Confiscate is in their real-life example, they're purchasing the contract, the old owner hasn't used any points this year, the contract transfers in the second half of the year and if Wyndham refuses to award the unused points when the contract transfers that would be confiscating.
From what I've heard, this does happen sometimes - though in many cases, I've also heard if the owner pursues it with Wyndham and requests a points audit, the points are eventually awarded as a result. On the flip side, there was an owner on Facebook late last year and they were buying their first resale contract and I was sure the points wouldn't transfer, and in December they actually were given the points automatically without any need for follow-up. So there doesn't seem to be any consistency, but I think the "points won't transfer in the second half of the year" is somewhat overstated but sometimes takes additional effort to fix.