Timeshare seller Westgate Resorts, Ltd. and a number of affiliated entities face a proposed class action that alleges the companies have repeatedly violated a federal law intended to protect members of the United States military from predatory lending.
The 40-page lawsuit alleges Westgate and subsidiaries CFI Resorts Management and Westgate Vacation Villas have run afoul of the Military Lending Act (MLA) by systematically failing to determine whether certain individuals are borrowers covered by the law and calculate accurate interest rates pursuant to the statute. Moreover, the suit claims that Westgate has failed to orally disclose to covered borrowers a military annual percentage rate (MAPR) for the total amount of interest they would pay, including fees and other credit-related charges.
The case also alleges Westgate has failed to provide mandatory legal disclosures in a separate writing and unlawfully required covered borrowers to agree to mandatory arbitration clauses, the use of which is prohibited under the Military Lending Act.
According to the lawsuit, credit agreements, such as those extended to U.S. military members for pieces of a timeshare property, that violate the MLA are “void from their inception.”
“Westgate made no attempt to determine if Plaintiffs and members of the Class were covered borrowers,” the lawsuit alleges. “It is their routine and systematic business practice to not determine whether an individual is a covered borrower.”
Per the complaint, Westgate “lures” military families into “high-pressure” timeshare sales presentations in which they’re frequently convinced to buy timeshare interests at any of the company’s locations, including the Westgate Palace outside of Orlando, Florida. According to the lawsuit, members of the military are “uniquely attractive victims” for predatory timeshare lending practices, including due to the expectation that they satisfy financial obligations in a timely manner under the Uniform Code of Military Justice and the fact that they have a reliable source of income that can be subject to garnishment. Further, the case states that military members targeted by timeshare companies are “relatively unsophisticated” given their average age and educational background.
The filing also stresses that servicemembers with a security clearance face additional pressure to satisfy financial obligations given the potential for them to lose that clearance over nonpayment.
The case alleges that Westgate finances the sale of vacations “cloaked in the disguise” of a timeshare interest. Importantly, the suit relays, the purchase of a Westgate timeshare interest is a more sophisticated type of financial transaction than the company lets on, and more closely resembles an installment agreement that allows a party to have the potential to rent a vacation property sometime in the future.
According to the lawsuit, the plaintiffs, an active-duty U.S. Army servicemember and his spouse, were “coaxed” into an agreement with Westgate after they made contact with the company’s sales representatives outside of a restaurant in Williamsburg, Virginia. The suit alleges the Westgate sales reps, who promised the plaintiffs a $175 Visa gift card just for sitting through the pitch, lured the couple into a five-hour high-pressure sales presentation “designed to ensure the Plaintiffs and other attendees would not leave without purchasing a timeshare property.”
The lawsuit looks to represent all borrowers covered by the Military Lending Act who entered into agreements with Westgate in substantially the same form as the plaintiffs within the last five years.
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