DOJ, FTC & Wisconsin Sue Timeshare Exist Service Providers For Deceptive Practices

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.

More Information

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.

Solutions Law Press, Inc. invites you receive future updates by registering on our Solutions Law Press, Inc. Website and participating and contributing to the discussions in our Solutions Law Press, Inc. LinkedIn SLP Health Care Risk Management & Operations Group, HR & Benefits Update Compliance Group, and/or Coalition for Responsible Health Care Policy.

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.

For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources available here.

IMPORTANT NOTICE ABOUT THIS COMMUNICATION

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author and Solutions Law Press, Inc.™ reserve the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The author and Solutions Law Press, Inc.™ disclaim, and have no responsibility to provide any update or otherwise notify anyone any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication. Readers acknowledge and agree to the conditions of this Notice as a condition of their access of this publication.

Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.