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Timeshare appears to have attracted a large amount of criticism over the years, yet the products are still being sold aggressively. However, over the last few years more and more Governmental Departments have become involved and are carrying out more and more investigations on Timeshare developers.

Last year South Africa backed many complaints against Resorts selling the infamous “point systems”. The investigators claimed that consumers were the subjects of a SCAM. Last year the Americans waded into the quests in that The Federal Government of the USA started a wide-scale investigation into Westgate Resorts.

Westgate resorts are by far the largest [privately-held] seller of Timeshares in the United States and have fallen foul of the law on many, many occasions. They have attracted huge penalties and have paid millions out in compensation for mis-selling.

As a result of the many consumer-driven allegations, the Consumer Financial Protection Bureau (CFPB) decided to investigate Westgate. They have demanded information from the Westgate’s and with respect to their sales and marketing practices. This demand started in or about October last year.

Westgate Resorts like many other Timeshare companies employ aggressive marketing tactics in selling Timeshare and litter the internet with information through a variety of Pro Timeshare websites.

One of the missions they have adopted is to invite consumers to free information sessions and at holiday destinations. When the consumer arrives [taking the bait of free information] they met with Westgate Timeshare salespeople and then the hard-sell begins.

The Federal Government regulator has also decided to investigate the financing for the consumer purchases, which Westgate pushes.

The Westgate organisation is based in the State of Florida and has contested the CFPB’s legal demands for the disclosure of many documents. The main head of contest is that the CFPB is operating a civil investigative and Westgate contend that they do not have any constitutional authority to carry out the investigation. They equally suggest that in any event, the demands made are erroneous and burdensome.

The second bone of contention is that the CFPB is investigating matters and requesting documents which are not related to the selling of a consumer or related financial products. In short, Westgate believes that the Government is on an unnecessary fishing expedition.

Westgate did eventually partially comply with the requests and before demanding that the CFPB amend their demands.

The CFPB explained that the civil investigation demand does not necessarily mean Westgate is a single target of an investigation. The requests for documentation does indicate that the US Government is carrying out a wide approach in its demands for a verity of documents, which they hope will uncover the many issues consumers have. Westgate ought to be worrisome and others developers now fear that their business models will be investigated next.

It has to be said that Westgate’s core business is selling and managing Timeshares and it has a vast inventory of over 25 resorts worldwide. Westgate products include Fixed, Floating and Fractional ownership Timeshares whereby consumers make large upfront investments in the Timeshare products on offer.

The CFPB has refused to comment at this stage explaining that it could not comment on any of its potential enforcement matters.

This is not the first time Westgate has slammed into the might of a Federal Regulators. Consumers may recall that in 2009, Westgate and other affiliated enterprises companies settled a Federal Trade Commission allegation for over a  $1 million. In that investigation, the federal commission claimed that Westgate had violated US “cold calling” rules.

To recap in April 2015 Westgate lost a lawsuit in the state of Tennessee. In that case, they were accused of high or overzealous pressure and sales tactics. In that case, they were forced to pay out half a million dollars.




Posted on: 23rd March 2016