For more than a decade, Wesley Financial (Wesley) has marketed itself as a third-party timeshare exit company that can assist customers in “legally” cancelling a timeshare. Wesley spends approximately $400,000 per week advertising its purported services to consumers, guaranteeing success. These marketing efforts lead consumers to believe that the cancellation involves something other than defaulting on their mortgage or utilizing voluntary relinquishment programs offered by developers. In a lawsuit filed by Westgate Resorts against Wesley, the federal court judge, Aleta A. Trauger, issued an Order for Partial Summary Judgment as well as a Memorandum for Westgate’s Motion for Partial Summary Judgement which outlines key facts that dispute Wesley’s marketing claims and shine a light on its true business practices. It is important to note that the court’s findings are with respect to Wesley’s entire business model, not just one isolated transaction.
KEY TAKEAWAYS
- Wesley’s business model is 100% reliant on timeshare developers letting consumers out of their contracts. No timeshare contract has been cancelled because of anything other than the owner defaulting on payments.
- Wesley has no control over whether Westgate will report a failure to pay a mortgage payment to a credit agency, and if Westgate did, neither Wesley nor any legitimate credit repair agency could do anything to remove it from a credit report.
- Wesley’s actions have misled customers into believing that Wesley is providing a “’legal” service when it is not.
- Wesley’s CEO states that Wesley charges consumers a minimum of a few thousand dollars to a maximum of $30,000 for these so-called services, set entirely at the discretion of Wesley.
Business Practices
Despite Wesley Financial CEO Chuck McDowell stating that the company’s cancellation process primarily involves writing letters on its clients’ behalf to Westgate which eventually leads to cancellation, the U.S. District Court for the Middle District of Tennessee found that:
- “McDowell acknowledged that Wesley’s letter-writing campaign has in the past had no effect on Westgate’s decision whether to cancel a timeshare.”
- “…the record clearly establishes, based on Wesley’s representatives’ testimony and that of the Wesley customers that is in the record, that no Westgate owner’s timeshare has been cancelled as a result of anything other than the customer’s payment default and that Wesley obviously knows this.”
- “Jon Browning admitted during his Rule 30(b)(6) deposition, however, that it is not true that Wesley effects cancellation of a timeshare debt ‘because it’s fraudulent debt.’ Wesley also falsely tells owners that Westgate has no ‘legal recourse’ if a customer stops making mortgage payments.”
The court also found that Wesley itself conceals and/or encourages its clients to conceal its involvement with their timeshare exit efforts.
- “[Taylor Jacobs, Wesley’s Vice President of Exit Solutions] also acknowledged that Wesley uses a system called ‘Caller ID Faker’ to ‘mimic the client’s phone number if we are making a call to the timeshare’ on behalf of the client. The use of this system ensures that the recipient’s (the timeshare company’s) caller ID will reflect the customer’s telephone number rather than Wesley’s. Wesley, in fact, uses the system so that Westgate will speak to the Wesley employee under the belief that it is actually a Westgate customer.”
- “It is undisputed that many of the Wesley customers/Westgate owners whose deposition testimony is in the record were advised to sign the affidavit falsely affirming that they had not worked with a timeshare exit company and that the customers did, in fact, sign the affidavits.”
Offering of Credit Services
As part of its business practices, Wesley’s representatives suggested clients stop making payments on their mortgages and assured them that any negative impact to their credit could and would be repaired. Specifically, the judge stated:
- “Wesley sales representatives, at least until recently, promised credit repair services when advising customers to stop making payments to Westgate, and they pitched credit repair as an important part of Wesley’s service, all included with the fee.”
However, the court was able to establish that Wesley actually had no control over whether a failure to pay was reported to a credit agency, and if it was, had no ability to remove it.
- “Wesley’s representatives acknowledged that (1) neither Wesley nor any legitimate credit reporting agency has any control over whether Westgate (or other timeshare company) will report a timeshare owner’s failure to make mortgage payment to a credit reporting agency; (2) Wesley was not effecting the cancellation of timeshare contracts as ‘fraudulent debt;’ and (3) if Westgate accurately and correctly reported a timeshare owner’s default on a timeshare mortgage, neither Wesley nor a legitimate credit repair agency could do anything to ‘scrub’ such a report from the timeshare owner’s credit history.”
- “[Katie Neher, President of Wesley Credit Repair, LLC] also acknowledged that it is illegal for a credit repair organization to guarantee that any negative information on a person’s credit report will be removed. She agreed that ‘it’s ultimately up to the timeshare to remove the demerits’ from a person’s credit report and that, if a timeshare company chooses not to remove an accurate demerit, it stays there.”
- “Moreover, there is no evidence in the record…that Wesley (or any third party to whom Wesley customers were referred) successfully contested any negative credit reports related to Westgate owners’ cessation of payments due under their Westgate contracts.”
Ultimately, the court found:
- “Wesley induced customers into hiring it by representing that their credit would not be harmed and that, if it was harmed, Wesley [or a third party] could fix it—despite Wesley’s actual knowledge that it could not do anything to prevent Westgate from making truthful and accurate credit reports relating to those customers’ failure to make payments on binding and legitimate loans; nor could it do anything to remove truthful and accurate reports once they were made.”
- “…Wesley’s false offering of credit repair services as part of the package of services it provided to its customers, along with its purported cancellation of the customers’ timeshares, violated the [Tennessee Consumer Protection Act] TCPA.”
Unauthorized Practice of Law
Wesley regularly markets its services as “legal” timeshare cancellations and the court found this, combined with the nature of Wesley representatives’ conversations with clients, misleads consumers into believing legal services are being provided, when in fact, Wesley is not a law firm, and its representatives are not lawyers and are not advised by lawyers.
- “The evidence presented by Westgate establishes that Wesley representatives, despite not being lawyers and notwithstanding disclaimers in Wesley’s customer contracts, regularly engage in the unauthorized practice of law vis-à-vis Westgate owners when, for example, they purport to interpret the owners’ timeshare contracts and explain the legal ramifications of timeshare agreements and when they claim to be able to ‘legally’ terminate or cancel timeshare agreements, as these are all matters that, on their face, require the exercise of professional legal judgment.”
- “The undisputed evidence in this case establishes that these representations actually mislead and tend to mislead customers into believing that Wesley is providing a service different from the service it actually provides and involves legal rights and remedies that simply do not exist.”
- “Wesley engaged, and apparently continues to engage, in the unauthorized practice of law, and the manner in which it does so constitutes a deceptive practice in violation of the TCPA, insofar as it has led and tends to lead its customers—and Westgate’s owners—to believe that Wesley’s system for cancelling timeshares is based on some legitimate legal grounds.”
Resources for Owners Interested in Exiting a Timeshare
The American Resort Development Association Resort Owners’ Coalition (ARDA-ROC) recommends owners always contact their timeshare developer, resort management company or homeowners’ association as the first source of information regarding exit options. The Coalition for Responsible Exit is also a place for owners to safely explore free or low-cost exit options that are supported by timeshare developers and can be accessed by visiting ResponsibleExit.com.