the sales staff, because the entire sales presentation was made orally.
Common Complaints Resulting From Timeshare Sales
Given the way a typical timeshare sales presentation proceeds, it is not surprising that countless complaints have been filed with state and federal consumer protection agencies against timeshare sellers and myriad lawsuits (individual and class actions) have been filed in state and federal courts. Many of the complaints describe the use of high-pressure sales tactics and allege that during the sales presentations timeshare salespeople intentionally lied to make sales. Common complaints about the sales presentation include the following:
The ease of making reservations was misrepresented.
The total cost of the timeshare was misrepresented.
The customer’s ability to use the timeshare as described was misrepresented.
The value of the timeshare was misrepresented.
The salesperson lied about personally owning and vacationing using a timeshare with the company he or she is selling for.
The timeshare company lied about the fact that it will help resell the timeshare or buy back the timeshare.
The sales staff misrepresented that the annual maintenance fees can be offset or completely eliminated using various methods.
The length of time required to be at the sales presentation to get the promised gift was misrepresented.
The sales staff misrepresented that the deal being offered to the consumer was good only for that day.
Many of the misrepresentations are either not memorialized in the documentation or contradict the documents customers are required to sign. Many customers do not discover that they were lied to until long after the sales presentation.
Conducting a Thorough Investigation
Timeshare fraud cases are labor intensive because of the need for attention to detail and the large number of documents involved. Before deciding whether to represent potential clients, it is important to conduct a thorough interview to learn all the facts surrounding the solicitation and sale of the timeshare, as well as all post-sale dealings the potential clients had with the timeshare seller. The initial interview can last hours because it is important to learn all this information. Reading and analyzing the documents is also a lengthy process. Each transaction includes multiple contracts and addenda, financing documents, disclosures, booklets, pamphlets, and catalogues, among other documents. Often consumers sign more than two dozen separate documents as part of a timeshare transaction.
The investigation should cover all the following:
1) Where was the sale made? Does the transaction involve Wisconsin law or the law of another state or country? If the timeshare was not sold in Wisconsin, will long-arm jurisdiction allow a lawsuit here because of significant contacts of the seller with Wisconsin?
2) Where was the sale solicited? If the timeshare was not sold or solicited in Wisconsin, can a lawsuit be brought here or should the case be referred to a lawyer in another state?
3) What happened? Do an extensive interview with the potential clients. Make sure to get all the documents. There will be solicitation letters, contracts, addenda, lists, rules, membership applications, certificates, receipts, catalogues, prize certificates, several-hundred-page books with required disclosures, and more.
4) Are there any agency enforcement actions? Investigate the practices of the specific resort and the industry in general. If the resort is in Wisconsin, check with the Department of Agriculture, Trade and Consumer Protection and the attorney general to see whether there is a past enforcement order against the resort. If the resort is in another state, check with that state’s consumer protection agency for enforcement orders. Check any consumer complaints made against that resort in Wisconsin or elsewhere.
5) What was sold? Is it real estate? Is it a specific week each year, a club membership, campground resort membership, vacation points, or something else?
6) When was the sale made? Investigate the timing for any remaining statutory right to cancel, to dispute charges, and to file suit. Check all statutes of limitation for possible claims.
Claims That May Arise From a Timeshare Sale
Many legal claims could result from a typical timeshare sales presentation. The Wisconsin consumer protection laws that can be used most effectively to combat fraud in timeshare sales are found in Wis. Stat. chapter 707 (timeshare ownership); Wis. Stat. section 100.18 (fraudulent representations made during the sales process); the Wisconsin Consumer Act, Wis. Stat. chapters 421-427 (consumer credit transactions) or, in the alternative, Wis. Stat. chapter 428 (first lien real estate transactions); Wis. Stat. section 100.20(5) and some of the Wisconsin Administrative Code regulations promulgated under that statute; and Wis. Stat. section 100.171 (the offering of gifts in order to induce attendance at sales presentations). Each of these is addressed briefly.
Timeshare Sales. First, Wis. Stat. chapter 707, titled “Timeshare Ownership,” governs the sale of timeshares.4 It is important to read and become familiar with all of chapter 707 and to use it as a checklist to determine if the timeshare seller complied with or violated each of the provisions. Pay particular attention to the following:
1) Wis. Stat. section 707.55: Prohibited sales practices. This section was drafted to prohibit some of the most common abusive practices used at timeshare sales presentations. For example, sellers may not make false or misleading statements, misrepresent the resale value, represent the timeshare as a financial investment, make assertions of material fact that are inconsistent with the written documents, or have the buyers waive their rights or certify the absence of any misrepresentations.
2) Wis. Stat. section 707.53: Warranties. Warranties are created by statements made by the sales staff with regard to the timeshare, such as promised improvements, or the right to use facilities.
3) Wis. Stat. section 707.46: Minimum contract requirements. There is no valid contract unless the six provisions listed are included in the contract documentation.
4) Wis. Stat. section 707.06: Unconscionability. This section contains a nonexhaustive list of factors a court can consider to determine that the contract, any conduct, or any result of the contract is unconscionable.
5) Wis. Stat. section 707.57: Remedies and penalties. The private remedies are “appropriate relief, including but not limited to damages, injunctive or declaratory relief, specific performance and rescission,”5 costs, disbursements, and reasonable attorney fees.6
Fraudulent Representations. A second very effective tool to deal with timeshare sales fraud is Wis. Stat. section 100.18: Fraudulent Representations. Section 100.18 is often referred to as the false advertising law and can be summarized as the “don’t lie about the stuff you are selling” rule. It contains very broad prohibitions on making untrue, misleading, or deceptive representations or statements while trying to sell a product or service.7 Private remedies to the consumer include recovery of his or her pecuniary loss, costs, and reasonable attorney fees.8
Wisconsin Consumer Act; Security Interests. The third statute that a lawyer should review when considering whether any consumer protection laws were violated during a timeshare sale is the Wisconsin Consumer Act, Wis. Stat. chapters 421-427. Provided that the transaction meets the other coverage requirements for the WCA, for example the amount financed or the cash price was less than $25,000,9 one of the parties was an individual (not an organization) who sought to acquire the product for a personal, family, or household purpose,10 and the transaction was not “secured by a first lien real estate mortgage or equivalent security interest,”11 there are many protections for timeshare sales transactions contained in the WCA. Special attention should be paid to these:
1) Wis. Stat. section 422.304: Prohibition on blank writings. All essential provisions must be filled in before signing.
2) Wis. Stat. section 422.416: Referral transactions prohibited. The seller is prohibited from using future rewards for referring other potential customers as an inducement to the timeshare sale.
3) Wis. Stat. section 422.411: Attorney fees. Terms requiring payment by the consumer of attorney fees are prohibited.
4) Wis. Stat. section 422.303: Form requirements. This section specifies mandatory disclosures.
5) Wis. Stat. section 425.107: Unconscionability. This section contains a nonexhaustive list of factors a court can consider to determine that any aspect of the transaction, any conduct, or any result of the contract is unconscionable.
Depending on which WCA provision has been violated, various remedies are available to the consumers, which include voiding the transaction, actual damages, statutory damage penalties, costs, and reasonable attorney fees.12
If the WCA does not apply to the transaction because the transaction was secured by a first lien real estate mortgage or equivalent security interest, check Wis. Stat. chapter 428: First Lien Real Estate and Other Mortgage Loans, for the consumer protections contained in that chapter. Two examples are Wis. Stat. section 428.103(1)(c)1., which provides that the list of prohibited debt collection practices set forth in Wis. Stat. chapter 427 applies to these transactions, and Wis. Stat. section 428.103(1)(e), which provides a limit on charging attorney fees to the buyer. Remedies for violations of Wis. Stat. ch. 428 include statutory penalties, costs, and reasonable attorney fees.13
Unfair Trade Practices. A fourth place to look for consumer protections that may assist consumers dealing with timeshare sales fraud is in Wis. Stat. section 100.20: Methods of competition and trade practices. Specifically, Wis. Stat. section 100.20(2) provides for DATCP to issue general orders forbidding unfair trade practices. Those orders are set forth in the Wisconsin Administrative Code ATCP regulations. Two such orders that apply to many timeshare sales practices are chapter ATCP 121 on the use of referral selling techniques and chapter ATCP 127, which governs direct marketing (telephone solicitations, mail solicitations, and face-to-face solicitations). Review each order in its entirety and use it as a checklist to determine if the timeshare seller complied with or violated each provision.
If the timeshare seller violated one or more provisions in the Wisconsin Administrative Code ATCP regulations, and thus violated Wis. Stat. section 100.20(5), a consumer is allowed to recover twice the amount of the pecuniary loss that resulted from the violation, together with costs and reasonable attorney fees.14
Prize Notices. A fifth statute to review to determine if the timeshare seller violated Wisconsin consumer protection laws is Wis. Stat. section 100.171: Prize notices. Among other requirements, the prize notice statute sets forth detailed written disclosure requirements for timeshare sellers who represent that consumers will receive a gift for attending a sales presentation15 and requires that the gift be given to the consumers before the sales presentation begins.16 Remedies include an award to the consumer of the greater of $500 or twice the amount of the pecuniary loss suffered because of the violation, costs, and reasonable attorney fees.17
The marketing and sales techniques and tactics used by timeshare sellers have remained relatively constant for the last 30 years. The main emphasis placed on a highly structured, lengthy, one-on-one sales presentation given in a closed, pressured environment has led to consumer fraud claims and the need to establish consumer protections for individuals in those situations. Any lawyer willing to become knowledgeable about the industry and its practices, as well as the remedies available, will be in a good position to assist consumers who have been the target of any of the industry’s predatory practices.
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What have you been doing when not practicing law?
I have been a huge – some might say rabid – fan of Bruce Springsteen and the E Street Band since I went to my first concert in Barcelona in 1981. Attending Bruce’s live shows brings me unmitigated and absolute joy. A few years ago I decided that if I ever had the opportunity I would attend as many concerts as I could fit in my life and work schedule.
Luckily for me, Bruce and the band went on a world tour recently. And so did I. Between January 2016 and February 2017, I attended 19 Bruce Springsteen and the E Street Band concerts in six countries on four continents. My 25-year-old son Lukas – also a huge fan – attended many shows with me, and friends went to shows with me across the globe. Every day was a marvelous adventure!
Mary Catherine Fons, Fons Law Office, Stoughton.
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1 Blacks Law Dictionary (7th ed. 1999).
2 Wis. Stat. § 707.02(24).
3 The author is presenting a description of a typical timeshare sales presentation based on an amalgam of the hundreds of such presentations described to her by her clients.
4 Wis. Stat. ch. 707.
5 Wis. Stat. § 707.57(1)(a).
6 Wis. Stat. § 707.57(1)(b).
7 See Wis. Stat. § 100.18(1).
8 Wis. Stat. § 100.18(11)(a)2.
9 Wis. Stat. § 421.202(6); see generally Wis. Stat. § 421.202.
10 Wis. Stat. § 421.202(10), (17).
11 Wis. Stat. §§ 421.202(7).
12 See applicable violation section and matching remedies section in Wis. Stat. sections 425.301-.311.
13 Wis. Stat. § 428.106.
14 Wis. Stat. § 100.20(5).
15 Wis. Stat. § 100.171(2).
16 Wis. Stat. § 100.171(4).
17 Wis. Stat. § 100.171(9).