Getting out of an expensive, rarely used timeshare can be a nightmare. Exiting a timeshare is complicated. And many timeshare exit companies are scammers who are out to take even more of your hard-earned money. But for active duty service members, the Military Lending Act (MLA) can provide a fast exit from onerous timeshare obligations.
What is the MLA, and who does it protect?
If you are a U.S. service member, you should be aware of the protections provided by the MLA. The MLA, enacted in 2006, protects active service members from certain predatory lending practices. The MLA covers certain types of borrowing such as installment loans, overdraft lines of credit, and payday loans.
These protections come in the form of an interest cap of 36%, known as the Military Annual Percentage Rate (“MAPR”), banning mandatory allotments, forbidding mandatory waivers of consumer protections, and other specialized privileges. For more information about the MLA, please see Part 1 of this series on the MLA.
What does the MLA have to do with timeshares?
Many timeshares violate the terms of the MLA. For too long, timeshare companies have preyed on service members through shady marketing tactics. Timeshare companies purposefully target service members because they are likely to fulfill their financial obligations. Timeshare companies will lure servicemembers into “high-pressure,” hours-long sales pitches, coercing them to purchase fractional interests in vacation properties.
However, timeshare companies habitually fail to take the steps needed to determine whether the financing terms of timeshare agreements charge interest rates that exceed the MAPR limits. Often timeshare companies do not adequately check if the borrower is covered by the MLA. Any loan or credit agreement that fails to comply with the MLA is “void from their inception.” This means that the service member is not legally bound to these illegal agreements.
How do timeshare agreements violate the MLA?
The credit agreements used by some timeshare companies are arranged as ownership of a “fractional timeshare interest” and do not signify ownership of a “dwelling.” This makes these arrangements installment loans, which are covered by the MLA.
Furthermore, some timeshare companies have failed to properly disclose the MAPR, which needs to be done orally and written in a separate document according to the MLA. Some borrowers are forced to agree to forced arbitration provisions, which also violates the MLA. These MLA violations nullify a service member’s credit agreements and give them the right to free themselves from these timeshares.
How can I get help exiting my timeshare?
Knowing your MLA-given rights is essential to ensuring that you are treated fairly. Please call us at 844-696-7492 (toll-free) to learn more about your rights concerning your timeshare agreement or click here to submit your info.
Edelson Lechtzin LLP is a national class action law firm with offices in Pennsylvania and California. In addition to cases involving consumer fraud, our lawyers focus on class and collective litigation in cases alleging violations of the federal antitrust laws, securities and investment fraud, wage theft and unpaid overtime, employee benefits plans, and dangerous and defective drugs and medical devices.