If you have been kicking yourself and considering a name change to “sucker” for buying a timeshare while on vacation at that nice resort — but you can never actually book a hotel stay — then today’s story will make you feel less guilty.
As I have written over the past several years, when you are having the time of your life at a lovely destination, attend a sales presentation and buy a timeshare, thinking, “How nice it would be to come back here again and again,” this is often the single worst financial decision you could ever make.
Buy it today, new from the developer, for $25,000, and tomorrow it is virtually worthless, a gleaming white elephant that you can’t give back and no one wants — and you are stuck with the yearly “maintenance fees and assessments” that never end and are well over $1,000.
(I will point out that timeshares are available on the resale market today for a tiny fraction of the original selling price — even for $1 — if you really want one.)
As a result of the morally bankrupt companies that run many timeshares and one enabler — the Better Business Bureau gives some of them an A grade— when you try to book a resort stay, nothing is ever available. In a moment, you’ll see why.
Won a trip to Las Vegas
Today’s story began late last year when two sales associates and their families from a Midwest industrial paper supplier were awarded a week’s stay in Las Vegas. Their employer phoned me, explaining, “I had to fire one other sales associate for dishonesty, and he was a friend of the two guys. After being let go, he returned home to Las Vegas. When my employees checked into their hotel for their stay, who should they run into, but the jerk I fired, and he was selling timeshares at their hotel! He conned them both into buying a timeshare! And they have never been able to book a resort stay. Why is this, Mr. Beaver?”
Owners can’t book a stay, but others can on travel sites
In a 2022 class-action lawsuit filed in the Delaware U.S. District Court against Wyndham Vacation Resorts — the world’s largest vacation ownership business — a former executive, Danielle Henderson, turned whistleblower on why its timeshare owners were often unable to book a stay. Her position was eliminated after bringing “this integrity concern” to the attention of the company’s CEO.
I have summarized her sworn declaration for length: Wyndham misappropriates owner inventory for its own financial gain, severely reducing the availability of accommodations and resulting in an inability to reserve on its website, but giving it to other, publicly accessible booking sites, like Expedia. Senior leadership is aware of this issue, yet continues to force owners to remain in their contracts even while knowing these business practices are the direct causes of the problems being experienced by owners. None of this is disclosed before timeshare purchase agreements are signed.
“Throughout the timeshare industry, this fraud has been known for years,” observes attorney Mike Finn of Finn Law Group in St. Petersburg, Fla. Finn is one of a handful of attorneys in the country who concentrate on timeshare law. “As access to your timeshare is based on availability, this means that you are competing with members of the public to use something that you’ve (already) paid for, but the public have not paid a thing for (yet) — they can get it, and you can’t because it often is not available to the timeshare owner!
“So, when they realize what’s going on and that their first chance to use the timeshare could be a year or two away, people try to cancel. But (by then), it is well beyond the cancellation period spelled out in the purchase agreements! It is truly maddening.”
OK, so I’ll just hire a timeshare exit company
We’ve all heard the ads for timeshare exit companies. Finn correctly warns that virtually all are not run by attorneys and that people should steer clear of them — a point I agree with. Each one I looked into proved to be a scam.
Chances are, you’ve heard a catchy but misleading radio spot by Chuck McDowell, CEO of Wesley Financial Group, who incorrectly tells us “the ugly truth about timeshares.” He states in the ad, “Even when you die, your family will be stuck with this burden.”
A day of reckoning is coming for timeshare companies
If you’re thinking, “Why has no one gone after timeshare developers with class actions?” Well, the Timeshare Law Firm, a national law firm based in Melbourne Beach, Fla., is filing a class-action suit against some of the largest in America. Its website shows which ones they are.
To see how the BBB grades the timeshare companies on the Timeshare Law Firm list, visit www.bbb.org and do a search. Some of the companies have been given D or F grades or are not rated, but others have gotten A’s.
See my article Best Way to Exit Your Timeshare: Never Buy One in the First Place for some advice on how to best buy a timeshare if you really want one and how to go about getting out of a timeshare you’ve already bought.
After attending Loyola University School of Law, H. Dennis Beaver joined California's Kern County District Attorney's Office, where he established a Consumer Fraud section. He is in the general practice of law and writes a syndicated newspaper column, "You and the Law." Through his column he offers readers in need of down-to-earth advice his help free of charge. "I know it sounds corny, but I just love to be able to use my education and experience to help, simply to help. When a reader contacts me, it is a gift."
Capital Gains Tax Exclusion for Homeowners: What to Know
Tax Breaks The IRS capital gains home sale exclusion can be a valuable tax-saving tool if you’re eligible.
By Kelley R. Taylor Last updated
Kiplinger's Mutual Fund Guide For 2024
Giant U.S. tech stocks dominate many of the top-performing names in Kiplinger's mutual fund guide, but small and foreign companies are well represented too.
By Nellie S. Huang Published
The Three Basic Components of a Good Estate Plan
Getting your estate in order so everyone knows what you want when the time comes can save your loved ones confusion and stress.
By Jason “JB” Beckett Published
Is Your Financial Adviser Listening to You?
Survey finds financial advisers and their clients might need to break out the talking stick. Repetition and summarizing are key to ensure your points are heard.
By Suzanne Norman, CIMA®, CPCC Published
Did You Get a Cash Windfall? The Case for Doing Nothing
An inheritance or lottery win can be a stroke of good fortune, but if you mismanage your funds, you could end up worse off than before your windfall.
By Samuel V. Gaeta, CFP® Published
How to Use Your Estate Plan to Save Tax Now: A Timely Update
Consider an upstream basis trust and a general power of appointment for an older family member to reduce capital gains taxes on highly appreciated assets.
By John M. Goralka Published
Three Common Mutual Fund Misconceptions Debunked
Mutual funds let investors access a basket of securities rather than buying individual ones on their own, but there are some misconceptions about them.
By Brian Spinelli, CFP®, AIF® Published
529s: No Longer the Ho-Hum Investing Device for College
Changes to the plans allow for the savings to be rolled into a Roth IRA, as long as certain rules are met, if a child decides not to pursue their education.
By Neale Godfrey, Financial Literacy Expert Published
To Make the Case for Equities in the Long Term, Look to the Past
While cash yields are attractive now, if we look at the performance of equities in the past, we can expect that, going forward, they could be a better bet.
By David Blanchett, PhD, CFA, CFP® Published
Workplace Financial Coaching Has Become Ever More Important
Employees face growing challenges to their financial wellness today, so it’s more critical than ever that employers provide the help they need to navigate them.
By Greg Ward, CFP® Published