March 18, 2015 – As spring and summer nears, folks may be enticed to visit popular Wisconsin destinations with the promise of a free gift and a free or discounted hotel room. When the offer comes from an unscrupulous timeshare company, the "free gift" may end up costing tens of thousands and years of financial stress.

Here’s the typical scenario: Potential clients call and say that they bought a timeshare for $40,000 based on what the timeshare salesperson told them, but later found out that many of the statements made by the salesperson were not true. 

The potential clients explain that they signed a multitude of documents related to the timeshare deal. Can you help them? If the timeshare is located in Wisconsin, the sale took place in Wisconsin, or the potential clients were solicited in Wisconsin, and if all applicable statutes of limitation have not passed, the answer is likely yes.

Timeshare Sales

Wisconsin has many timeshare properties in popular tourist areas, such as the Wisconsin Dells and Door County. Timeshares come in several variations, but usually consist of either the right to vacation at the same location during the same time every year or the right to vacation at multiple locations at different times of the year. 

Some timeshares are tied to a specific piece of real property, while others are not. The current trend is the sale of symbolic “points,” which are a sold under the premise that the owner can use the points at a multitude of resorts at the time of the owner’s choosing. Timeshares are often marketed and sold by highlighting the most appealing vacation locations and emphasizing the ease of making reservations.

The majority of people who purchase timeshares attended a sales presentation because they were offered a free gift to attend the presentation. Traditional methods of advertising, such as television, radio, and print ads are almost never used to sell timeshares. 

Timeshare sales’ prices range from $15,000 to more than $150,000, and the price does not include perpetual annual maintenance fees. Timeshares are usually sold within hours of the customer first learning about the product. Sales presentations usually consist of one or more salespeople explaining the product to the potential customer on an individual basis, and frequently last between two to eight hours.

Once a customer makes an oral commitment to purchase, the timeshare company prepares, presents, and has the customer sign and initial dozens of documents. Many timeshare purchases are financed on site at the time of purchase by a loan directly from the timeshare company to the purchaser. Often the timeshare company also arranges for the customer to open a credit card account at the sales site to fund the down payment on the timeshare or to pay monthly maintenance fees.

Complaints About Timeshare Sales Tactics

The method timeshare companies use to sell timeshares has resulted in countless complaints being filed with state and federal consumer protection agencies and myriad lawsuits being 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 routinely and purposefully lie in order to make sales. Common complaints include that the salesperson lied about:  

• the ease of making reservations;
• the total cost of the timeshare;
• the customer’s ability to use the timeshare as described;
• the value of the timeshare;
• that the salesperson owns and frequently vacations using a timeshare with the company he or she is selling for;
• that the timeshare company will help resell or buyback the timeshare;
• that annual maintenance fees can be offset or completely eliminated using various methods;
• the length of the sales presentation; and
• that the deal being offered to the customer was only good for that day.

Many of the alleged lies either are not memorialized in or contradict the documents customers are required to sign and evidence the timeshare purchase. Many customers do not discover that they were lied to until long after the sales presentation. 

Possible Legal Claims

There are many statutes and rules governing the solicitation and sale of timeshares in Wisconsin. Several would apply in a situation where a potential client claims to have been lied to in a timeshare sales presentation.

Wis. Stat. chapter 707, entitled “Time-Share Ownership,” for example, specifically prohibits timeshare salespeople from making false, deceptive, or misleading representations of material fact, representing the timeshare as a financial investment, and misrepresenting the resale value of the timeshare, among others.¹

Chapter 707 also requires timeshare companies to make specific written disclosures to prospective purchasers pertaining to the significant features of the timeshare, fees the customer may be charged, and the customer’s right to cancel the timeshare transaction, among other things. 

Wis. Stat. section 100.18(1), titled “Fraudulent Representations,” also provides a potential remedy for lies told in a sales presentation, whether written or oral. Section 100.18(1) is a broad general statute governing untrue, deceptive and misleading representations in the sale of goods and services. Courts have applied the statute to one-on-one sales presentations.²

In certain circumstances, if the amount financed does not exceed $25,000 or the timeshare transaction does not involve a first lien real estate mortgage or equivalent security interest, for example, the protections found in the Wisconsin Consumer Act³ may govern certain aspects of the sale of timeshares.

If the timeshare transaction involved a first lien real estate mortgage or equivalent security interest and the amount financed does not exceed $25,000, the protections found in Wis. Stat. chapter 428 entitled “First Lien Real Estate and Other Mortgage Loans,” may apply.

Each of these statutes provides specific remedies. Some allow for the recovery of actual damages, pecuniary loss, injunctive and declaratory relief, and/or statutory damages. 

All of the statutes provide for the recovery of a successful plaintiff’s costs and reasonable attorney’s fees from the wrongdoer. A victim of fraud may also consider the common law claims of intentional misrepresentation, negligent misrepresentation, and strict liability misrepresentation. 

Conducting the Necessary 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 the potential clients, a great deal of investigation is necessary. 

It is important to conduct a thorough interview of the potential clients to learn all the facts surrounding the solicitation and sale of the timeshare, as well as all post-sale dealings the potential client has had with the timeshare company.

The lawyer needs to learn as much detail as possible, including what salesperson made which statements, and when that salesperson made the statements. The initial interview can last hours, and it may require multiple meetings, because of the length of some sales presentations, and the sheer volume of documents involved in each timeshare transaction. Reading and analyzing the documents can sometimes take days. 

Each transaction includes multiple contracts and addenda, financing documents, disclosures, booklets, pamphlets, catalogues, among other documents. Timeshare companies often require customers to sign more than two dozen separate documents as part of a timeshare purchase. 

Conclusion

Timeshare fraud often causes severe stress on its victims, because of the large amounts of money involved, and the difficulties obtaining redress for the fraud. It can lead to financial instability in the form of credit problems, the need to file or consider filing bankruptcy, being the subject of collection activities, and being sued by the timeshare company. Wisconsin statutes provide the tools which lawyers can use to obtain meaningful remedies for victims of timeshare fraud.

Endnotes

¹ Wis. Stat. §§ 707.55(1),(3) &(4).

² See Below v. Norton, 2008 WI 77, ¶ 6, 310 Wis.2d 713, 719, 751 N.W.2d 351; Jersild v. Aker, 775 F. Supp. 1198, 1205 (E.D. Wis. 1991); State v. Automatic Merchandisers, Inc., 64 Wis. 2d 659, 664, 221 N.W. 2d 683 (1974).

³ Wis. Stat. chapters 421-427.