A group of Timeshare Owners have filed a joint class action suit against Diamond Resorts. The lawsuit claims that Diamond sold unregistered investment contracts to consumers during high-pressure sales pitches, this is a violation of the U.S. Securities Act of 1993.
The class action is lead by Kaarina Pakka and includes people who bought points in a Diamond Resorts International Club Membership, who were coerced into signing lengthy purchase and security agreements after attending high pressured sales pitches. They say they were not given enough time to read or take documents off Diamond Resorts premises prior to signing agreements, and were not given the opportunity to discuss them with legal advisors.
In November 2016, Pakka travelled to Hawaii and attended a timeshare presentation, following a sales pitch from Diamond resorts Hawaii, she was persuaded to purchase 50,000 points which cost $175,356. During the sales pitch, Diamond Resorts salespeople told Pakka that her points were tied to real estate property, as required by U.S. law. They also told her they would increase in value over time and that the points could be sold for a profit.
The suit claims these promises were false, it reads: “Diamond Resorts salespeople tell their unwitting targets, over the course of hours long high-pressure sales pitches, that by purchasing points ‘now’, the purchasers will receive a discounted purchase price that is only available on the day of the sales presentation. They are investing in their future, their points will increase in value, they can use their points to pay annual maintenance fees, they can bequeath the points to their heirs as an inheritance, and they can sell their points at any time. Thus these points are actually investment contracts, and therefore securities, under the United States Securities Laws.”
When investors tried to cash in, they found they were locked into contracts with little resale value and high maintenance fees. The reality is that Diamond Points do not increase in value, there is no profitable resale market for them. The suit says, that rather than receiving a return on their investment, members were stuck paying extortionate maintenance fees that keep going up and up each year. This is in addition to the huge cost of purchasing the points themselves and interest payments added on to any loans taken out to purchase them. The contracts are also ‘In Perpetuity’ meaning if they can’t sell them they will be stuck with them for the rest of their lives.
The suit is asking for a trial by Jury, they are also asking for compensation and a formal judgement which will prohibit Diamond Resorts from continuing to market and sell unregistered securities and grant class action members the right to rescind their points purchases.
People who enter into Timeshare agreements often find it difficult to keep up with the mounting maintenance fees and simply cannot afford it any longer. They may also find that the Timeshare no longer suits their needs and simply want to end the contract. There are too many individuals who are willing to take advantage of Timeshare owners and offer fake products, along with Timeshare exit schemes. Before agreeing to any Timeshare termination or exit procedure with an individual or company, seek independent advice and fully research any company you are thinking of working with.
It is also important to remember that purchasing a Timeshare should NEVER be viewed as a financial investment. Timeshare is an investment in lifestyle, in future holidays and family time together. There is almost no resale value to a Timeshare.
The mis-selling of holiday products is, unfortunately, common practice within the holiday industry and these type of crimes often go unreported by the most vulnerable in our society and criminal convictions are few and far between.
If you have purchased a Lifestyle / Concierge Service, a Timeshare or a ‘Holiday Points’ based product from a resort or company and feel unhappy with the service, or feel you have been mis-sold this product, please get in touch with us to discuss how we may be able to help you with a possible Money Back Claim.