Kirkland Company Ordered To Pay $2.6M In Restitution

KIRKLAND, WA — A Kirkland-based firm will pay at least $2.61 million in restitution and other fines to resolve a lawsuit from the Washington State Attorney's General's Office alleging it misled consumers. The state's suit alleged Reed Hein & Associates, a timeshare exit company, deceptively advertised full money-back guarantees, but many customers were still denied refunds.

"In practice, Reed Hein regular denies refunds," the attorney general's office wrote. "Reed Hein's position is that anything that terminates the customer's timeshare ownership is an 'exit' in satisfaction of the guarantee, meaning that Reed Hein is not obligated to provide a refund — even if that 'exit' is the resort foreclosing on the customer, or the customer finding some way out of the contract on their own."

The state estimated more than 2,800 Washington customers signed contracts with Reed Hein to help them exit timeshares, paying thousands in fees, and saw no resolution even years later. Nearly 300 people filed complaints with the state.

"Reed Hein deserves its F rating from the Better Business Bureau," said Attorney General Bob Ferguson. "Their dishonesty and reckless behavior had grave financial consequences for its customers. Thanks to my legal team, millions of dollars will be returned to Washingtonians who lost money because they believed Reed Hein's deceptive promises."

In one case, the attorney general's office said a man received a letter notifying him of a successful exit from his timeshare and future payments, only to find out months later that his account was past due and sent to collections, preventing him from qualifying for a loan.

Under the terms of the agreement, the Kirkland company is ordered to:

• Discontinue certain advertising and sales representations, including that Reed Hein “forces” or “compels” resorts to take back timeshares and that Reed Hein does not sell its customers’ timeshares, both of which are not the case.
• Discontinue certain damaging “exit methods” including transfers that are done without the knowledge or consent of the timeshare resort.
• Disclose to customers that some “exit methods” may lead to foreclosure, and provide opt-out and refund options.
• Disclose some of its business practices to consumers, including that customer “files” may be outsourced to third-party vendors.
• Make sure at least 20 percent of each customer’s payments is set aside for refunds.
• More readily provide refunds to customers, including a partial refund if the customer is not out of their timeshare three years from the date of contract.
• Retract and apologize for certain public statements made since the filing of the lawsuit.
• Post an announcement providing a link to the consent decree, which must remain on the company’s website for the duration of its operation.

If the company does not uphold its end of the deal, it will be on the hook for another $19 million in penalties. The attorney general's office is standing up a claims process to distribute restitution payments to consumers based on their financial losses. Those who may qualify for claims can contact the state via e-mail.