Abusive timeshare and other travel or membership programs commonly target elderly or other susceptible Americans. A new joint federal/state enforcement action suggests consumers also should be careful about services offering assistance to exit timeshare and other similar arrangements.
On November 22, 2022, the Department of Justice (“DOJ”), Federal Trade Commission (“FTC”) and State of Wisconsin announced a civil enforcement action against 16 defendants for allegedly using deceptive sales practices nationally to sell timeshare “exit services” to senior citizens.
The defendants include five individuals – Christopher Carroll, George Reed, LouAnn Reed, Scott Jackson and Eduardo Balderas – and 11 related companies and trusts they run and operate – Consumer Law Protection LLC, Consumer Rights Council, Premier Reservations Group LLC, Resort Transfer Group LLC, Square One Development Group Inc., Square One Group LLC, Timeshare Help Source LLC, Farmington Allegiance LLC, Mainline Partners LLC, the Jake and Avery Irrevocable Trust dated Sept. 11, 2019, and the Maggie and Lucy Irrevocable Trust dated Sept. 11, 2019.
According to a complaint filed in the Eastern District of Missouri, the defendants promised to assist consumers in exiting their timeshare contracts in exchange for large fees, but usually failed to deliver on their promises.
The complaint alleges that the defendants, at high-pressure sales presentations at hotels and restaurants in multiple states, convinced consumers to sign up for timeshare exit services by falsely claiming that consumers could not exit timeshare contracts on their own, that the defendants were affiliated with legitimate companies, and that the consumers’ heirs would be stuck with large fees unless they signed defendants’ contracts.
The complaint further alleges that the defendants failed to notify consumers of their rights under federal and state law to cancel their contracts with defendants within three business days. According to the complaint, the defendants deceived consumers – who were mostly seniors – into paying more than $90 million to the defendant companies for services that were not delivered.
The complaint states that, through these actions, the defendants violated the FTC Act, which prohibits unfair and deceptive conduct, the FTC’s rule concerning cooling-off period for sales made at home or other locations, which requires disclosures about the right to cancel purchases, and certain Wisconsin state laws concerning fraudulent misrepresentations and direct marketing.
The complaint seeks monetary relief, civil penalties and injunctive relief to stop defendants from continuing to make deceptive claims in connection with the sale of timeshare exit services. The defendants’ timeshare exit services are also the subject of lawsuits filed by the Alaska and Missouri Attorneys General in June 2022.
For more information about the Department of Justice’s Elder Fraud Initiative is available at www.justice.gov/elderjustice.
The actions highlight the need for elderly and other consumers to use care when considering working with timeshare or other debt liquidation services as well as reminds businesses to use care when dealing with elderly or other unsophisticated or frail consumers to avoid misleading or other deceptive practices.
We hope this update is helpful. For more information about the these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
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About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.
A Fellow in the American College of Employee Benefit Counsel, Vice Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, Ms. Stamer is most widely recognized for her decades of pragmatic, leading edge work, scholarship and thought leadership on health and managed care industry legal, public policy and operational concerns.
Ms. Stamer’s work throughout her 30 plus year career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns.
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