Trouble with Timeshare Exit Companies
Last updated April 2020
Update: In September 2021 the Washington State attorney general announced that Timeshare Exit Team settled a lawsuit the state brought against it in February 2020. The company agreed to cease its alleged deceptive business practices and pay the state $2.62 million to cover part of the state's legal costs, and for restitution to affected consumers. In settling the case, the company did not acknowledge wrongdoing. Separately, self-described personal money expert Dave Ramsey announced in May 2021 that Timeshare Exit Team, which is facing multiple legal battles, could not afford to continue advertising on his show and was no longer being endorsed. Ramsey bitterly criticized media that had questioned his ongoing endorsement of the company, despite the mounting and numerous consumer complaints and the Washington State lawsuit.
If you’re one of hundreds of thousands of people who want to dispose of a vacation timeshare you no longer use, can’t afford, or were pressured into buying, you probably already know how difficult it can be. Resorts are usually reluctant to allow their clients to terminate timeshare contracts, in part because it’s far easier to continue collecting annual maintenance fees and other charges from current owners—usually on agreements that last for the rest of their lives—than it is to take back properties they’ll have to remarket to others.
Many owners who want out turn to a burgeoning timeshare exit industry for help. But if you’re considering hiring an exit company, beware. With many of these companies, at a minimum, you could end up paying thousands of dollars for something that, with some know-how, you can probably do yourself. At worst, you may find that after spending a lot of money and years of waiting you’re still trapped in your timeshare, your credit is damaged, or both.
Checkbook reviewed hundreds of timeshare-related customer complaints, lawsuits, ads, and marketing schemes, and interviewed timeshare owners and consumer advocates. We found a disturbing picture of a timeshare industry that uses deceptive selling practices to lure consumers into buying timeshares without understanding all the costs and complexities of ownership and then victimizes them again when they want to get rid of their properties. We also found an industry in turmoil, as resort owners and exit companies battle each other in the courts and via marketing spin as they point out one another’s abusive practices.
“What we have here are two industries at war, and they have failed to self-regulate,” said Michelle Corey, president and CEO of the Better Business Bureau (BBB) of Eastern & Southwest Missouri & Southern Illinois. Missouri, with its Branson-area timeshare developments, is a major center of the timeshare exit industry.
Much at Stake
Both timeshare sales and the exit industry are big businesses. Nationally, about 9.6 million households own some type of timeshare or similar private residence club, says the American Resort Development Association (ARDA), an industry trade group. In 2019 alone, there were more than $10 billion in timeshare sales, with an average price of more than $21,000, reports ARDA.
Some of those owners purchased a deeded right to spend a week or more each year at a specific resort. But increasingly timeshare resorts sell packages of points that operate sort of like frequent-flyer miles, allowing members who buy into these programs to book at a variety of facilities, including those owned by the likes of Disney, Hilton, Marriott, and their affiliates. Timeshare weeks also can be exchanged, typically through the resort or a company specializing in such transactions, allowing even those who purchase a week or more at a specific spot to spend their vacation elsewhere.
Buying a package of affordable annual vacations for life, sometimes at luxury resorts, may sound like a dream come true. But a lot of folks are unhappy with their timeshares.
In a recent ARDA survey, about nine percent of respondents said they would like to sell their timeshares within the next two years. If that finding is correct, it translates to more than 850,000 hopeful sellers, many of whom no longer use their timeshares—perhaps because they’re empty-nesters, have lost interest in traveling, or can’t afford to continue paying unpredictably escalating fees ranging from hundreds to thousands of dollars annually.
Others are owners who are dissatisfied by the deterioration of their facilities over the years because of poor upkeep. And still others are recent buyers who, having been victimized by high-pressure and aggressive techniques at sales presentations, often ended up with lifetime commitments to resorts that cost them more than they expected and are difficult to book. Click here for reasons why timeshares are usually bad buys.
No Exit
Timeshare exit companies emerged during the past six years or so because owners eager to jettison their timeshares discovered that their resorts—dependent on steady streams of annual fees—weren’t interested in letting them out of their contracts.
If owners tried selling on the crowded timeshare resale market, they quickly discovered that those “luxury” vacation accommodations often were worth little if anything. For example, in just a few minutes during a recent interview with us, Brian Rogers, who operates the Timeshare Users Group, a website for timeshare owners, found an online ad offering a Wyndham timeshare, originally costing around $60,000, for $375. And he found another Wyndham timeshare, initially costing more than $100,000, that had just sold on eBay for $1,525.
Industry experts told us that’s to be expected. Even though many timeshares are deeded properties, akin to real estate, they don’t usually increase in value. “When you are done with the product, the expectation shouldn’t be that there is a dollar-and-cents value at the end,” said Jason Gamel, ARDA’s president and CEO. Some desperate owners even dangle cash incentives to entice someone to take their units off their hands. But even that is often unsuccessful.
Worst off are owners who have outstanding mortgages, having financed their timeshare purchases through a developer or third-party lender. For most of them, the only path to freedom typically is to wait until they finish paying off their loans or to default.
All this is something resort marketers aren’t likely to mention during their hours-long timeshare sales presentations. Instead, they sometimes mislead prospective buyers to believe that their timeshare purchases will increase in value and that they will have no trouble selling them. “That’s a very, very common lie in a sales presentation,” said Rogers.
In recent years, an increasing number of resorts have adopted exit, or deed-back, programs that allow owners to return or even sell back their timeshares under some circumstances. But those programs are not well publicized by the resorts (or even exit companies), and details about how they work are hard to come by. When we asked four major resort operators to discuss their exit options, none returned our calls. And the explanation we got from a fifth left us uncertain about exactly what owners should expect. “It’s predicated on what you own, where you own, and how long you’ve had it. We have formulas based on individual circumstances,” said Marriott spokesperson Ed Kinney. Even the Coalition for Responsible Exit, a website set up by the timeshare industry to assist owners anxious to return their properties, lacks specifics. Some owners complain that when they tried to use their resort’s exit program, they were turned down, sometimes without explanation.
Finally, owners behind on their fees and those with outstanding mortgages on their timeshares likely aren’t eligible to participate in industry exit programs.
To the Rescue…Not So Much
All of this has helped ignite the timeshare exit industry, which often portrays itself as the white-hatted hero saving consumers from the sinister resorts. With names like “US Consumer Attorneys,” some exit companies refer to themselves as consumer protection organizations.
After a grueling four-hour sales presentation in 2013, Lori and Kyle Rager, from Monroe, Wash., finally gave in and paid more than $7,000 for a points-based timeshare from Bellevue, Wash.-based Vacation Internationale. But their selected vacation destination was never available for their preferred dates. “It was impossible to get a room, any time, even a year in advance,” said Lori. The couple ended up using their timeshare four times, but never at their preferred dates.
So, in 2015, when the Ragers heard a radio ad for another Bellevue-based company, Timeshare Exit Team, promising a money-back guarantee and an endorsement by self-described personal money expert Dave Ramsey, they decided to hire it. The Ragers paid the company $5,500 to free them from their timeshare within three years. But as the years clicked by, the Ragers said they seldom received updates, and each time the couple contacted the company, they say there was no sign of progress in their case. “They told me the same thing every time: ‘Our attorneys are working diligently. No news is good news,’” Lori said.
Finally, in October 2019, the company asked them to sign a contract addendum that, among other things, gave it another year to complete the work. The Ragers said they first wanted to talk to the exit company attorney who was handling their case. They say they haven’t heard back since. Now, nearly five years after hiring Timeshare Exit Team, Lori says the couple feels bamboozled.
“They said, ‘We can get you out in three years or 100 percent money-back guarantee.’ It’s like your word, your bond,” she said.
The Ragers now have a bigger concern. They said that Timeshare Exit Team had instructed them to stop paying their annual maintenance fees of more than $600, as well as the mortgage they took out on their timeshare purchase. At the same time, armed with the Ragers’ power of attorney, the company sent a cease and desist order demanding that their resort stop communicating with the couple directly. The Ragers now have no idea about the status of their timeshare or how much they owe in fees and mortgage payments. They worry that the resort could foreclose or take other legal action against them at any time. “I have a perfect credit score. I don’t want that messed up ever,” Lori said.
Citing a pattern of complaints about Timeshare Exit Team’s contracts, customer service and guarantee, the Better Business Bureau issued a consumer alert about the company in 2018.
In February 2020, the Washington State attorney general filed a lawsuit that accuses the company of failing to provide promised exit services to thousands of customers throughout the U.S. and in Canada, many of whom have been waiting three years or more after paying as much as $8,800. The lawsuit says the company, also known as Reed Hein & Associates, has nearly 15,000 customers waiting to dispose of their timeshares and that many of the deals the company reported as “successful” are in fact still being disputed by the resorts. The state also says the company accepted payment from customers who owned resort timeshares that it knew, based on past experience, it would not be able to return or cancel. Washington’s lawsuit says that the company manipulated some customers into failing to pay their timeshare-related fees, leading their resorts to foreclose. Like some other exit companies, Timeshare Exit Team considers a foreclosure to be a successful exit, making customers ineligible for the company’s money-back guarantee.
The lawsuit says Brandon Reed and Trevor Hein, who previously worked as rain gutter salesmen, started the company in 2012 without any experience or training in performing timeshare exits. It says the two farmed out most of their cases to third-party vendors who were paid as little as $500 and allowed to work on customers’ behalves with little oversight. “Defendants’ deceptive advertising has at times portrayed Reed Hein as performing speedy, ‘risk-free’ exit services with a 100% success rate,” says the 68-page lawsuit filing. “In reality, customers can wait months or years for an exit that may never come, all while continuing to owe money for their timeshare,” the lawsuit says.
After the Washington lawsuit was filed, we checked the Dave Ramsey website and found it was still endorsing the company. On the “Dave Recommends” section of his website, he extols that “There’s only one company Dave recommends, Timeshare Exit Team.” Ramsey’s company did not respond to our request for an interview.
It’s not known how many exit firms there are nationwide. During our investigation, we identified 62 active companies before we stopped counting and found another 13 that took on clients but apparently have shut down.
Exit companies advertise widely online, in print publications, and on TV and radio. Timeshare Exit Team alone spends more than $1 million per month on ads, says the Washington lawsuit filing. Type “timeshare” into a web search and you’ll likely see plenty of exit company ads, which due to target marketing will then follow you from one website to another. Some exit companies market directly to owners, whose contact information they buy from list brokers. Daniel Blinn, a timeshare owner and managing attorney of the Connecticut-based Consumer Law Group, says exit companies routinely call or email him, sometimes misrepresenting themselves as employees of his resort or of RCI, a major timeshare exchange network. “I get those every three months, trying to get me to go to a dinner at Red Lobster,” he said.
The use of free dinners and other incentives to entice would-be customers to attend high-pressure sales presentations is straight out of the timeshare sales business playbook itself. That’s no surprise given that some in the exit industry have transitioned from timeshare sales. Among them is Chuck McDowell, CEO of Tennessee-based Wesley Financial Group, which claims it’s the nation’s largest exit company. McDowell, who once sold timeshares for Wyndham Resorts, founded the firm because he “felt bad about some of the things he had said to people to sell the timeshare,” said Wesley’s president, Robin McVey.
Further confusing the issue, some exit companies, as part of their services, market timeshare-like vacation plans. Pamela Yvette Calwell of Cockeysville, Md., said she and her husband had no idea that the more than $10,508 they paid Missouri-based Vacation Consulting Services in 2018 included enrollment in a Florida vacation club neither of them wanted or have since used. The two are still stuck with their New Jersey timeshare and its $900 annual maintenance fees.
Owners Are Often Re-victimized
Timeshare owners lured into bad or unwanted deals are often victimized yet again once they hire an exit company. Although some of these firms satisfy many of their customers by successfully terminating their timeshare contracts, there are countless online complaints from angry exit company clients, who often make the same allegation: After they paid thousands of dollars upfront, their exit companies strung them along for months or years, often with few or no updates about their cases. Exit companies often tell customers that eliminating a timeshare can take 12 to 18 months, but some of their contracts specify no firm deadline by which the companies must complete work.
Chris and Cathleen Rahschulte of Verona, Ky., were among those who say they were victimized by both their resort and exit company. In 2004, the couple paid $10,000 for a timeshare at Smoky Mountain Resort in Gatlinburg, Tenn., which is now owned by Westgate Resorts. Their purchase entitled them to use their timeshare every two years during any week it was available. The problem? Finding a time when they actually could use it. “You end up having to book your vacation a year in advance. It just became a pain,” said Chris, a retired state police detective, who said in some years it was so bad that he and his family would pay to vacation elsewhere.
The Rahschultes aren’t the only ones with that complaint. Westgate Resorts currently is the target of a class action lawsuit from other Smoky Mountain Resort owners who say they find it difficult or impossible to use their timeshare weeks.
In October 2017, the Rahschultes hired Relief Solutions International (RSI)—yet another exit company located in Springfield, Mo.—to terminate their timeshare, paying it nearly $4,000 for a process that the exit company said would take up to 18 months. The couple say they waited without much word about what was going on with their case. Finally, after two years, they requested a refund under the company’s money-back guarantee. But RSI refused, telling the Rahschultes it was continuing to negotiate with the resort on their behalf.
After the couple complained to the BBB, RSI agreed to refund 80 percent of its fee, retaining the remaining $800 as an administrative fee. “We are two and a half years into this, it has cost us $800, and we’ve made no progress,” Chris Rahschulte said. No longer represented by RSI, the Rahschultes now are in discussions directly with Westgate, hoping the company will allow them to use its in-house exit program. Meanwhile, they remain stuck with their timeshare and its biennial maintenance fees, which have increased from around $500 in 2004 to nearly $1,000 today.
In its response to the Rahschultes’ complaint, RSI told the BBB that the couple ignored its multiple attempts to contact them to discuss their account and to respond to their questions and concerns. (The Rahschultes say that claim is “patently untrue.”)
The BBB has issued a consumer alert about the company and given it an “F” rating. In an email to Checkbook, RSI’s owners Russell Turner and Burt Cummings said the BBB is treating them unfairly: “The St. Louis BBB had 40 complaints on our office even though we have thousands of happy clients,” adding that 15 of those who complained are now out of their timeshares and that the company has issued refunds to 14 of the 40 dissatisfied clients who complained. RSI said progress continues on the remaining cases. It also pointed out that RSI’s website, unlike most exit companies’, advises timeshare owners to first find out whether their resorts offer voluntary exit programs. And unlike some other exit companies, RSI’s owners say they don’t consider a foreclosure to be a successful exit.
The Rahschultes are lucky they received any refund at all from their exit company. Many complaints we reviewed detail frustrated customers who ask for their money back but are simply told to remain patient. Others are denied refunds based on contractual fine print. For example, the companies may say that the owners failed to provide requested documents or other information within a reasonable time. Some exit firms have gone out of business, stranding owners who despite having paid thousands of dollars remain on the hook for their timeshare obligations.
“Many of these companies either do not have the expertise or the ethics to follow through with promises to extricate their clients from the often burdensome lifetime timeshare contracts,” says a blistering report issued in June by the St. Louis BBB. From January 2017 to March 2019, the BBB says, consumers from at least 46 states reported losing more than $2.2 million to the 10 most active exit companies in the Springfield, Mo., area alone. It believes the actual losses are far higher.
In September, the Nashville-based BBB, alarmed over escalating complaints about timeshare exit companies nationwide, announced that it no longer will award accreditation to any exit company in its coverage area, period. “We don’t believe this is an industry that fosters trust in the marketplace,” said Robyn Householder, president and CEO of the BBB Serving Middle Tennessee & Southern Kentucky.
Scare Tactics and Sketchy Promises
A common marketing tactic exit companies use is to mislead owners into believing that unless they get rid of their timeshares, their annual maintenance fees and other charges will automatically pass on to their children. “Even when you die, your family will be stuck with this burden,” said McDowell of Wesley Financial Group in a nationwide TV commercial it ran last fall. A Wesley Financial qualifications specialist made the same assertion to a Checkbook undercover shopper. The representative also said that the timeshare company’s failure to disclose that information at the time of sale was evidence that it had engaged in misrepresentation, which would make the caller eligible to purchase Wesley’s services.
The truth is that children don’t inherit their parents’ timeshare obligations unless they’re co-owners or accept ownership as part of an estate transfer or agreement with the resort.
A few weeks after Checkbook brought Wesley Financial’s dishonest ad to the attention of the Nashville BBB, it suspended Wesley’s accreditation, which the BBB’s board of directors permanently revoked in November 2019. The BBB’s Householder said it already was monitoring the company, concerned about its contract, which BBB attorneys found confusing, and its sales practices, including its failure to advise prospective customers that they should first find out whether their resorts offer their own free or low-cost exit programs. “All things should be laid bare so the consumer can make an educated decision,” Householder said.
Stephen Grauberger, Wesley’s general counsel, said the company has revised its contract and is reviewing its advertising and employee training to ensure neither is misleading. As far as informing its prospective clients about the availability of resort exit programs, he told us, “I don’t think that’s our responsibility.”
Citing BBB actions and customer complaints, AARP recently decided that it no longer will accept advertising from Wesley, which had been running full-page ads in its newsletter.
In September 2017, convinced that her son would inherit the $680 in annual maintenance fees for her Florida timeshare, Leah Lilly of Riverdale Park, Md., hired Vacation Consulting Services, yet another Springfield, Mo.-based exit company. “He’s an adult with his own family now. He doesn’t need these kinds of bills coming in,” said Lilly, a retired sergeant with the U.S. Supreme Court police.
But like the Rahschultes and many other exit company customers, Lilly says she watched the months go by with little apparent action on her timeshare. “They said it’s going to be easy for them to do it, but it could take up to a year. Once the year is up, they stopped returning phone calls,” she said. When she complained, VCS said it would refund $900 of the $4,200 she paid, an offer she rejected. Now, more than two years later, she’s still waiting for something to happen. Concerned about damaging her credit rating, she paid last year’s maintenance fee, and she has another one coming up.
The St. Louis BBB has issued a consumer alert about the company, based on what the bureau says is a pattern of complaints and unsubstantiated online advertising claims. It says VCS and The Transfer Group, a related F-rated exit firm located at the same address, have generated dozens of complaints alleging more than $670,000 in consumer losses. In 2018, two of the companies’ principals, Brian Scroggs and Bart Bowe, opened another exit firm, Real Travel, with an Arkansas address. In July, that state’s attorney general filed a lawsuit against Real Travel, Scroggs, and Bowe, claiming they failed to provide more than $136,000 in promised exit services. The court issued a default judgment against the company in October 2019, although some issues, including possible consumer restitution, are pending.
The Arkansas attorney general’s lawsuit against Real Travel, like the other lawsuits we reviewed, provides a close look at the abusive practices in which some exit companies engage. It says that Real Travel charged its customers $5,000 to $18,000 for exit services that it then failed to perform. “Sadly, good people were left with unwanted timeshares and thousands of dollars in fees for services not provided,” Arkansas Attorney General Leslie Rutledge said in a statement announcing the lawsuit.
Arkansas’ case against Real Travel also says it arranged for some customers to obtain high-interest credit cards to finance its fee, which also included enrollment in a related vacation club that the state says customers were unable to access. It says the company gave customers an unusable email address and toll-free number, making it impossible for them to cancel their agreements under the three-day cancellation period.
Real Travel’s “100% guarantee” promised that the company would buy the timeshares of any customers whose obligations were not terminated within one year. But the state says the company erected obstacles that virtually negated that promise, among them making it difficult or impossible for customers to provide the company with any requested paperwork, as mandated by the contract. The lawsuit says the company also instructed customers to stop paying their maintenance fees and then blamed them when the resorts reacted by blocking their timeshare transfers, the same allegation made by the Washington State attorney general against Timeshare Exit Team.
Arkansas officials say Real Travel’s Bentonville address is a mail drop, and the BBB believes the company is operating in the same Springfield, Mo., location as Vacation Consulting Services and The Transfer Group.