Frauds call claiming they have a buyer or renter for your timeshare – and steal your money

There are reports that 9.1 million US households own a timeshare.  And anyone who owns a timeshare is a potential fraud victim.  Often the timeshares people buy are not at luxury resorts, but are at more familiar places like Branson, Missouri.  Many people also often find that they really can’t afford to visit these, and that the various fees they have to pay every year are burdensome.   This may be why there is a very active radio campaign for people offering their services to help consumers get out of their timeshares.  Many older people are the owners of timeshares.

This situation has opened the door for timeshare resale fraud.  Those interested in selling their timeshares often list them online.   The frauds can thus easily locate a ready pool of potential victims to call.  Telemarketers claim to have a buyer for the timeshare, and that they just need some money upfront to handle title checks or other expenses.  But this is nothing more than the most basic sort of theft – there are no actual buyers (or renters) and victims are simply robbed of their money.

 So how does this work?

A case brought by the FTC’s Atlanta office in December 2016 nicely illustrates this fraud.  Pro Timeshares operated out of two sales rooms in Florida for at least five years.  They called victims and told them that they had a buyer for the victim’s timeshare (or someone who would rent it for a great price). Victims were told that they simply needed to pay some money for costs needed for title purposes — but that those would be refunded at the closing.  Victims paid between $500 and $2500 each to the company through their credit cards.

Victims were also sent a form contract to sign and return.  They were urged to sign quickly, because the closing was supposedly going to happen in a week or two.  Victims who read the contract found that it was simply a contract to advertise the timeshare.  When they asked Pro Timeshares about this they were assured that this was simply legal boilerplate and that there really was a sale (or rental) that would happen very quickly.  Sometimes victims were called again, and told more money was needed to make the sale happen.

Needless to say, there were no buyers or renters and victims did not get refunds from the company.  This enterprise took in more than $17 million while it was operating.  The FTC sued, and a federal judge issued a Temporary Restraining Order ending deceptive claims, freezing the company assets, and appointing a Receiver to take over the business.  The Defendants later stipulated to a preliminary injunction continuing this relief until a trial can be held or the case settles.

How many victims are there of timeshare resale fraud?

Two or three years ago this area was the single largest subject of complaints to the Florida Attorney General’s office.  Although complaints have been reduced after some vigorous law enforcement action, the recent Pro Timeshares case demonstrates that this fraud is still very much alive.

Why do victims fall for this fraud?

Like many frauds, the callers are professionals, and thus very good at that they do.  And they tell people something that they want to hear – that they can get rid of a timeshare and make some money in the process.

Timeshare resale fraud also operates on the old “Big Lie” propaganda technique, where it is at times easier to fool people with a true whopper than it is to convince them on a minor point.   In our daily lives most of us are accustomed to listening for small inconsistencies or shadings of the facts.  It is difficult for many of us to believe that anyone would just flat lie about something to just steal money.

 How has law enforcement dealt with this issue?

The FTC has brought at least ten cases against these types of operations over the last few years, and the State of Florida has also brought a variety of cases.  In addition, there have been a number of criminal prosecutions.  The U.S. Attorney’s office for the Southern District of Illinois has been particularly active, targeting timeshare resale frauds operating out of both Florida and Arizona.  They have not just concentrated on going after the owners of these boiler rooms, but have convicted large number of those who actually made fraudulent claims on the phone.  To date they have successfully prosecuted 73 people.

In response, the timeshare resale operations have gone to great lengths to hide their actual locations, and some have begun operating from Mexico or Panama, making it difficult for law enforcement to find these operations or to take effective legal action.

Newer variations on this fraud

Some timeshare frauds have more recently been claiming that a corporation or other business wants to rent the timeshare for an extended period – at a great price.  Again, they request money up front in order to make this happen, and it is a total fraud – there are no renters.

In addition, many people have bought timeshares at resorts while vacationing in Mexico.  Over the last couple of years we have seen callers pretending to be in the US and claiming to have a buyer for the timeshare.   But they are really calling from Mexico, perhaps spoofing the Caller ID so that it looks like it is a domestic call.  The Mexican operations often claim money is needed because of Mexican law, and frequently impersonate actual Mexican government agencies.

Finally, victims are getting calls claiming to be from a government agency and that they can return the victim’s lost money.  They need a fee to process this.  These are frauds, known as recovery rooms.  No one from any kind of government agency will ever make you pay to get money back.

 What to do if someone claims they can sell (or rent) your timeshare?

  • Do an internet search of the company name before doing business with any company claiming they can sell a timeshare.
  • The Better Business Bureau has online reports for all businesses, whether they are BBB members or not. Check out a business at org.
  • Read the contracts carefully. If it only discusses advertising a timeshare walk away.
  • If you must pay, do so by credit card. You may be able to charge back on the card if you are defrauded.
  • It is illegal for telemarketers to receive payment through Western Union, stored value cards such as GreenDot, or by getting checking account information over the phone.
  • If you’ve been ripped off complain to law enforcement. Even if they can’t get your money back the complaint may help keep others from being defrauded.
  • To file a complaint go to FTC.gov or call 877/FTC-help.
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