Timeshare Pitfalls and Scams

If you are a timeshare owner and happen to get a call from a telemarketer promising cash in exchange for your “bonus weeks,” Arizona Attorney General Mark Brnovich suggests hanging up.

Brnovich has filed a consumer fraud lawsuit against Condosmart LLC, an Arizona-based timeshare resale and rental advertising business. The suit accuses the company of making hundreds of unsolicited telemarketing calls to consumers who owned timeshare properties all over the U.S. 

According to Brnovich's records, consumers in Arizona, Arkansas, California, Florida, Georgia, Nevada, New Jersey, New York, Pennsylvania, and South Carolina may have paid Condosmart thousands of dollars for services that were not provided.

The suit claims Condosmart, which also does business as CS Marketing, CSR Financial, and Condosmart Marketing, engaged in deceptive and misleading business practices as it targeted consumers who owned timeshare properties.

“Routine misrepresentation”

Brnovich says the company's telemarketers were armed with a lot of information about the condo owners, including their name and where the property is located. He says that during sales calls, the telemarketers would routinely misrepresent that the owners had bonus, or extra, weeks that were available for sale to third parties.

For example, in some cases Brnovich says timeshare owners were told well-known Fortune 500 companies wanted to rent their extra timeshare weeks for large events like automobile races, trade shows, and sporting events.

The catch, says Brnovich, is the condo owner would be required to pony up anywhere from $995 to $1995 to market his or her “bonus” weeks.

The suit claims the company has violated the Arizona Telemarketing Solicitations Act by failing to file a verified registration before soliciting consumers and by failing to maintain a surety bond, as required by Arizona law.

Florida crackdown

In states where there tend to be a lot of timeshare properties – like Florida – state officials spend a lot of time prosecuting alleged timeshare fraud. Florida Attorney General Pam Bondi says her office is constantly investigating telemarketers that push their services on timeshare owners trying to get out from under their obligation, either by selling or renting their time.

Florida passed sweeping consumer protection legislation in 2011 that, among other things, prohibits a timeshare resale advertiser from providing brokerage or direct sale services, or misleading a consumer as to the advertiser’s sales success rate.

Bondi says timeshare owners should always be wary of any marketer who calls out of the blue, expressing the opinion that the consumer's property is in a “hot” area and in demand. Unless it's a South Beach property for the week between Christmas and New Years, it probably isn't.

Bond has other tips for avoiding timeshare resale scams here.

Buying a timeshare is no problem at all. You can get a free lunch and maybe a boat ride, a massage or some other perk just for listening to a hard-sell pitch for a resort getaway that you use for a few days each year but pay for all year.

But as consumers sometimes learn to their dismay, the timeshare payments add up and they're not often able to use the facility as frequently as they had hoped. Even worse, people lose their jobs, move away, get old or sick. Sometimes they die, leaving family members trying to figure out what to do with their timeshare.

Bingo, along comes a friendly voice on the phone, offering to sell the unit for a small fee. Sometimes, the person the phone even claims to have a buyer all lined up and ready to lay down some heavy cash.

The hitch? It might be taxes, or a processing fee or a filing charge -- you know, something that sounds reasonable. 

A sad tale

Unfortunately, what happens next is that the consumer wires the money and the friendly voice disappears. We're flooded lately with emails telling this sad tale. Here's a recent email exchange with a consumer named Christy:

Christy: Can you  please  give me some advice. We bought a time share with  Occidental. A third party  contacted us looking to buy it for $16,000. We want to get rid of it, they said the buyer is in Mexico and we need to pay an upfront tax of $2,700 before the $16,000 is released. What do you think.

ConsumerAffairs: NO, NO, NO. You will never see your money again if you send it to someone in Mexico. Don't do it. 

Christy:  Have you ever heard of this group Third Coast Group out of Texas? They are the ones working with us. Said the $2,700 is a tax to Mexico that we have to pay before we get the money.

ConsumerAffairs: We do not recommend ANY timeshare resale company that charges an upfront fee. 

Christy: They are saying it's Mexico taxes.

Here's an email from Noel: 

We have been contacted by these 2 groups out of nowhere, saying that they have offers to our timeshare. Sounds believable, but both of them are insisting we have to pay the closing cost, legal documentation costs and transfer costs, first before they can proceed with the sale. It is not a small amount, almost $1,500.

Still stuck

We also heard from John, who had thought he was free of his timeshare, only to find out that he was out thousands of dollars and still stuck with the timeshare.

In October 2013, an agent for Exit Pros, a company in Daytona Beach, came to my house and convinced to turn the deed over to them and they would pay the maintenance but would offer me no money. On the contrary, I ended up paying $3,200 to them for transfer fees and other indigestible costs. In April 2014, the timeshares association assessed me $1285 for refurbishing costs.

I explained that I no longer owned the property.but they informed me that I was still the owner.

Then there's Joe, who seems to have escaped unscathed, at least so far:

Joe: My wife and I got caught up in a timeshare resell scam while in Los Cabos, Mexico. I am seeking information about attorneys who have experience with these fraudulent companies.

ConsumerAffairs: If the transaction occurred in Mexico, you need a Mexican lawyer. Simple as that. No one in the U.S. can retrieve money that you paid to someone in another country.

Joe: The first part of the scam took place in Mexico and I understand that. The second part of the scam is solely with a reseller company in Wilmington, Delaware, with absolutely no reference to Mexico other than the contract was signed in Mexico. Also, I have not sent any money to this outfit but they are trying to compel me to wire money to "continue with the process". ... Quite sad indeed! I guess I will just tell these con men to go pound sand and fight them in court if they file suit.

A contract signed in Mexico would normally be subject to the laws of Mexico, not the United States, so it's likely that it's safe for Joe to ignore further entreaties.

"Very valuable"

And here's a slightly more involved email from Gina:

I was solicited by Le Reve to visit their property while in Mexico on June 4th. They offered me $25,000 for my existing timeshare in NC. The amount is much more than I paid, and they explained that Mexican nationals can obtain a VISA to enter the US much easier if they have property in the US, therefore this deeded timeshare that I own is very valuable to them.

To make a long story short, after much wining and dining and free massages, Gina was told she would have to buy into a new vacation membership plan called Le Club. After that, she would be paid $25,000 as well as $6,000 each year for renting out some of her Le Club weeks. 

She didn't tell us how much she had to pay in exchange for all this but admitted it sounded too good to be true. Guess what? It was. The money didn't come through, the Le Club website is "under construction" and Gina has a big fat hole in her bank account.

Common elements

So what do all these cases -- just a few of the hundreds of similar incidents we hear about -- have in common? 

Well, aside from the fact that they all involve timeshare resellers, they require money to be paid upfront and many of them either take place in Mexico or require the would-be seller to send money to Mexico.

Either of these should be a tip-off. No one should ever pay upfront fees to sell anything -- whether it's real estate, a timeshare or an antique cello. Fees should be deducted from the proceeds at the time of the sale.

In other words, if you sell a timeshare for $25,000 and there are various fees totaling $2,000, you should get a check for $23,000. And the proceedings should be signed in the presence of licensed attorneys, duly notarized, etc. 

Second, money sent out of the United States is gone. There is no way to retrieve it if you change your mind later. Period. Anyone who tells you otherwise -- especially if it's someone asking you to send them money -- is either misinformed or trying to scam you. (Yes there are exceptions to this but they are seldom available to the average consumer and any attempt to legally recover funds sent overseas will be very expensive -- much more than a few thousand dollars).

In summary, timeshares are very tricky. The time to avoid trouble is before you buy one. Read some of our earlier stories about timeshares and consult your attorney before signing any timeshare document. 

Consumers can be victims of scams any time but are often especially vulnerable when they go on vacation. The reason is simple: Vacationers are usually in a happy, relaxed mood and may be less wary to a con. They usually are carrying more cash than usual.

So it's no mystery why scammers show up in popular vacation spots, where there are thousands of relaxed, well-financed potential victims. As bank robber Willie Sutton is reputed to have said, “That's where the money is.”

Pickpockets

The most aggressive form of scam is the pickpocket. The operator, or an accomplice, distracts your attention as he or she deftly lifts your wallet.

This scam takes some skill and carries a good bit of risk. However, you are more likely to encounter it where there are large crowds and a lot of noise and confusion.

You can guard against it by keeping your money and valuables in a secure pocket, preferably one with a button flap.

Shady businesses

A more subtle form of scammary is to simply overcharge you for a purchase. It can happen when a business tacks on fees, doesn't charge the right amount for a service, or even gives you back the wrong change.

The best way to guard against these scams is to know exactly what you are buying and what it costs. Make sure you get a receipt for each transaction and count your change, don't just rely on the cashier's accuracy.

High-pressure pitches

If you are visiting a popular resort area, chances are good you will encounter a high-pressure pitch to purchase a timeshare. These come-ons usually start with a guy on the street handing out “free” tickets to some event. The catch – you have to sit through a sales presentation.

Not all timeshares are scams, of course, but high-pressure sales tactics are when the salesman uses deception and trickery to close the deal. Florida Attorney General Pam Bondi, who deals with lots of timeshare complaints, says scams are prevalent on the purchase transaction as well as the resale.

Her advice? Watch out for the “you must act now” close. She says consumers always have the right to leave the sales office and come back later. Read your contract to determine what cancellation rights you have after you have signed the papers.

And before buying a timeshare, by all means consider whether you will want to return to the same vacation spot each year. Once you buy a timeshare, Bondi says you may not be able to sell it due to a depressed resale market.

Getting you coming and going

And if you get scammed into buying a timeshare you really don't want, chances are good you could be victimized again by a scammer promising he can sell it for you – for an upfront fee.

The Florida Attorney General's Office sued nine Florida-based timeshare resale companies in the first half of 2013 for fraudulent activity and filed motions requesting temporary restraining orders against six of those companies.

To avoid falling victim to vacation scams, try to carry little cash and instead, use a credit card for most purchases. Know where your wallet is at all times. And run when a smooth-talking guy on the street offers you free tickets or a prize.