Feds crack down on timeshare fraud 'epidemic'
Criminal charges announced against 184 people as con artists ramp up activity against owners.
Cracking down on an "epidemic of fraud" targeting timeshare owners unable to sell their properties, the Federal Trade Commission today announced nearly 200 actions brought by the federal government, 28 states and 10 countries.
In addition, criminal charges were filed by federal prosecutors and local law enforcement officials against at least 184 people, the FTC said.
"Con artists take advantage of timeshare owners who have been in tough financial straits and are desperate to sell their timeshares," Charles A. Harwood, acting director of the FTC’s Bureau of Consumer Protection, said.
Most of the scams aim at owners desperate to unload their properties and the fees that come with them. The timeshare owners are typically hooked by the scammers when they say they have a buyer lined up for the property. Then the seller is asked to make a deposit or a payment for some other reason. The timeshare owner ends up out the cash -- often more than $1,000 -- and, just as they were before, without a buyer.
"Truly, we have an epidemic of fraud in this area," Harwood said at a news conference in Miami. "It has really ballooned."
The number of complaints about timeshare scams doubled from 2009 to 2010 and tripled in 2011, dipping a bit last year, but still remaining well above 2010 levels, Harwood said.
Florida Attorney General Pam Bondi said complaints to her office's consumer hotline had swelled to more than 12,000 -- outpacing the next three complaint categories combined -- prompting a series of cases against alleged scammers.
The FTC announced it won restraining orders against three companies alleged to have taken more than $18 million from victims without selling their properties. All three companies' assets were frozen by federal judges.
The companies are:
- Resort Solution Trust Inc., which allegedly collected advance payments of $800-$3,400.
- Resort Property Depot, Inc., which was accused of collecting $300-$3,000 from consumers.
- Vacation Communications Group LLC, also known as Universal Timeshare Sales Associates and M.G.M. Universal Timeshares, collected $1,600-$2,200.
All three companies were based in Florida, though Vacation Communications Group pretended to be located in other areas including Beaverton, Ore., and Reno, Nevada, the FTC said. That company also had a base of operations in the Dominican Republic, the FTC said.
Some of the nearly 200 cases announced today date back more than a year. While many of the actions the governments took involve lawsuits and written agreements to cease certain activities, they also include simply issuing warnings about timeshare scams. A full list of the actions can be found here.
In addition to going after scams that target timeshare owners, officials also took action against sleazy travel "prize" promotion companies that dangle low-cost or supposedly free trips in front of people, but are really getting them to commit to high-pressure timeshare sales presentations. These promotions are sent by mail, email and are also advertised on radio, TV and online, the FTC said.
Here are some tips to avoid falling for one of these scams:
- Don't pay money upfront when selling a timeshare. As with any property sale, the commission is paid when you get paid.
- Don't send money via a money transfer service such as Western Union or MoneyGram. It's the same as handing someone cash.
- Don't believe promises from a cold call that your property is being sold.
- Don't fall for pressuring tactics, such as being told if you don't agree to the deal the "seller" will back out.
- Don't accept a "free" trip or vacation prize without understanding the catch.
Why would you pay money for something most people never use and has a bad resale value
But, I do like the free gifts and perks for taking the tours.
High pressure sales pitches don't bother me in the least.
I agree that buying a timeshare directly from the company responsible for distributing them rarely (not never!) makes sense, I've bought several timeshares off eBay, etc. - and use mine all the time. Are they for everyone? No - of course not. If you don't use it - they can be awfully expensive. And you have to do your research going in to the purchase; don't blindly trust what the salesperson tells you as gospel (would you believe anyone else trying to sell you an item - without doing your research first)?
We are about to retire - and currently have a job that allows me to travel...a LOT! We've been able to go places and stay in resorts we couldn't afford (or want to pay!) if we didn't have our timeshare.
So - don't just rule them out; at the same time, don't buy one unless you're going to use it - and understand that 1) it won't be worth much, if anything, when you try to sell it, and 2) you DO have to pay for the maintenance & upkeep - even when you're not using it. On that note, I wouldn't buy anywhere that wasn't kept up; I *do* expect them to spend my $ on exactly that - new roofs, etc. The same is for condos and other community-type living arrangements.
I keep getting calls from these scammer companies that want to invite me to a "timeshare update." They try to make it sound like they are affiliated with the timeshare management company, but they are not. One called yesterday, so I asked her what company she worked for. She said some company I had never heard of, but inferred that they were contracted by my management company. I asked her, "what timeshare do I own?" She couldn't answer and then tried to change it to saying they were contracted by the exchange company. So, I asked her, "what exchange company do I use?" She said they are contracted by RCI and Interval International, Worldmark and others. What a load. Complete fishing expedition on their part. If they were contracted by my timeshare or exchange company, they would have at least had the basic information at hand...
Years ago I would have commented about how can one even begin to fall for this scam.
But in the age of few people reading newspapers or any other sources of information, not keeping up with your own state much less the country has created a huge percentage of Americans that only know how to text / tweet and stay addicted to Facebook.
It's no wonder we are 28th in global personal education / abilities. We choose to bury our heads in the sand rather than to learn something each day. Of course our public schools and lack of responsible parents have a great deal to do with this.
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