October 1, 2021

Timeshare Exit Company Settles Allegations Of Misleading Marketing Tactics And Incompetence

Lori Kalani, Bernard Nash

Cozen O'Connor

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Cozen O'Connor

Washington AG Bob Ferguson reached a settlement with timeshare exit company Reed Hein & Associates LLC (“Reed Hein”) to resolve allegations that it used deceptive practices to market its timeshare exit services and to represent its clients in violation of Washington’s Consumer Protection Act, Debt Adjusting Act, and Credit Services Organization Act.
As previously reported, the complaint alleged that Reed Hein charged thousands of dollars to help timeshare owners exit their timeshare contracts and advertised a 100-percent money-back guarantee if it did not obtain a successful outcome. In reality, Reed Hein failed to honor the guarantee, partly by considering foreclosures to be successful outcomes for its clients. The complaint also alleged that Reed Hein made claims of expertise in timeshare exits that it did not have, outsourced its work to a variety of vendors that it did not supervise effectively, and exposed customers to numerous negative consequences, including ruined credit.
Under the terms of the consent decree, Reed Hein is subject to a $22 million judgment, of which a $19.4-million civil money penalty is suspended unless Reed Hein violates the terms of the consent decree, and $2.6 million are payable to the state to be used for restitution to impacted customers and to partially cover attorney’s fees and costs. Reed Hein also agreed to change its marketing and business practices, including setting aside at least 20 percent of each customer’s fees for refunds, discontinuing misleading advertising and sales representations, discontinuing certain damaging methods of ending timeshare contracts, and disclosing to customers that some methods may lead to foreclosure while providing options for opting out and refunds, among other things.

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