Timeshare Deal Oversight Gets Shortchanged

South Carolina's timeshare industry may be booming, but the state agency that commission that is to look out for consumer interests in those deals has seen staff and budget cuts.

Only Florida has more time shares than South Carolina, but South Carolina Real Estate Commission has only one person keeps an eye on 14 developers and 130 resorts after layoffs and staff shifts.

That means the commission lacks enough workers to anonymously screen sales pitches.

"We only have time now to respond to complaints," Ken Kitts, the commission's time share coordinator, said. "The business has grown, and our staff has shrunk."

The business of selling timeshare points has grown, too. With that system, people don't buy rights to use specific property or a specific block of time. Instead, they're buying what amounts to a type of timeshare currency that they can use at a seller's resorts in the future.

It can be a tricky system.

While the Federal Trade Commission leaves time share regulation up to the states, South Carolina doesn't audit timeshare companies to see if the number of points sold is more than can be accommodated in their respective units in a given year.

Three years ago, South Carolina stopped screening timeshare promoters with a 50-question test on the state's timeshare laws.

By the timeshare industry's own reckoning, 15 percent of all timeshare owners in the country - nearly 600,000 households - are unhappy with their purchase.

South Carolina isn't making it easier for consumers to get out of soured deals. For instance, Florida has a 10-day window for consumers to cancel deals and Hawaii and Arizona give their consumers a week. In the United Kingdom there is a 14-day window. South Carolina give consumers five days.

The window is important because buyers often don't read contract details until they return from vacations. By then, the window may have closed, Kitts said.

The Legislature did pass a law this year that says an attorney paid for by the consumer has to be present at a time share closing. But the consumer can waive that.

One consumer protection is long gone. South Carolina began regulating the industry in 1981 and set up the Vacation Time Sharing Recovery Fund to reimburse consumers losing money to unscrupulous sellers. That fund once had $250,000 to help aggrieved time share owners, but it never was used to make buyers whole. The Real Estate Commission said the money was never needed and Legislators siphoned off the money for other projects.

"It was our hammer with which we'd put the time share industry on the anvil," Kitts said. "Over my time here, we have been successful in getting many problems resolved because of the cooperative nature of everyone. ...We didn't really feel we had to use it."

The industry should regulate itself, said Howard Nusbaum, president of the American Resort Development Association, the time share industry trade group.

"We were founded to protect the good guys, because there are still some bad guys. ... It would be counterintuitive to purposely have an industry that's trying to be unscrupulous."

Nusbaum said recent complaints and lawsuits come mostly from consumers who don't fully understand what they are buying.

"It's true of any industry," he said. "If I went and bought a brand new computer and didn't know how to use it, I wouldn't be too happy about it."

Byron Wiegand, a former time share developer who now owns a California time share resale firm, said there are "worms" in the industry, "people who have to steal" sullying the entire market.

"They're making so much money it's scary, but as far as the poor customer is concerned, I feel sorry for them," Wiegand said. "It's a shame because if they would straighten up their act, it's a good product. Underneath all this hocus-pocus, it is a good product."