In the wake of the financial crisis of 2008 many timeshare owners, who previously wanted to sell their timeshares, suddenly became desperate to do so.
Reversals of fortune meant many owners had to unload, fast. But selling a timeshare, even in good times, can be a challenge. When the economy has just gone over a cliff? Nearly impossible.
Enter the timeshare resale scam. Con artists suddenly began contacting timeshare owners, using a variety of company names, giving them hope that their troubles were over.
Against all odds, a buyer had turned up who wanted the lucky owner's timeshare. There would only be a few necessary fees to cover the closing.
If the timeshare owner bit, their money was gone and they were still stuck with their timeshare. While you would think this particular scam would have run its course by now, it apparently has not.
Arrests in Florida
Florida Attorney General Pam Bondi has announced that officials in her state have worked together to break up what she describes as an elaborate scam to defraud timeshare owners.
Six Floridians have been arrested and charged with one count each of organized fraud for operating a telemarketing scam. While the defendants were all located in Florida, the victims are believed to be scattered nationwide.
According to the investigation, defendants used three different company names; Clement Park, Inc., Clyde Trails Financials, or Eastgate Solutions, LLC. They had "virtual" offices in Tampa.
According to the complaint, telemarketers would contact timeshare owners and claim to have a buyer interested in purchasing their unit. But investigators say no timeshares were actually sold and more than 350 victims have been identified who were bilked out of more than $753,000.
False hope
The victims, however, were convinced they had finally unloaded their units. After negotiating a sale price they were allegedly instructed to sign a sales contract. But before they could receive a check, they were told, they would have to write a check for closing costs. After that, the investigators say, the scammers disappeared.
Florida has a recently-passed state law designed to crack down on this kind of fraud. Called the Timeshare Resale Accountability Act, it forbids timeshare resellers from making unfounded promises and collecting large fees.
Last summer the Federal Trade Commission (FTC) launched a multinational effort against the timeshare resale scam. It initially brought 191 actions and participated in enforcement actions in 28 states.
Still, the scam goes on. Why? Probably because there are still lots and lots of people with timeshares who are desperate to unload them.
The best way to avoid being victimized by this scam is to avoid becoming a timeshare owner in the first place. Actually, “owner” is not quite the right word.
How it works
When you “buy” a timeshare, you are not buying real property. You are actually paying for the right to occupy that property for a specified time.
When you check into a hotel, you are doing the same thing. Only you aren't required to keep making monthly payments and pay fees for the upkeep and management of the property. With a timeshare, you are.
According to the Timeshare Users Group (TUG), which is supportive of the timeshare concept and counts many happy owners among its members, the industry has historically been plagued by developers who have used high-pressure and deceptive sales tactics, with misleading and inaccurate portrayals of what buyers could expect from their timeshare ownership.
“Consumer awareness and education is still essential for owners to avoid being misled and to obtain the most value from their timeshare purchases,” the group says.
TUG also notes that because of the negativity surrounding timeshares, many developers have dropped the term “timeshare” and now use other terms, like “vacation ownership” or “fractional ownership.”
Whatever it's called, once purchased it may be very hard to sell, exposing you to fast-talking scammers who claim they have a buyer who wants your unit.