October 2009 Developments - 38

State The Role Attorneys General Play in Our Industry hile Congress debates what additional federal regulations or agencies are needed to protect consumers in the wake of the worst ﬁnancial crisis since the Great Depression, there is an existing regulator that timeshare developers and managers would be well-served to remember: state attorneys general. Whether it is the proper disclosure of fees, the offer of prizes that are difﬁcult to redeem, proper notice to the consumer of rights of rescission, marketing practices, resolution of consumer complaints or many other aspects of your business—each is under increasing scrutiny by state attorneys general. Jerry Kilgore W Through consumer protection laws or timeshare-speciﬁc laws, most state attorneys general interact with the industry at some level. Part of the attorney general’s duties in the consumer protection realm is ﬁelding complaints. Often, many play a more direct role in regulating the timeshare industry in their state; in some states, like Missouri, the attorney general holds the primary enforcement role. We are all familiar with many of the wide-ranging effects the current economic troubles have had on consumers, including timeshare buyers and owners. As household budgets have tightened, some owners have sought to sell or even give away their timeshares, and attorneys general have become increasingly involved in two ways. First, some owners are looking for a way out of their commitment and have ﬁled complaints on a variety of issues, hoping the threat of government action will pressure the developer into voiding the contract. While some complaints have merit, most can easily be resolved. Which leads to the second most common interaction point—unfortunately, the need to “unload” their timeshare has made some owners vulnerable to fraud, as disreputable parties make promises of help they can’t fulﬁll. In both cases, attorneys general are taking a greater interest in the timeshare industry, as a limited number of bad actors chip away at the reputation ARDA and its members have worked to build over several decades. It is important to remember that virtually all state attorneys general are elected ofﬁcials. Inevitably, politics plays some role in how their ofﬁce/agency functions, based on the individual attorney general (AG). Many of them aspire to be governor or some other form of political ofﬁce, while others want to make a name for themselves in support of their reelection. That combination of ambition and regulatory power can be a potent force to deal with, should your company be the subject of an AG investigation. (See the sidebar on p. 39 about tips for what to do.) Moreover, it is not uncommon for state AGs to publicize actions being taken against companies, so other businesses and the general public are aware of the priority issue and the particular business/industry under investigation. The “bully pulpit” can be the most effective tool in the arsenal of an attorney general for enforcement and for winning political points. The sidebar also provides critical resources for you to engage the AG and to resolve the matter quickly and effectively. D Jerry Kilgore is a partner with the Williams Mullen law ﬁrm. His e-mail is jkilgore@ williamsmullen.com. Developments • October 2009

October 2009 Developments

Table of Contents for the Digital Edition of October 2009 Developments