Last Year Inside Timeshare published the following article based on a report for The New York Times by Gretchen Morgenson, with the latest news from Europe about the closure of Diamond Resorts Europe sales and marketing decks, along with many redundancies, it was thought this was an appropriate time to republish here on CLA International.
On the 22nd January 2016 The New York Times ( by Gretchen Morgenson) published an article about Diamond Resorts International. Following this article the Share Price plummeted by around 15% on the New York Stock Exchange. So what prompted this plunge?
The article highlighted the high pressure sales tactics that Diamond sales staff employ at their sales presentations. A lady called Mrs Mary Ann Gutierrez aged 77, who had been an owner at Lake Tahoe California for around 25 years, visited one of the timeshare units she owns. While checking in she was given a $100 gift voucher to attend a presentation. She was then subjected to 5 hours of hard sell. Before this happened she had to fill out various forms including her credit card details.
The pressure she felt was enormous, but she did not give in, eventually the sales staff gave up trying. The next shock came a little later, a Diamond representative gave her a voided credit card voucher for $4,840. This sum had been deducted from her card without her permission, the Diamond sales staff felt that confident she would purchase, they put the transaction through before the end of the meeting.
This was not the only case The New York Times Highlighted. (See link below)
The Consumer Financial Protection Bureau, is looking very closely at the timeshare industry in the US, and many are calling for tighter regulation and controls. It may be that as in Europe self regulation does not work. Is it time for outside control of this industry?
Diamond Resorts International was formed in 2007 by Stephen J Cloobeck, the head quarters is situated in Las Vegas and they own 99 resorts worldwide and have associations with another 255. In 2014 Mr Cloobeck earned $7.4 million as a director. The company’s revenue last year reached around $845 million.
The article also highlighted that the number of complaints against timeshare companies in general has risen. It also stated that there were more lawsuits being filed against Diamond for the hard sell tactics and unfair contracts including perpetuity,
The United States Securities and Exchange Commission is also investigating many companies, including Diamond Resorts International.
They have placed into evidence an email sent by Frank Acito, this email was sent to investors following the New York Times article. It basically refutes the article calling it “rumour, speculation and innuendo”. It also goes on to state that in customer satisfaction surveys they achieved over 80% satisfaction ratings for the resort. This to me is not surprising as the resorts and service whilst on holiday is good. What it does not address is the negative feeling customers get during the high pressure sales or the unfair contracts.
This email is placed as a PDF below.
So it is not just timeshare owners in Europe who are having these problems. Lawsuits in Europe, especially in Spain where the laws have been strengthened to protect the consumer, are on the rise.
According to information supplied by Canarian legal Alliance, against Diamond Resorts they have 38 cases in court, 58 cases in process with 5 victories so far. This number is set to increase with the recent supreme court rulings.
It only remains to be seen, how will investors and shareholders react when this news becomes more widely known. Are the share prices likely to fall even more, will we see people pulling the plug on this company? It also seems the price is still falling, it will be interesting to see what happens when the NYSE, opens today. I for one will be watching.