The owners of a timeshare business in Manhattan have been ordered to pay $6.5 million to the New York State Attorney General’s office. Thousands of timeshare buyers were conned into purchasing timeshare with the Manhattan Club through the company’s use of illegal sales tactics and false promises.
Attorney General Eric Schneiderman announced a court order back in 2014 preventing the Manhattan Club from making any more sales. This order was issued following countless complaints from owners.
14,000 timeshare holders had paid tens of thousands of US dollars for their unit in one of the the Manhattan Club’s 286 suites (excluding annual maintenance fees), but have been unable to make reservations. The hotel’s operator claimed that there was a ‘lack of available rooms’, despite renting rooms over the internet to the general public. What’s more, those maintenance costs were rising at a shocking rate.
One of the timeshare holders reports that his maintenance shot from $500 in the first year (2005) to a shocking $3,000 a year twelve years later.
Another reports that he was sold the timeshare as a ‘great deal’, considering that he and his partner returned to the city every year for Thanksgiving. One of the things he was told was that “it would be ours forever, it could be left to our kids”, a statement that will certainly ring alarm bells for any regular readers of this blog. They were also given that line about the timeshare going “up in value”.
After the first two years, this person reports that they were happy with the timeshare, that the fees were reasonable, so they decided to purchase two more weeks. It was only after a few years that the fees starting skyrocketing and they could no longer get their desired Thanksgiving week – the week that they had purchased and had been promised would always be available if they booked 9 months ahead, as they had always done. Things only got worse from there. In the end, the timeshare holder reported that he had spent enough money to have put down a large down-payment on a studio flat in New York City (which is a renownedly expensive city to live in!).
This $6.5 million settlement marks the largest in recent history for the Attorney General’s Real Estate Finance Bureau. The Manhattan Club even admitted its wrongdoing, acknowledging that they ‘repeatedly misled shareowners about the club’s reservation process, their ability to sell back their shares, and the details of the club’s state-approved offering plan’.
Along with the massive fee, the operators of the Manhattan Club are now barred from the timeshare industry. They will be forced to sell their stakes to a third-party buyer and relinquish management control. All sponsor-appointed current officers and directors will be removed from their positions as members of the Board of the Timeshare Association.
The $6.5 million will be divided appropriately between the 14,000 or so timeshare owners that were victims of the Manhattan Club’s timeshare scam. This is likely to work out at about $464.29 per person, which is scarcely recompense for the huge losses they have suffered.
Scams like this one are common across the timeshare industry, which is a crying shame when there are plenty of legitimate timeshare companies out there selling a great product legally and ethically. We’re committed to stamping out such scams and abuse, so if you feel you’ve been wronged by your timeshare resort or operators, then please get in touch. We’ll happily offer you no-obligation advice and, obviously, help you with any further steps you might like to take.