An update to my recent story on the almost million dollar fine paid by Orlando based timeshare developer Westgate Resorts.
Accused of violating the “Do not call” regulations, Westgate CEO David Siegel agreed, without admitting guilt, to have the company pay $900,000. Accument, another Florida travel company paid about $275,000 for the same violation.
I speculated last week that the million dollars was a relatively small drop in the Westgate marketing bucket, a cost of doing business, comparable to Fedex paying parking tickets.
My interview with Siegel leads me to correct the impression left by my speculation.
First, according to Siegel, the calls that violated the law were not made by a Westgate phone room. One manager in one of the sales offices (Westgate now has more than 20 resorts in 11 states) hired an outside marketing company that promised to provide travel oriented sales prospects for presentations.
These people had filled out surveys on cards in order to win a prize, leading to the invitation to a Westgate presentation. Similar marketing programs may be seen at pizzerias, festivals and county fairs all over the country.
Because it wasn’t made clear on these cards that the calls would be made on behalf of Westgate, the Federal Trade Commission, responding to a number of complaints pursued charges against the developer.
Siegel feels very strongly that they would have prevailed if they had fought the charges. However, with a potential penalty of $10,000 per violation, they were facing potential fines of more than ten million dollars. That combined with the legal fees associated with even a successful fight, persuaded Siegel to follow the advice of counsel and settle.
Siegel insists that the sales generated by the leads in question were about a quarter of a million dollars, so all in all, it was a losing proposition for the developer with almost 30 years experience in the timeshare business.
In a wide ranging conversation, Siegel reflected on the problems caused by the nation’s credit crunch, the laying off of more than 4,000 employees, the lack of a secondary market for timeshares, and being an independent in a world of hotels. More on those issues in future entries.
Comments
Hi, I'm a member of the Army and deploying to the middle east next year. My e-mail is meachamron@yahoo.com. My wife and I are in a pickle with westgate. In September of this year, we were invited to stay a night and hear the spill. I was dumb and naive enough to "purchase", calculating that we'd be able to handle paying for ownership of a timeshare. Well, during the 10 day rescintion period, the Army sent me to Spain for 3 weeks and my wife and I found out we were expecting another child and our car broke down; however, I was unable to contact westgate until my return to the states. They wouldn't listen to us or help us with anything. We'd already paid them well over $500 for a property we'd never used, nor will ever use. The only option they left us was forclosure. Our "contract" has a one year "no sale" clause... And when they wouldn't let me contact anyone with the power to reverse the situation, I told them to foreclose... they now call nonstop telling me to pay... or else.
My name is Jessica Y. My husband and I was lied too. In 2005 We bought a timeshare from Westgate thinking that we could make a profit. Then in 2007 we bought another one. We though we were on top of the world because we have bought 2 timeshare and now we could sell it and make some money. In January of 09 We both wanted to list it and see what happen. So I did some reached and found out that everything the sales men told us was all a lie. Knowing that this would happen I would of never bought it. Westgate needs to be shut down. I have created a FB account for people like who was lied to and got pressure to sign a contract while taking a vacation. Stay far away from westgate.
Jessica
Fb info: Westgate is a SHAM..
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