Lawsuit Takes Aim at Wyndham's ‘Florida-Only’ Arbitration Provision, 'Fraudulent Omission' in Contracts

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A proposed class action alleges “a single, common fraudulent omission” in Wyndham Vacation Resorts’ and Worldmark’s contracts with timeshare owners makes the agreements “void and rescindable”—and that an alleged violation of consumer arbitration rules may be the reason why so few arbitrations with the companies actually make it to the negotiating table. 

The “material omission” at the center of the 30-page lawsuit is that Wyndham and Worldmark allegedly fail to tell consumers that they will be unable to use their timeshares to stay at their desired locations. If the plaintiffs and proposed class members had been told this fact, they would not have bought their timeshares, the suit contends. According to the lawsuit, the omission of the fact that consumers will not be able to use their timeshares to stay where they want voids their contracts with defendants Wyndham Vacation Resorts, Worldmark, The Club, and Wyndham Resort Development Corporation. 

At further issue in the suit is “one identical arbitration clause” wielded by Wyndham and Worldmark that eight timeshare owners allege violates Principle 7 of the not-for-profit American Arbitration Association’s (AAA) Consumer Due Process protocol, which mandates that arbitrations be conducted at locations that are reasonably convenient to the involved parties. The plaintiffs argue that Wyndham and Worldmark’s arbitration clause is a problem given it requires any AAA arbitration to proceed only in Orange County, Florida, even though Wyndham timeshare owners are scattered across the country and are required to handle their disputes through arbitration. 

As a result of the contract’s language, the AAA has declined to administer the plaintiffs’ disputes with Wyndham and will not hear any arbitrations between Wyndham and any consumers, the lawsuit claims. In the last five years, the lawsuit says, the AAA has closed only seven cases against Wyndham, a number that’s “incredibly small” considering thousands of Wyndham customers seek to cancel their timeshare contracts each year.

“Six of the seven AAA cases settled or were withdrawn,” the case, filed in Florida federal court, says. “Plaintiffs are informed and believe that the reason so few cases go to arbitration is that Wyndham fails to comply with AAA Consumer Arbitration Rules.” 

In the past, the case says, Wyndham, if it was sued by a consumer, would move to compel arbitration, a private out-of-court process by which disputes are handled by a neutral party called an arbitrator. Now, however, consumer arbitrations filed against Wyndham “cannot proceed” due to Wyndham’s “failure to comply with AAA rules,” the suit alleges.

“Wyndham can not [sic] demand arbitration one minute and fail to comply with AAA rules the next minute,” the plaintiffs scathe, alleging they signed on with the defendants as the result of a fraudulent omission. 

In light of the myriad, well-documented issues that come with owning a Wyndham timeshare, the plaintiffs charge that there is no benefit to signing on with the defendants. A Wyndham timeshare is “a liability, not an asset,” according to the suit.  

The lawsuit looks to represent all persons who’ve signed Wyndham or Worldmark timeshare agreements in the last five years and who have arbitration clauses in their contracts. Additionally, the plaintiffs look to represent all persons who’ve signed Wyndham or Worldmark timeshare agreements in the last four years and who have arbitration clauses in their contracts and have unsuccessfully requested cancellation of the timeshare contracts. 

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