n this newer era of social responsibility and fair dealing, which ARDA (American Resort Development Association) and its members subscribe to, I consider it my duty as a consumer advocate (and timeshare owner) to bring a matter of important consumer significance to your attention. A client of mine received a collection letter in March, 2016. Let me note initially, that based upon where the letter was mailed from and mailed to, that no state laws may have been broken, and, because the letter did not come from a third-party debt collector, no Federal laws may have been broken either. The Federal Fair Debt Collection Practices Act (FDCPA) which applies only to third-party debt collection agencies, provides multiple safeguards to consumers including: provisions prohibiting debt collectors from making any false, deceptive or misleading representations; threatening to take legal action if the course of conduct is not intended; and further, debt collectors may not engage in conduct intended to disgrace or harass the alleged debtor/consumer.
Despite, and perhaps because of these legal conclusions, I attached the referenced collection letter to this article as Exhibit A (Editor: see attached image), and highlighted the provisions that concern me as a consumer advocate, and as a lawyer. I believe this letter absolutely violates debtor-based collection laws in several states, as well as Federal law, as rferenced herein, (operative in all states) specifically the Federal FDCPA, if it had been sent by a third party debt collection agency. A quick review of my highlighted portions reveals the number and tone of the purposrted violations. One of the more egregious clauses is quoted herein as an example. (See the highlighted portions of the letter attached as Exhibit A) “… you can expect a Process Server showing up at your Home or Work serving you with a Summons and Complaint unannounced“ (my emphasis via the bold and underlining). Not only is this clearly calculated to scare the wits out of a consumer, but, arguably is quite inaccurate 98% of the time, and further, the letter is nothing if not terribly mean spirited.
Although judicial foreclosure as referenced in Exhibit A, is a fairly common legal remedy in the timeshare industry, the more common and simplified process to recover title is via a nonjudicial foreclosure. Somewhat ironically, FantaSea Resorts utilizes a self-help process eliminating the necessity of either variant of foreclosure, whereby at closing, new timeshare purchasers are required to execute a deed in lieu of foreclosure, literally retitling their newly purchased resort interest back to the resort! Presumably this extra deed in lieu of foreclosure would only be recorded if the purchaser defaults on their purchase obligation under the contract. Therefore, with the resort now in possession of the deed back from the purchaser, this novel self-help repossession technique eliminates the need to file either type of foreclosure action, either judicial or nonjudicial. Clearly, threatening judicial foreclosure and unannounced and embarrassing service of process — when one does not intend to take such action — would violate the FDCPA prohibition, cited above, regarding threatening an action that is unintended. Of course if a resort actually intends to attempt to enforce the purchaser’s promissory note along with retaking title to the property, a foreclosure action could be appropriate. On the other hand, because this specific resort already possesses the title to the property back via the deed in lieu process, one would assume that by retaining the purchaser’s down payment and any payments made before default —coupled with the ability to resell the now unrestricted interest to the next purchaser without missing a beat — that this resort has no need to double dip and attempt to profit twice from the foreclosure/resale of the same unit. Indeed, if that is the resort’s intent, such action could raise another thorny ethical issue of equitable enforcement.
Again, in fairness to the resort, the Federal Law referenced herein (the FDCPA) does not apply to a creditor or its internal debt collection department, but the point remains that the resort is using deceptive tactics clearly designed to frighten and intimidate the consumer into continuing to pay a debt that may have been previously satisfied (or will soon be satisfied) by the resale of the interest.
I chose to raise this issue in this op-ed forum in the hope that if the issue is highlited and brought to the attention of ARDA, especially given the newer era of social conscience and fair dealing as referenced above, that ARDA may take note o these decidedly unfriendly practices and perhaps counsel the resort to adopt a “kinder and gentler” approach to its resort collections. It is one thing to remind owners of their ongoing legal responsibilities, the loss of use consequences, and even the credit reporting consequences of their failure to timely pay, but it is quite another to threaten to send a Process Server to their job location to make the point.
Perhaps as a practicing lawyer, my job should be to report issues within the strict confines of the law, but given the inconsistencies in laws between various states and the Federal Government, the gross disparities created thereby cannot simply be ignored. For example, in my own state of Florida, this letter would clearly be actionable at law via Florida state statute, as it would as well in New Jersey for example, if the collection account was in the hands of a third party debt collector.
As a consumer and a timeshare owner, I humbly petition ARDA to police their own constituents’ conduct and to weigh in by reinforcing the social consequences of their pledge to facilitate a more consumer friendly industry. Surely an honest living can be made without taking advantage of legal ambiguities to frighten and intimidate timeshare owners into mindless fearful submission. Indeed, it is hard to even contemplate a less consumer friendly process as this.
I hope the industry comes to understand that if they cannot or will not police themselves, it is just a matter of time before someone else steps in and does so.
Michael D. Finn, Esq.
7431 114th Ave, Ste 104
Largo, FL 33773
Telephone 727-214-0700 Ext.107