A 2024 study by the American Resort Development Association found that almost 10 million Americans own a timeshare. Another study found that as many 85% of them regret their purchase, primarily due to high maintenance costs and other fees.
At the same time, timeshares often quickly lose much of their value, making it difficult for owners to sell or get out of their obligation.
That makes them vulnerable to what are known as timeshare exit or resale scams. How prevalent are they? Consider these headlines from U.S. Department of Justice or FTC press releases in just the past few years:
- “Lead Defendant in Multimillion-Dollar Boiler Room Scam that Targeted Timeshare Owners Pleads Guilty to Wire Fraud.”
- “Owners of timeshare resale company sentenced to federal prison for defrauding over 8,000 victims out of $18 million.”
- “FTC, Wisconsin Attorney General Take Action Against Timeshare Exit Scammers for Cheating Consumers Out of $90 million.”
The defendant in the first case operated four different telemarketing companies that scammed dozens of timeshare owners. Once a company became inundated with complaints,
he would form a new one to perpetuate the fraud.
In the second case, the operators charged timeshare owners up to $2,500 in advance and often convinced them to pay phony closing costs or other fees. But according to the FBI Special Agent in Charge, they never once sold a timeshare interest.
The last case involved Missouri-based companies that operated under a variety of names, including Consumer Law Protection, Square One and Timeshare Help Source. The regulators said the defendants used direct mail and in-person seminars to “pitch a dizzying array of deceptive claims to pressure consumers into paying for their services,” including:
- Falsely claiming to be associated with timeshare companies;
- Falsely telling consumers that they couldn’t exit a timeshare without paying the defendants’ exorbitant fees;
- Failing to provide promised refunds; and
- Forcing consumers to sign contracts that they were told they couldn’t cancel in violation of the FTC’s Cooling-Off Rule, which guarantees consumers the right to cancel a door-to-door sales contract within three business days of the sale.
The FTC and Wisconsin Attorney General thanked the Better Business Bureau of Greater Missouri and S. Illinois for their help with the case. One consumer who filed a complaint with the BBB about Consumer Law Protection said, “Consumer Law Protection stated that they would get us out of our Timeshare for $19,732.00. That was signed on 06-24-2020. It is now over 3 years with minimal communication for the first year and no communication in the last few months. The worst part is we still are obligated to pay the annual fees to these timeshares.”
Red flags of a timeshare exit scam include a high-pressure sales pitch, often at a seminar in a nice restaurant; stoking fears about big increases in maintenance fees; having to pay an upfront fee; and a contract that doesn’t include a three-day right to cancel.
Check out any company offering to help you unload a timeshare with the BBB and online using terms like “scam” and “complaints.” Be sure the reseller or agent is licensed in the state where your timeshare is located. Contact the resort that originally sold you the timeshare to see if it has options for getting out of your obligation.
Randy Hutchinson is president and CEO of Better Business Bureau of the Mid-South.
This article originally appeared on Memphis Commercial Appeal: Better Business Bureau of Mid-South: Beware of timeshare exit scams
