March 12, 2024
Westgate Resorts and other timeshare Developers have been sued, accused of violating the Military Lending Act (MLA). Congress passed the Military Lending Act (MLA) in 2006 to protect servicemembers from predatory lending. Today we summarize fourteen reports received from military families that experienced security clearance concerns due to a timeshare loan default. At the crux of the matter is whether a timeshare is a residential stay or a transient stay. Arbitration is prohibited under the Military Lending Act, but home mortgages are exempt. Developers vigorously argue for arbitration.
By Irene Parker
Last week we delved into Steines v. Westgate in advance of Oral Arguments to be held at the Eleventh Circuit Court of Appeals on April 18. More than a few active duty service members have found their security clearances in jeopardy if forced to default on a timeshare loan. Those who serve have lifestyles and circumstances that make buying a timeshare more perilous than for the average buyer. Defaulting on a loan isn’t pleasant for anyone, but for a member of the military, a loan default can be catastrophic. The loss of a security clearance can lead to involuntary separation from service.
Today’s non-deeded, right-to-use timeshare points bear no resemblance to actual real estate. Deeded fixed weeks maybe, but with floating weeks, the argument weakens - that a timeshare stay is the same as a residential stay.
The Florida Real Estate Commission (FREC) categorizes point buyers as leaseholders, explaining in one Florida pre-license real estate course that, concerning non-deeded points, “the Developer retains actual ownership of the properties.”
Information Provided by the Federal Trade Commission:
But we also know that — whether it’s the steady paycheck, frequent relocations, or other aspects of military life — scammers target servicemembers and their families. In 2022, military consumers reported over $414 million in losses to fraud. Take a minute to consider the mottos of our military services: Always Faithful (Marine Corps), This We’ll Defend (Army), Aim High…Fly-Fight-Win (Air Force), Always Ready (Coast Guard), and Always Above (Space Force). Honor and duty are drilled into servicemembers from the minute they start boot camp.
https://consumer.ftc.gov/consumer-alerts/2023/06/time-help-your-buddies-0?utm_source=govdelivery
There are also many veterans who maintain security clearances because of working post-active duty service in a military related capacity. At the Steines v. Westgate Oral Arguments at the Florida District Court, a witness for Westgate testified that Westgate gives away 1,500 weekend stays a year, in appreciation of veterans. He mentioned that a few of their executives are veterans. I wished I could have raise my hand, because I had recently spoken with a veteran who served in military intelligence. He works at the Pentagon and his position requires a security clearance. Westgate denied him a hardship release despite being on a lung transplant waiting list:
I am a 100% disabled combat Army veteran. I served 24 years overseas in Iraq, Bosnia, and Afghanistan. Since my return, I have experienced more stress being in the US than being in war. In 2021 we bought a Westgate timeshare for $20,000, financing $19,305. My combat-related medical condition includes idiopathic pulmonary fibrosis, a fatal lung disease. My only option is a lung transplant, but in order to be moved up on the transplant wait-list, I have to be on a ventilator. Our agents promised that if we did not want to continue with the property, we could request to get out of the loan with no penalty. They also said we could offset the cost of the property by renting the timeshare out and they would assist us with the process. We had to stop loan payments. We filed a complaint with the Florida Attorney General on April 1, 2022, through the Military and Veterans Assistance Program. The Attorney General responded that there was no misrepresentation. Our promised 90-minute presentation lasted six hours. I suffer from PTSD and TBI.
David Seigel and "Queen of Versailles" Jackie Siegel, Westgate Owners
https://www.youtube.com/watch?v=AdJYzgJ4CwI
Fourteen Active Duty Military Timeshare Buyers
1) John in Illinois has served 19 years with the Army National Guard. John’s wife, Gabby, is a veteran who will be caring for their children when John is deployed for a year to Kuwait. National Guard members carry an additional burden. When deployed, they may have to leave a high-income job, replaced by lower pay received during deployment.
Gabby's July 8, 2024 Timeshare Solution or Surrender interview:
https://podtv.tv/timeshare-showcase
The person who sold John’s family a Hilton Grand Vacation timeshare didn’t deceive them. Their circumstances changed. However, John had no choice but to default because the only option offered was to adjust payments. John’s income will decrease by about $40,000 when deployed.
According to John,
The Hilton representative we spoke with said there was nothing they could do for us if we have not paid off at least half our loan amount. My income is high now only because I have been working a lot of overtime for a contractor. With our credit cards, home loan, and personal loans, we cannot make ends meet.
We bought a one-week studio unit at Las Palmeras in Orlando with 3,000 points at a Hilton hotel in May of 2018. We paid around $20,000 and financed $17,552. Our loan payments were $200 per month. My wife was approved for $5,000 for an AMEX card.
We received a call in 2021 from someone at Hilton who told us we could upgrade our studio unit to a 2 BR unit with 8,000 points. We have two children. They said this was a special offer. Most importantly, they said the increase in our loan payment would only be an extra $100 per month. The purchase price for the upgrade was $23,992. That loan balance is $21,045, financed at 15.60% but when we cancel the auto-payment, our interest rate will increase to 17.59%. The contract documents for the upgrade said that the loan payments would be $200 a month more, not $100.
Note: It is advisable to notify your NCO before defaulting.
2) and 3) Amanda and George - the first active duty members in 2017 (Resolved)
In 2015 we purchased 15,000 Diamond US Collection points in Virginia for $63,232. We were told by the SUPERVISOR, that we would have no problem getting a lower interest rate since we were in the service. All we would have to do is supply the lender with “duty orders” and it would go down to 1.5% as long as my husband was stationed overseas. We later learned that wasn’t true and banks don’t finance timeshares. Our loan balance (in 2017) stands at $42,159.68, financed at 14%. Our monthly loan payment is $856.52.
In 2016 we attended a meeting in Florida because we had a life change and could no longer afford loan payments. We wanted to relinquish our ownership per the buy-back program that they said they had when we purchased. The account representative said they did not have this program. Jose, the Supervisor, recommended we buy more points as that would lower our maintenance fees by taking back the trial product we had previously purchased. They said we had to transfer our Virginia points to Florida because we live in Florida now. It cost $4,898 to do the transfer. We later learned there is no such thing as Florida and Virginia points. Our sales rep, Joaquin, promised to help resell our points if needed. After a few calls and emails, I was ignored. What wasn’t true:
1- The timeshare is an INVESTMENT, tax deductible and could sell for a profit,
2- We could rent the timeshare for additional income,
3-We could refinance at a lower interest rate with any financial institution,
4-The sales agent would be a personal counselor to help us rent our timeshare
4) Taya, active duty Army, was our inaugural guest on Timeshare Solution or Surrender, appearing on February 26, 2024 to explain the Servicemembers Civic Relief Act, According to the Act, Taya is eligible for a 6% interest rate on her Wyndham timeshare loan. Wyndham told Taya she only needed to submit her duty orders to proceed. She has sent Wyndham 74 emails since September. The last response was that it had been escalated. Taya is not the type of person to surrender without a fight.
https://tarda.org/blog/44-lawsuits/218-yorks-fissix-vs-wyndham-class-action-the-military-scra
5) Valerie, active duty Air Force National Guard, 25 years served, likes her Wyndham points and wanted to work towards becoming a silver loyalty member. She told her sales agent she could not afford to do this right now. He told her after her paperwork was completed she could contact Wyndham and they would lower her interest rate to 6%. Valerie remembered something about this (the SCRA), so did not question it, but later learned the high interest rate loan had to be borrowed BEFORE entering service.
6) A Navy Chief Petty Officer, currently deployed in Japan, sought release from Tahiti Village, a Soleil Management resort. According to statements made by Soleil’s agents, they will not take a timeshare back under any circumstances. The officer paid a timeshare listing agency Soleil recommended $600, to no avail. In November of 2021, he paid an exit company $2,800 and has received nothing but email updates.
7) A Homeland Security agent, and a Marine veteran, with 26 years served, resolved his dispute by working directly with his resort.
8) Active duty Navy, 12 years served, a father of four, purchased a minimum number of Diamond Resort timeshare points for $12,000. They paid an exit company $6,000. They lost in arbitration resulting in a $66,000 judgment against them. The judgment included the resort’s attorneys’ fees. “The presentation lasted seven hours with six agents. They said we had to make our decision that day. Our children were restless. We were told this was an investment that would help us when we bought a home. The agent said he was giving us a great deal because we are military. Riding back to my room, I asked the agent and her fiancé, ‘If I change my mind tomorrow what happens?’ They said it was too late. I signed on the dotted line. I later learned I had five days to cancel. We were not given a copy of the contract, only a tablet that did not work well. They mailed the documents. Upon review, I learned that the interest rate is astronomical.”
9) Active duty Navy, 18 ½ years served, in 2019 we purchased Diamond points for $36,034, financing $32,000: We repeatedly told our sales agents we could only afford $1,500 in maintenance fees. They said if we purchased additional points, we would be eligible for a program to offset 50% of the fees by charging purchases to the resort’s Barclaycard, but it turned out this would only offset fees by 1%. We were offered a settlement of $16,000, half our loan amount. We refused. We would have to borrow the money. We were not given a copy of the contract, only a tablet, but the tablet did not work. The mortgage agent and manager said they would send the documents. We never received them. We charged the $4,000 down payment to their Barclaycard believing this would offset about half of our maintenance fees. A Barclays rep said that was not how it works. I had a breakdown and hung up the phone. We are a single-income family and I will be deployed this year. One of my children has special needs.
10 and 11) both active duty Air Force. “We purchased Holiday Inn Club Vacation (f.k.a. Orange Lake) points multiple times. We were first told in 2016 that the timeshare would be easy to sell back because we are military. In August of 2021, in Tennessee, we complained about rising maintenance fees. We told this sales agent that ALL agents said we could sell back. She said we could not and that we would have to hire lawyers to get out. She said the only way to lower maintenance fees was to combine our three contracts. This required buying more points we did not need. We owe an estimated $75,000 for one contract and $50,000 for the second. Fees increased even though we were told they would decrease. We used to use the points two or three times a year but due to deployments, we can only book about once a year.
12) A Homeland Security agent, a Navy veteran, resolved his dispute. He spent a considerable amount of time trying to convince his Collection Agent that, since he has degree in criminal justice, he had been researching timeshare complaints and wanted to share his information. When he got home from work sometimes he would send 50 tweets to resort executives. His dispute was resolved, his loan canceled.
13) Active duty Air Force National Guard, 8 ½ years served, a family of three: “In September of 2021, we bought a 4 BR Westgate Resort “Unlimited Getaways” week for $50,954.42, financing $44,711.19.
Andrew and Brooke's July 8 and July 16 interviews:
https://podtv.tv/timeshare-showcase
We were told about an owner who rents her unit online with AirBnb. They talked about unlimited Getaways that we could buy and sell to others. The agent said there was a loophole so that we receive the income. They explained that the variable rental rate was $49 to $399 per week, but we could turn around and rent it out for around $1,000 or whatever the market bears. My fiancé attempted to find renters, but there were too many extra fees and obstacles. Our sales agent told us they had a deal because someone was giving up a unit. They said if we ever wanted to sell we could as the original price was $75,000. Before we signed documents, our sales agent said not to mention anything that was discussed.”
14) Marine active duty served 9 years: “We purchased a 2 BR Westgate Vacation Villa in Kissimmee in 2021. Our sales agent told us military members often buy timeshares. We were concerned about not being able to use it when deployed. They said no problem because we could rent the timeshare out and use the money to pay our mortgage or fees, or we could sell the timeshare. We were offered a timeshare that was a little over $24,000. We declined. We were told to sit tight. The agent came back with a man ‘in charge of the military department’ who stated that they had just bought back a unit from a service member with a mortgage paid down to $12,000. We didn’t have the money for a down payment. They offered to set up a payment plan to finance it. We learned they don’t buy back timeshares. The purchase price was $12,230.09 and the amount financed was $10,650.”
The Armed Forces Disciplinary Control Boards and Off-Installation Liaison and Operations
If base commanders would take the time to review our report, they should agree - timeshare presentations should be made off-limits, like PayDay loans. An Armed Forces Disciplinary Control Review Board publication lists 12 reasons that justify why an entity should be deemed off-limits. Provision 11 is unfair commercial or business practices (2-4).
Army Regulation 190–24
OPNAVINST 1620.2A
AFI 31-213
MCO 1620.2D
COMDTINST 1620.1E
Military Police Chapter 2, 2–1. Establishment of Armed Forces Disciplinary Control Boards
The AFDCBs may be established by installation, base, or station commanders to advise and make recommendations to commanders on matters concerning eliminating conditions, which adversely affect the health, safety, welfare, morale, and discipline of the Armed Forces.
Armed Forces Disciplinary Control Board: The Marne Minute
https://www.dvidshub.net/video/869696/marne-minute-armed-forces-disciplinary-control-board
Related Articles
The FTC cracked down on exit companies that swindled more than $90 million from timeshare members desperate for release:
The FTC sanctioned a Mexican cartel distributing fentanyl and timeshare exit scams throughout the US, falsely promising a buyer:
https://home.treasury.gov/news/press-releases/jy1315