Three years after consumer complaints against Florida time-share resale companies began a meteoric rise, the state Attorney General's Office and legislators say they have a solution: the Timeshare Resale Accountability Act.
The legislation, co-sponsored by Rep. Eric Eisnaugle and Sen. Andy Gardiner, Republicans from Orlando, cruised to passage this legislative session and awaits Gov. Rick Scott's signature.
Representatives of the Attorney General's Office and the time-share resort industry, who collaborated on the legislation, say it will help end deceptive marketing practices by time-share resale companies.
They admit it will not help put scammers behind bars, though. And resort industry officials agree with a Tampa Bay Times assessment that a 2009 legislative attempt to deal with time-share resale scams was poorly written.
A March 4 Times investigative report detailed the state's failures to curb rampant fraud in the time-share resale industry. While consumer complaints against Florida time-share resale companies soared nearly 1,300 percent in two years, the report found that Florida regulators and law enforcement agencies at every level failed to take basic steps to protect consumers.
The Attorney General's Office has received nearly 25,000 complaints about time-share resale companies since 2008. Many follow the same script: A time-share owner gets a cold call from a salesman who says he has a buyer for his time-share, or he has advertising methods that can guarantee a sale. The salesman takes an upfront fee of several hundred dollars over the phone, but the sale never happens and no real marketing takes place. A contract arrives in the mail with fine print explaining the time-share owner paid for advertising, with no guarantee of a sale.
The complaints of criminal fraud rarely result in criminal prosecution. While U.S. Attorneys have landed prison sentences for a few people connected to time-share resale companies, the Florida Attorney General's Office avoids criminal prosecutions in favor of settlement agreements that let companies stay in business and not admit wrongdoing. The office has recouped about $6 million for consumers, a fraction of what victims say they've lost.
Attorney General Pam Bondi took office in January 2011, and the new legislation is her biggest accomplishment in the fight against time-share resale fraud, according to Bondi spokeswoman Jennifer Meale.
The new legislation, to take effect in July, will require time-share resale companies to disclose more information before they can get paid. Among the requirements:
• A time-share resale company cannot take payment until the customer has returned a signed written contract.
• Contracts must state, in at least 12-point type, detailed information about the types of advertising the company will offer and how much they cost.
• The contracts must also tell customers they can cancel within 10 days of signing a contract. The company must refund the customer's money within 20 days of a cancellation notice.
• A salesman cannot state or imply that his company's advertising has generated sales or rentals for customers unless he can provide documentation to substantiate his sales pitch.
The legislation overwrites a 2009 law that also required time-share resale companies to spell out their advertising methods and tell customers the ratio or percentage of time-shares they actually sold over the previous two years.
However, the law was poorly written, according to officials from the resort industry and time-share resale companies. Most time-share resale companies don't actually sell time-shares, they just advertise them. It's up to buyers and sellers to actually strike a deal. Companies that did comply with the 2009 law put a disclaimer on their contracts explaining they had a zero ratio of sales, since they don't sell time-shares.
"It certainly did not meet the intentions," said Jason Gamel, vice president of state government affairs for the American Resort Development Association, which helped the Attorney General's Office with this year's legislation.
Neither ARDA nor the Attorney General's Office was involved with the 2009 bill, Gamel said. That legislation was written by then-state Rep. Jennifer Carroll, R-Jacksonville, now Florida's lieutenant governor, Gamel said. Carroll did not respond to a request for comment.
The 2012 legislation will succeed where the 2009 bill failed, Gamel said.
"It will empower the consumer with information," he said. "If you tell a customer your website has generated $1 million in offers, you need to be able to prove that."
The legislation also specifies that a salesman who tells a time-share owner he has a buyer must provide the buyer's name and contact information.
The Attorney General's Office will still primarily pursue companies accused of fraudulent sales practices with civil penalties and, in some cases, civil lawsuits, rather than criminal charges.
Bondi spokeswoman Meale said that her office's Economic Crimes Division does not have the statutory authority to pursue criminal cases, just civil cases. While the attorney general's statewide prosecutors can try criminal cases, they need law enforcement agencies to do the investigating. The office has referred some time-share resale cases to law enforcement, Meale said. Civil enforcement is still the office's preferred method of dealing with time-share resale companies accused of deceptive sales tactics, though.
Regardless of whether time-share resale scammers face prison sentences or lawsuits, Judi Kozlowski thinks the legislation will help clean up the industry. Kozlowski is president of the Licensed Time-share Resale Brokers Association, a group of about 85 licensed real estate brokers who do not take upfront fees and only charge commissions after they sell time-shares.
"Do I think this bill will be the cure-all? No," said Kozlowski, an Orlando-based broker who has sold time-shares since 1993. "But I do think it's better than what they have."
Times researchers Caryn Baird and Natalie Watson contributed to this report. Will Hobson can be reached at (727)-445-4167 or [email protected]