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Feds crack down on timeshare fraud 'epidemic'

Criminal charges announced against 184 people as con artists ramp up activity against owners.

By Mitch Lipka Jun 6, 2013 4:28PM

Fort Myers Beach, Fla. © Ilene MacDonald, AlamyCracking 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:

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.
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23Comments
Jun 6, 2013 5:36PM
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Can't believe people still throw away their money on time-shares.
Jun 6, 2013 5:58PM
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Why would you pay money for something most people never use and has a bad resale value

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These timeshares were a fraud when they started back in the '70's.  Gee whiz, you mean our government finally figured that out 40 years later.
Jun 6, 2013 5:29PM
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I wouldn't give $10 for a stupid time share.
But, I do like the free gifts and perks for taking the tours.
High pressure sales pitches don't bother me in the least.

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J Sell you are kidding. Time shares themselves are a fraud. First you don't own anything and if they decide a new roof is needed you get the bill for your part or needs new appliances, carpet or any other things above normal maintenance. Once you have bought one you can't get out of it and they are impossible to sell. That is why you can see ones that people paid $20,000 for sale at $500, they are trying to get out from under them. Another thing is they sell 100 percent of the rooms and days but keep 20 percent and rent them out on the side. Time shares have to be the biggest scam going. 
Jun 6, 2013 9:18PM
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I own a timeshare and for families imo its a better deal than staying in a cramped hotel/motel for a week if you are not renting a condo or home for less than $850 for my 2 Bedroom. You can always pass it down or give up your week to a family member as well. Have you seen the prices of hotel/motels lately? The days of $100 nice 3-4 Star Hotels/Motels are gone in high demand locals. If I had to do it over again however I would have looked for someone selling theirs vs buying from the Property Sales Staff. Lets say I paid $10000, that same property is selling for $22000 today. I still would be happy getting $5000 back out of it. The property was secure, well kept and we had a blast using the owners facilities as well as the local beaches. For some people it works and for some people it doesn't. I can't complain. 
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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.

Jun 7, 2013 10:47AM
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I keep getting mailings (Resort Property and Vacation Communications both sound familiar now that I think about it) offering to help me "manage" my timeshare more economically.   One big problem:  I don't own a timeshare, I have never owned a timeshare!  I guess these scammers aren't very selective in whom they target.  Next time I get one, I may respond and tell them my name is Bernie Madoff.
Jun 6, 2013 7:38PM
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I own a timeshare and have enjoyed it for many years, and I like the great discounts on airfare, car rental, restaurants, show tickets, etc.  The exchanges are great.  Timeshares are worth it if you use them and take advantage of the perks.  In my case maintenance hasn't been especially high and I make up the cost by using the discounts.  

Having said that, I've gotten my fair share of scammers on the phone and in the mail over the years.  The article is correct about scammers trying to get your money by promising to sell your timeshare.  If you really want to sell it contact your home resort for advice and information.

Jun 7, 2013 11:13AM
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seems to work for some folks but full of sharks, fees can go up exorbitantly, and you don't really own anything, really.  The developer gets you to pay for upkeep on their investment, and often is able to resell weeks when people default.  Don't go to one of the free weekends with sales event required.  Some people are very vulnerable to that and the sales process is very highly developed and skilled, watch out. 
Jun 6, 2013 6:25PM
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Do any of you own timeshares ?   If you use them and dont overpay they are worth the money....There is nonthing fraudulent about timeshares....it is people ripping off those wanting to sell them...clowns
Jun 7, 2013 2:34PM
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Dumber than most321....I paid $1 for my timeshare 3 years ago on the boardwalk of a beach...the yearly fee I am paying cannot get you a unit for 7 days that close to the beach.  My first time share I bought 29 years ago and the yearly fee is only $500 up from $350 in 1984.....Sorry to hear you are not smart enough to find deals...but I have....as someone said..not for everyone....just for those who are smart enough to shop around for a good deal.....
Jun 7, 2013 11:03AM
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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...

Jun 7, 2013 1:23PM
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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.

 

 

 

Jul 18, 2014 5:44PM
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Too little, too late. These people aren't going to fix anything because they are taking the wrong approach. Until the timecrap industry is reined in, and given specific guide lines by which they can operate, and rules which are strictly enforced, then this plague and the ilk and scum scammers will continue to be scheming for your money.
Oct 11, 2013 6:31PM
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Timeshare industry is known for being very susceptible to scams.  Year after year, thousands of people around the world feel they were scammed by a timeshare developer. The reason why fractional ownership is successful, it’s because shared properties have become a tremendously profitable way for resorts to sell real estate- mostly suites in important touristic destinations. On the other hand, despite the success, timeshares have gained a bad reputation. 
Oct 10, 2013 2:12PM
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Timeshare weeks are good for large families who want spacious rooms and amenities within the resort. Timeshares are not for most people. Many families have made the mistake of purchasing a timeshare based on misrepresentations told by their sales rep. These lies are usually uncover after the rescission period. Therefore, The owner is stuck with a purchase that they can’t get rid of. This a good article on how timeshare weeks work:

http://www.timesharescam.com/blog/163-timeshare-weeks/
Jun 18, 2013 2:15PM
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The truth is that , and every day more victims fell for them. Fortunately, there are many solutions to get rid of an unwanted timeshare; however, the best way to dump a timeshare is by cancelling the contract. has many advantages, but the most important is that once the contract is properly cancelled, there are no further responsibilities attached to the resort. 
Jun 6, 2013 8:07PM
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I love reading about stupid people getting ripped off.
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