Timeshare News and Scams

A telemarketing operation that allegedly deceived consumers who were trying to sell their timeshare properties is permanently banned from the timeshare resale and rental business, and from all telemarketing, under settlements with the Federal Trade Commission. 

According to the FTC's complaint against Vacation Property Sellers Inc., Vacation Property Services Inc., Higher Level Marketing Inc., Frank M. Perry, Jr., David S. Taylor, and Albert M. Wilson, the defendants deceived consumers who were trying to sell their timeshare properties into paying an upfront fee ranging from $200 to more than $8,000, claiming they had buyers lined up or would find buyers for consumers' properties.

When consumers realized they had been duped, the defendants allegedly ignored their phone calls and denied refund requests. The FTC charged the defendants with misrepresenting their refund policies and the existence of potential buyers, and calling consumers whose phone numbers were on the FTC's Do Not Call Registry.

In addition to the timeshare and telemarketing bans, thesettlement order prohibits the defendants from misrepresenting material facts about any goods or services, and selling or otherwise benefitting from consumers' personal information.

The order imposes a $23.5 million judgment that was suspended when Perry and the companies surrendered almost all of their assets. The settlement order against Taylor contains the same conduct prohibitions and imposes a $3.7 million judgment, which was suspended based on his inability to pay. The full judgments will become due immediately if the defendants are found to have misrepresented their financial condition. Litigation continues against the remaining defendants, Vacation Property Services Inc. and Albert M. Wilson.

To avoid pitfalls when selling a timeshare unit, read the FTC's Selling a Timeshare Through a Reseller: Contract Caveats.

Visa is getting more involved in raising awareness of timeshare resale fraud because, typically, payments for this so-called service are made on credit cards. It sites Federal Trade Commission (FTC) statistics showing the number of consumer complaints about timeshare resalehas more than doubled in recent years.

Timeshares are generally condominium properties that are sold to a number of different “owners.” The owners take turns using the properties, usually for one or two weeks per year.

In addition to the purchase price, owners also have to pay monthly maintenance and management fees. These purchases are often made in the heat of the moment and after a high-pressure sales pitch. Only later do the owners realize they don't have time to use the property and can't afford the fees. As a result, they are highly motivated to sell their timeshare. But without another high-pressure sales pitch, there just aren't that many eager buyers.

Effective scam

That's what makes timeshare resale scams so effective. A timeshare property owner gets a phone call with an offer to sell a vacation property to a waiting buyer. The timeshare owner is asked to sign a contract and pay a transaction fee – usually with a credit or debit card.

But after the contract is signed and the fee collected, the timeshare owner rarely is contacted again by the reseller. In most cases, the buyer never existed, and the contract was for advertising services only.

When the timeshare owner realizes this and calls to get the fee refunded, the fraudulent reseller typically ignores the phone calls, denies any refund requests, or stalls to go beyond chargeback timeframes and evade acquirer and Visa risk controls.

That's why Visa says it is teaming up with the FTC to help timeshare owners avoid these schemes in the first place.

Two-pronged approach

"We're taking a two-pronged approach to tackling timeshare reseller fraud by working with organizations such as the FTC to help alert consumers to this emerging scam and working with financial institutions to heighten monitoring of timeshare resale merchants," said Martin Elliott, Head of Americas Acceptance Risk and Global Brand Protection, Visa Inc. "We know that there are many legitimate timeshare resellers out there. Our goal is to weed out the fraudulent ones for the benefit of merchants and consumers."

The FTC, of course, is well aware of the problem.

"If you own a timeshare, chances are you will hear from fraudsters pretending to be resellers, promising a ready buyer, top dollar, or a quick sale. This is timeshare hot air," said David C. Vladeck, Director of the FTC's Bureau of Consumer Protection. "The more pressure you get to pay fees before your timeshare is sold, the more likely it's a scam. Check out the reseller, and get all the details of the contract in writing. That includes the fees, costs, and services you'll get for your money. If the contract you get isn't what you expected, don't sign it and don't pay any money."

A number of states have also been active on the timeshare resale scam front, notably Florida, where many timeshares are located.

The Florida Attorney General's Office reported receiving nearly 9,000 consumer complaints about timeshare resale fraud in 2011, representing the highest complaint category. On April 6, Florida Governor Rick Scott signed into law the Timeshare Resale Fraud Bill, which is intended to protect the many timeshare property owners in the state from unscrupulous merchants.   

The Federal Trade Commission put the telemarketing and timeshare businesses off-limits to a south Florida couple who allegedly operated a deceptive telemarketing scheme that victimized property owners hoping to sell their timeshares.

Pasquale Pappalardo and his wife, Lisa Tumminia-Pappalardo, agreed to settlements with the FTC that permanently ban them and their companies -- Timeshare Mega Media and Marketing Group, Inc. -- from telemarketing and engaging in timeshare resale services. 

According to the FTC's complaint, filed in October 2010, the defendants conned consumers by promising that they had buyers lined up and waiting to buy the consumers' timeshares. The defendants charged consumers an up-front fee, usually $1,996, but promised a full refund upon closing of the timeshare sale.

The FTC alleged that, after the consumers paid the fee, they were told to expect a contract from Timeshare Mega Media. What they received turned out to be a contract to market and advertise their timeshare, and not a sales contract, and many consumers signed and returned the contract thinking it was a sales contract, the complaint alleges.

Those who questioned its validity allegedly were given the runaround by the company and falsely told that a sales contract would follow.

In fact, according to the FTC, the company never had any timeshare buyers lined up and never actually assisted anyone in selling a timeshare. When consumers discovered this and demanded their money back, they found it nearly impossible to get a refund, or even get a call back.

The Commission estimates that in the 20 months the defendants operated, thousands of consumers were defrauded out of at least $2.7 million. In October 2010, a federal court halted the operation and froze the defendants' assets, pending resolution of the case.

In addition to banning the duofrom telemarketing and engaging in timeshare resale services, the settlement orders announced today permanently prohibit them from misrepresenting any product or service, selling or using customers' personal information, failing to properly dispose of customer information within 30 days of the orders, and attempting to collect payments from past customers.

The order against Pasquale Pappalardo imposes a judgment of almost $2.7 million, which will be suspended when he surrenders the proceeds from the sale of a condominium.

Some consumers who bought Florida timeshares when times were good are now desperate to unload them. So desperate that they fall for timeshare resale scams, which promise they have a buyer but first demand an upfront fee.

Florida Attorney General Pam Bondi says she teamed with the Delray Beach Police Department to arrest two people she accuses of running just such a scheme. Bondi has sued William Clarke, P.A., and its owner, Gerald W. Clarke; and Provident Choice, LLC, and its owner, Nicholas Paul. Bondi says both individuals have been arrested.

The suit charges that G. William Clarke, P.A., Provident Choice, LLC, Gerald W. Clarke, and Nicholas Paul were operating  as  unlicensed telemarketers,  targeting  consumers who were previous victims of timeshare resale  fraud. Bondi says the defendants collected up-front fees ranging from $400 to$4,000  and  promised  to  assist  consumers  with obtaining refunds from a non-existent state restitution fund. Additionally, the companies claimed to be  working  with  various state agencies, including the Attorney General’s Office.

Second suit

In a second case, Bondi has filed suit against TS Luxury Group, Inc., another timeshare resale company, and its owner, Mary Filocomo. According to the lawsuit, the company also promised timeshare owners they would sell their property in exchange for an upfront fee.

The Attorney General’s Office is seeking more than $550,000 in restitution for consumers, and ultimately a permanent injunction prohibiting TS Luxury and Filocomo from engaging in similar business practices.

Bondi says an investigation determined that TS Luxury Group, Inc. allegedly marketed its services by making false and fraudulent misrepresentations. Specifically, the company contacted consumers and falsely claimed that it had procured interested or actual buyers for the consumers’ timeshares.

The company also required an up-front fee for its services and often provided written contracts to consumers which contained language that was completely different from the oral representations made earlier by company representatives.

Unresolved issues

This isn't the first time the company has had a scrape with the state of Florida. In August, 2010, TS Luxury and its owner entered into a binding settlement agreement with the Office of the Attorney General. TS Luxury and its owner, Mary Filocomo, were required to resolve and/or to pay more than $110,000 in initial consumer claims and to thereafter to pay any new claims against the company which arose within a certain time frame. Neither the company nor its owner resolved and/or paid the consumer claims as required, Bondi says.

The Florida House of Representatives has approved the Timeshare Resale Fraud Bill, a measure that cracks down on companies that prey on consumers desperate to unload their timeshare properties.

There was no ambiguity about it - the measure passed unanimously and now goes to the Senate, where it is also expected to pass.

“This bill is essential in stopping unscrupulous individuals from misleading and defrauding our consumers who are attempting to sell their timeshares,” said Florida Attorney General Pam Bondi. “I commend Representative Eisnaugle and the House of Representatives on their commitment to protecting Florida’s consumers.”

A new weapon

The proposed new law would give consumers in Florida a weapon against companies that use deceptive business practices when they approach timeshare owners with the promise to find a buyer. The measure would allow consumers to hold these companies accountable.

The legislation would provide greater transparency and would require, among other things, timeshare resale companies to disclose all terms and conditions of their business relationship with a consumer, provide for a right of rescission for consumers to cancel a contract for resale services, and impose penalties on companies who continue these deceptive practices.

ConsumerAffairs hears from lots of consumers who feel they were duped by various timeshare-reselling agents. M., of Bethpage, N.Y, reported a bad experience with Timeshare Solutions.

"I gave them $899 to sell my timeshare in Orlando," M. wrote. "Nothing happened; just another scam. These people should burn in hell for what they do to people. Do not give them money up front."

States crack down

In the last couple of years, various states have reached settlements with some companies in the business of reselling timeshares, especially those that demand a large upfront fee.

In an eight-month period, Vermont Attorney General William Sorrell settled with two time-share real estate firms he accused of ripping off consumers. Massachusetts and Missouri were also among the states reaching timeshare settlements in 2010.

In September 2010, Illinois Attorney General Lisa Madigan warned timeshare owners in her state that scammers have moved into the space, collecting money but making no attempt to sell anything.

Now that Florida appears headed toward a law to bring timeshare reselling under more control, other states may not be far behind. In Texas, for example, the Better Business Bureau notes that timeshare resale fraud is on the rise.

Many a timeshare owner has complained that operators promising they have a buyer for their unit have pocketed a big advance fee but not sold their timeshare.

Many of these victims have expressed outrage that no one has been held accountable in these scams. But now, someone has.

Florida, which has its share of timeshares, has teamed with the federal government to send one timeshare resale operator to prison. Florida Attorney General Pam Bondi says Jennifer Kirk, who operated Creative Vacation Solutions, was sentenced this week to 188 months in federal prison for conspiracy to commit fraud and wire fraud.

A $30 million take

Bondi says Kirk operated a timeshare resale scam that stole $30 million from more than 22,000 victims across the country. In December 2009 the Florida Attorney General's Office obtained a court order to close the company down.

"Florida will not tolerate people who prey on those trying to sell their timeshares," Bondi said. "This case is a great example of law enforcement working together to protect consumers."

Fraudulent time share re-marketing has become a bigger problem since 2008, when many people found they could no longer afford their timeshares and were desperate to get out from under the monthly payments and maintenance fees.

Targeted timeshare owners

According to the civil complaint, which was filed in December 2009, Kirk employed telemarketers who placed cold calls to timeshare owners and then falsely represented that their company had actual buyers for the owners’ timeshare property. Her telemarketers then solicited advanced fees of up to several thousand dollars from each victim in purported closing costs that they promised would be refunded to the owner once the closing on the property occurred.

The state maintains that, despite collecting fees from approximately $1,200 to $3,000 from each of the 22,000 victims, her companies never sold a single timeshare unit. The complaint also alleged that the defendant and her co-conspirators pocketed the closing costs.  

A federal court has temporarily halted a telemarketing operation that allegedly targeted consumers trying to sell their timeshare properties. The defendants allegedly charged consumers thousands of dollars, falsely claiming they had buyers lined up for sales that supposedly would be reviewed and approved by the Federal Trade Commission (FTC).

The FTC is seeking to permanently end the defendants’ deceptive practices and make them refund consumers’ money.

The FTC alleges that the Orlando, Florida-based defendants, who operated out of mail drop addresses in places such as Las Vegas, Boston, and Orlando, contacted consumers trying to sell their timeshare properties and told them they had buyers for them.

In order for the sale to proceed, the defendants charged consumers up to $3,150 – either as an “earnest money deposit” to commit them to the sale, or for sale-related expenses – which, consumers were told, would be refunded when the sale closed.

The defendants instructed consumers to pay by cashier’s check or money order sent by overnight delivery, and to immediately sign and return a “sales agreement” or “seller’s document” that would be mailed to them. Telemarketers who spoke with consumers often represented that the property sale would be reviewed and approved by the FTC.

“Sales agreement”

The FTC’s complaint alleged that the “sales agreement” was merely a marketing contract for advertising the property, not a sales contract. Consumers who signed the contract and sent their payment to the defendants often were not contacted again, and consumers’ properties were never sold.

Consumers who called the defendants were given the run-around, and refund demands were routinely ignored or denied. Contrary to the defendants’ alleged assertions, the FTC does not review or approve timeshare sales.

The FTC charged the defendants with violating the FTC Act and the FTC’s Telemarketing Sales Rule by misrepresenting that they had buyers willing to pay a specific price for consumers’ timeshare properties, that they would refund their fee when the property was sold, and that the FTC would review and approve proposed sales.

The court froze the defendants’ assets and appointed a receiver to take control of the businesses. The defendants are National Solutions LLC, also doing business as Blue Scape Timeshares International, Country Wide Timeshares, Countrywide Timesharesales MA, Landmark Timeshares, Propertys Direct, Quicksale Propertys, Sun Property Networks, Sun Property’s, Universal Propertys, and VIM Timeshares; Landmark Marketing LLC, also doing business as Blue Scape Timeshares, Country Wide Timeshares International, Propertys DRK, Quick Sale Advisers, Quick Sale International, and Universal Propertys International; Red Solutions LLC, also doing business as City Resorts and Resort Advisors; Enterprise America, LLC, also doing business as American Timeshares, Exit Week, and Resort Advisors International; Investments Group of Florida, LLC, also doing business as Resort Advisors AM; Multiglobe LLC, also doing business as Universal Propertys; Leandro Velazquez; Samuel Velazquez; Joel Velazquez; Kiomary Cruz; Edgar Gonzalez; Vicente Virgilio; and Aaron Weiss.

The real estate market may be in a double-dip recession, but sales of timeshares are “holding steady,” according to a report prepared for the American Resort Development Association.

But the report also shows rentals have become a larger area for timeshares, as 10 percent of the timeshare occupancy rate was comprised of renters as more timeshare developers expanded their rental program offering in the last year.

As for buyers, the report says 55 percent were first-time buyers while the remainder owned one or more properties.

Started in Europe

The timeshare concept originated in Europe in the 1960s, when an enterprising developer came up with a bold idea. Instead of building a condominium and selling each unit, why not sell each unit to 52 different owners, who would each have use of it one week each year?

Each owner would pay fees for the upkeep and management of the property, freeing the developer of that financial responsibility. The owners would feel the status of owning a piece of a beautiful and well-manicured resort. In a deeded property sale, the owner woould own the unit until they sold it, like any other piece of real estate. As long as they owned it, they would be required to pay the maintenance fees.

The concept quickly caught on in the United States, when Conrad Hilton and some partners built a timeshare in Hawaii. Each unit owner paid several thousand dollars upfront for the timeshare, then paid the management company a monthly maintenance fee to cover the costs of operating and maintaining the building and all the units.

Trading system

Other hotel chains, like Marriott, quickly got into the game. To meeting buyers' objection that they didn't necessarily want to vacation in the same spot each year, a system of trading weeks with owners of timeshares in other locations was quickly established. Today, RCI and Interval International handle swaps for the estimated 155,000 timeshare units in the U.S.

But if the market for new timeshare units is, as the industry says, stable, what about the timeshare resale market? There, the evidence suggests that more than a few owners are encountering difficulty.

The Great Recession has changed circumstances for millions of people and flooded the timeshare market with units for sale by owners desperate to get out from under the expense. It's led to a rash of scams in which timeshare resellers contact owners with great news. They have a buyer for their timeshare unit. They just need an upfront fee from the owner to get things started.

“We got a call from TimeShare Solutions out of Florida,” Dennis, of Galveston, Tex., told ConsumerAffairs.com. “They had buyers ready to buy our Wyndham property. We paid an upfront fee of $598 expecting to hear in the next day or so that our timeshare had been sold. So far, we have not received on phone call back. When we call them, they are not available to talk.”

States crack down

In the last 12 months or so, various states have reached settlements with some companies in the business of reselling timeshares. These companies usually make big promises that they will sell an unwanted timeshare unit, but demand a large upfront fee.

In an eight-month period, Vermont Attorney General William Sorrels settled with two time-share real estate firms he accused of ripping off consumers. Massachusetts and Missouri were also among the states reaching timeshare settlements last year.

Last September, Illinois, Attorney General Lisa Madigan warned timeshare owners in her state that scammers have moved into the space, collecting money but making no attempt to sell anything.

Take my timeshare, please

The fact is, with the collapse of the real estate market, there is even less of a market for timeshare resales. Some owners are so desperate that there are now companies that offer to simply take the unit off the owner's hands. These companies have begun advertising on cable television, obviously believing there there is a large number of people interested in their solution.

The solution calls for the timeshare owner to sign over the unit. The owner gets no money for the unit, and in fact is required to pay closing costs, which can be as high or higher than if they were actually receiving payment for the unit.

Rather than do that, owners should check into donating the timeshare to a charity. There are some charities that will accept the donation of a timeshare. They will usually handle the paperwork and at least you'll get a tax deduction.

In the last 12 months or so, various states have reached settlements with some companies in the business of reselling timeshares. These companies usually make big promises that they will sell an unwanted timeshare unit, but demand a large upfront fee.

In an eight-month period, Vermont Attorney General William Sorrels settled with two time-share real estate firms he accused of ripping off consumers. Massachusetts and Missouri were also among the states reaching timeshare settlements last year.

Last September, Illinois, Attorney General Lisa Madigan warned  timeshare owners in her state that scammers have moved into the space, collecting money but making no attempt to sell anything.

How it works

Madigan says the scam typically works like this: a timeshare owner gets a call out of the blue from someone claiming to be a timeshare reseller. They have a client who wants to buy their timeshare, are they interested?

In this market, getting an unsolicited call from someone wanting to buy your timeshare is cause for jumping up and down. It sounds too good to be true, and of course, it is. And the problem persists.

"A few months back I was in really desperate straits," Chris, of Rincon, Ga., told ConsumerAffairs.com this week.

Out of nowhere

He said a company called Vacation Property Resellers "came out of nowhere" and assured him they could sell his timeshare.

"They seemed to know a lot about it and said they had buyers already lined up," Chris said. "The issue was they wanted $1100 up front. Yeah, I know. Dumb move but I was not thinking right back then. I paid it and saw the "closing date" move seven times in the last eight months."

George says he feels a bit sheepish after doing some online research and seeing the number of complaints about this, and other similar companies. He says he wishes he had known then what he knows now.

It's a good lesson for everyone else who has a timeshare they would like to sell. Keep in mind that today, selling any type of real estate - especially timeshares - is very difficult. Anyone who says they can, but needs an upfront fee, probably isn't shooting straight with you.

Planning your next vacation? Perhaps timesharing -- the use of a vacation home or campground for a limited, pre-planned time—is on your list of options. Timesharing may be a popular way to take a vacation, but problems can occur.

Timeshare sellers offer gifts to get you to listen to a sales presentation. Many giveaways are of little or no value. Free airline tickets may be tied to the purchase of expensive hotel accommodations. Other vacation "awards" are often of questionable value.

Timeshares can cost as much as $15,000, based on location and amenities, season, and length and type of ownership. Annual maintenance fees of up to $500 may also apply. In addition, buyers may be responsible for major repairs. What some consumers realize too late is that renting may:

• Be a lot cheaper,
• Allow more flexibility and variety in vacations,
• Prevent being locked into yearly maintenance fees until death or bankruptcy.

No quitting

Some resorts refuse to "take back" unwanted memberships. This is because the income generated by annual maintenance fees may be more valuable than the member's title to real estate. According to the Wisconsin Bureau of Consumer Protection, some timeshare/campground members state they have been unable to even give away their membership, much less being able to find a buyer.

Timeshare owners who discontinue to use the resort facilities must continue to pay their annual maintenance fees and any special assessments. If the member refuses to pay annual dues, the condominium association may sue and recover back dues, interest, and attorney fees. Some members say they feel trapped for life.

An investment it isn't

The Federal Trade Commission (FTC) found only 3.3 percent of owners reported reselling their timeshares during the last 20 years. You may face competition from the original seller. Or local real estate agents may not want to include the timeshare unit in their listings.

Some resorts have a resale office to try to assist the owners of unwanted timeshares. In addition, some resorts will allow an unhappy timeshare owner to give back his interest in the resort, but rarely will a resort guarantee that it will buy it back.

Be wary of offers from timeshare resale companies. Some desperate timeshare owners report paying resale companies $500 to list a timeshare, but promised buyers never materialized. These consumers report the loss not only of the original purchase price of the timeshare, but also the money paid to timeshare resale companies.

Purchasing tips

• Practical Factors. Consider whether you'll be able to use a timeshare facility year after year. Are your vacation plans sometimes subject to last minute changes, or do they vary in length and season from year to year? Does the property have flexible use plans? Are you -- and will you be -- in good enough physical and financial health to travel to your timeshare?
• Total Costs. The total cost of your timeshare includes mortgage payments and expenses, such as travel costs, annual maintenance fees and taxes, closing costs, broker commissions, and finance charges. Annual maintenance fees can range from $300 to $500. Since these fees can rise at rates that equal or exceed inflation, it's important to ask if there's a fee cap for your plan. Keep in mind that these fees must be paid whether or not you use the unit. To help evaluate the purchase, compare your total timeshare costs with rental costs for similar accommodations and amenities for the same time and in the same location.
• Document Review. Don't act on impulse or under pressure. Take the documents home to review. Ask a professional or someone familiar with timesharing to review the paperwork before you buy. If the seller will not let you take the documents, perhaps this isn't the deal for you. A good offer today usually will be a good offer tomorrow. Legitimate businesses don't expect you to make snap decisions. Find out if the contract provides a "cooling-off" period during which you can cancel and get a refund. If not, ask to include this clause. Most states where timeshares are located require a cooling-off period. If there is no cooling-off period, be sure you understand all aspects of the purchase and carefully review all materials before you sign.
• Oral Promises. Make certain all promises made by the salesperson are written into the contract. Exchange Programs that allow you to arrange trades with other resort units in different locations for an additional fee usually cannot be guaranteed. There also may be some limits on exchange opportunities. For example, you may need to make your request far in advance. Or, even at an additional cost, you may not be able to "trade up" to a better unit at peak time in an exotic location. When you trade, expect a unit of approximately the same value as your own.
• Reputation Research. Your resort will be a good place to vacation only if it is run properly. Research the track record of the seller, developer, and management company before you buy. Ask for a copy of the current maintenance budget. Learn what will be done to manage and repair the property, replace furnishings as needed, and provide promised services. Will these arrangements be adequate? Will they extend over a long period of time, or just the near future? Visit the facilities and talk to current owners about their experiences. Local real estate agents, Better Business Bureaus, and consumer protection offices also are good sources of information.
• Unfinished Facilities. Purchasing an undeveloped property is extremely risky. But if you decide to do so, commit money to an escrow account. This protects your financial investment if the developer defaults. Also get a written commitment from the seller that the facilities will be finished as promised.
• Default Protection. Learn your rights if the builder or management company has financial problems or defaults. Check to see if your contract includes two clauses concerning "non-disturbance" and "nonperformance." A non-disturbance provision should ensure that you'll continue to have use of your unit in the event of default and subsequent third party claims against the developer or management firm. A non-performance protection clause should allow you to keep your ownership rights, even if a third party is required to buy out your contract. Contact an attorney who can provide you with more information about these provisions.
• Foreign Properties. Be especially wary of offers to purchase timeshares or vacation club memberships in foreign countries. If you sign a contract outside the United States for a timeshare located in another country, U.S. federal or state contract property laws generally will not protect you.

A federal court has put a stop to a telemarketing operation that allegedly scammed millions of dollars from property owners hoping to sell their timeshares.

The Federal Trade Commission (FTC) claimed the ring, operating out of South Florida, conned consumers by promising that they had buyers lined up and waiting. Only after making a hefty up-front payment did the consumers learn that there were no buyers. The victims found it nearly impossible to get their money back from the defendants, many of whom have long criminal histories.

"When cash-strapped consumers are trying to sell their property, the last thing they need is to lose thousands of dollars to scam artists who promise a quick sale, but then provide no services at all," said David Vladeck, Director of the FTC's Bureau of Consumer Protection.

Timeshare owners under pressure

The case is part of an FTC effort to crack down on con artists who use fraud and deception to take advantage of consumers hit hard by the recent economic downturn.

Many of the defrauded consumers needed to sell their timeshares to help pay their living expenses. According to the FTC, the number of complaints related to fraudulent timeshare resales has more than tripled over the past three years, as more consumers have attempted to sell their timeshares.

In this case, the defendants allegedly defrauded consumers nationwide out of millions of dollars before being shuttered by the court. They also are well known to the South Florida Better Business Bureau (BBB) which, together with the FTC and the Florida Attorney General's Office, has received hundreds of complaints from consumers about their conduct. The BBB has given the firm, Timeshare Mega Media and Marketing Group, an F rating, the lowest rating it can give a business.

Money upfront

According to the FTC's complaint, Timeshare Mega Media, two related companies, and six individuals used a telemarketing boiler room in Ft. Lauderdale, Florida. They told timeshare owners who were attempting to sell their units that a buyer was lined up and a deal had been negotiated on their behalf, but that before the sale could be completed, consumers would have to pay an up-front fee, usually $1,996, by credit card.

The FTC's complaint charges that Timeshare Mega Media's representatives typically claimed the fee was for sale-related costs, such as realtor fees, closing costs, title searches, or document processing. They also told consumers that this fee would be refunded at closing.

In some cases, if a consumer owned an expensive timeshare, the fee could be more than $1,996, ranging up to 10 percent of the asking price. Consumers also were told that their timeshare sales would close quickly, often in as few as 30 days.

Misleading claims

The FTC maintains that, after the consumers paid the fee, they were told to expect a contract from Timeshare Mega Media. What they received turned out to be a contract to market and advertise their timeshare, and not a sales contract. Many consumers signed and returned the contract thinking it was a sales contract.

Those who questioned its validity were given the run-around by the company and falsely told that a sales contract would follow. In fact, according to the agency, the company never had any timeshare buyers lined up. When consumers discovered this and demanded their money back, they found it nearly impossible to get a refund, or even get a call back.

The FTC's complaint was filed against Timeshare Mega Media and Marketing Group, Inc., also doing business as (d/b/a) Timeshare Market Pro, Inc.; Timeshare Market Pro, Inc.; Tapia Consulting, Inc.; Joseph Crapella, also known as Joseph John Philbin; Pasquale Pappalardo; Lisa Tumminia Pappalardo; Pasqualino Agovino; Louis Tobias Duany; and Patricia A. Walker.

In filing the complaint, the FTC is seeking a permanent halt to the defendants' allegedly illegal conduct and to provide money back to consumers who were harmed by their violations of the FTC Act and Telemarketing Sales Rule.

In a number of states, officials have begun to crackdown on companies promising timeshare owners they can sell their property, but who charge a large fee upfront. In Illinois, Attorney General Lisa Madigan is now warning timeshare owners in her state that scammers have moved into the space, collecting money but making no attempt to sell anything.

Madigan says the scam typically works like this: a timeshare owner gets a call out of the blue from someone claiming to be a timeshare reseller. They have a client who wants to buy their timeshare, are they interested?

In this market, getting an unsolicited call from someone wanting to buy your timeshare is cause for jumping up and down. It sounds too good to be true, and of course, it is.

If the owners rise to the bait, the scammer tells them they must pay a refundable security deposit or fee to ensure that the sale goes through, and instructs them to wire money to an out-of-state bank account.

Taking the money and running

As soon as the owners wire the money as directed, theyve fallen victim to the scam. In most cases, by the time the owners realizes theyve been defrauded, the con artists have closed out their bank account, disconnected their phones and disappeared.

Victims filing complaints with the Attorney Generals Office have reported wiring as much as $5,000 to the scammers, Madigan said.

In some versions of the scam, the con artists tell the owners theyve found potential renters for their timeshare. In others, a person posing as a prospective buyer makes the initial call and urges the timeshare owners to contact the fake reseller immediately to complete the sale. Also, in some instances, the owners are asked to charge the security deposit to their credit card rather than transferring the money by wire.

Many scammers briefly rent a P.O. Box or office suite as a business address, and in some cases create Web sites to trick consumers into believing they are legitimate.

Especially vulnerable

Seniors living on fixed incomes and persons suffering the effects of the economic downturn may be especially vulnerable to the scam, because they may view their seldom-used timeshares as a source of much-needed money. Madigan cautioned that consumers should never assume they will recoup their purchase price for their timeshare, especially if they have owned it for less than five years and the location is less than well-known.

If you are actively trying to sell a timeshare, here are some things to remember:

• Dont agree to anything on the phone or online until youve had a chance to check out the reseller. Contact the Better Business Bureau (www.bbb.org) and the state Attorney General (www.naag.org) in the state where the reseller is located. Ask if any complaints are on file.

• Ask the salesperson for all information in writing. Under Illinois law, a timeshare reseller must enter into a listing agreement with the owner signed by both the owner and the reseller that discloses certain specified information, including the resale agents contact information and the fees to be charged for the resale agents services.

• Check with the state Department of Professional and Financial Regulation to confirm that the reseller is registered as a real estate agent, as required by state law.

• Ask if the resellers agents are licensed to sell real estate where your timeshare is located. If so, verify it with the state Real Estate Commission. Deal only with licensed real estate brokers and agents, and ask for references from satisfied clients.

• Ask how the reseller will advertise and promote the timeshare unit. Will you get progress reports? How often?

• Ask about fees and timing. Its preferable to do business with a reseller that takes its fee after the timeshare is sold. If you must pay a fee in advance, that's a very bad sign.

Read more about Timeshares

So far this year, two states have taken action against timeshare resellers. In Vermont, Attorney General William Sorrell reached a settlement with Timeshare Relief, Inc., in which the company agreed to pay $140,000 for violations of state consumer laws.

In March, Florida Attorney General Bill McCollum unveiled continuing investigations into at least 17 timeshare companies and their affiliates throughout the state for deceptive trade practices.

"Florida's consumers are trying to make prudent financial decisions," the attorney general said at the time, "but many timeshare resale companies are blatantly scamming people by promising sales or refunds and failing to provide services even after taking hefty up-front fees."

Complaints

ConsumerAffairs.com has received a sizable number of complaints about the practices of timeshare sellers from consumers across the nation.

"I called TimeShare Only in March of 2007 to sell my timeshare in Florida and they promised they would be able to sell it or rent it. They charge me 600 dollars for my two bedroom loft and I have never heard anything else from that company unless I call about it," Sheila, of Richmond, Va., told ConsumerAffars.com.

In warning timeshare owners to be careful when trying to sell their property, the FTC offered this advice:

• Even if the salesperson claims the local market is "hot," or his office is overwhelmed with buyer requests, don't agree to anything on the phone or online before checking out the reseller. Contact the Better Business Bureau, state Attorney General and local consumer protection agencies in the state where the reseller is located. Ask if any complaints are on file.

• Ask for all information in writing.

• Ask if the reseller's agents are licensed to sell real estate where the timeshare is located. If so, verify it with the state real estate commission. Deal only with licensed real estate brokers and agents, and ask for references from satisfied clients.

• Ask how the reseller will advertise and promote the timeshare unit. Will progress reports be issued? How often?

• Ask about fees and timing. It's better if the reseller takes its fee after the timeshare is sold. If a fee must be paid in advance, ask about refunds. Get refund policies and promises in writing.

• Don't count on recouping the purchase price of a timeshare, especially if you've owned it for less than five years and the location is not well known.

• To get an idea of the value of a timeshare, consider using a timeshare appraisal service. Check with the state where the service is located to make sure the appraiser's license is current.

• Before signing the contract, make sure it specifies the services the reseller will perform, the costs the seller is responsible for and when they must be paid, whether the seller can rent or sell the timeshare at the same time the reseller is trying to sell it, the length or term of the contract to sell the timeshare, and who is responsible for documenting and closing the sale.

• Don't sign the contract if the deal isn't what you expected or wanted. Negotiate changes or find another reseller.

• Check with the resort to determine restriction, limits, or fees that could affect resale or ownership transfer.

• Have available the name, address, and phone number of the resort, the deed and the contract or membership agreement, the financing agreement if money is still owed, information to identify your interest or membership, the exchange company affiliation, the amount and due date of the maintenance fee, and the amount of any real estate taxes that are billed separately.

June 30, 2010
A Torrance, California, company will offer over $91,000 in consumer refunds and pay $50,000 to the State of Vermont to settle claims that it violated Vermont law in three different ways in arranging for the repurchase of timeshares.

Vermont Attorney General William H. Sorrell used word of the settlement, the second of its kind in the past eight months, to warn out-of-state companies offering a financial benefit to Vermonters not to violate the State's consumer laws, or "they will find that doing so is an expensive proposition."

On eight occasions between 2007 and 2010, representatives of Timeshare Relief, Inc., solicited consumers in Burlington to transfer ownership of their unused timeshares and thus relieve the owners of timeshare maintenance fees, taxes and other costs. The company advertised these meetings with a mailing that invited Vermonters to find out about the "Guaranteed Timeshare Relief Solution."

Consumers in the lurch

A number of consumers who met with Timeshare Relief understood the invitation to mean that the company would offer to pay them for their timeshares; in fact, they had to pay several hundred to several thousand dollars to transfer ownership of their timeshares. The AG's office considered this to be a deceptive trade practice.

In addition, many of the consumers were also given a "Financial Benefits Worksheet" that indicated that they might be eligible for a tax deduction as an offset against their payment to Timeshare Relief, when in fact such a deduction is available only in those rare cases where the primary reason for buying the timeshare was for investment. The attorney general claimed this to be a deceptive trade practice as well.

In addition, through June 2008, Timeshare Relief did not comply with the requirement of Vermont law that whenever goods or services are sold at a transient location like a hotel, the buyer must be given specified notice of his or her right to cancel the transaction.

Restitution

Under the settlement, Timeshare Relief will:

• Offer those 28 of its customers who did not receive proper notice of their right to cancel an opportunity to cancel the transaction within ten business days and get all of their money back. Letters to this effect will be sent out in the next month, and Timeshare Relief will pay up to $84,000 under this provision.

• Send to another 28 customers a check in the amount of $250 to compensate them for the time and money they spent traveling to attend the company's presentation.

• Pay the State of Vermont $50,000 in civil penalties and costs.

By James Limbach
ConsumerAffairs.com

June 4, 2010
The Pennsylvania Attorney General's Bureau of Consumer Protection has reached a settlement with BlueGreen Corporation, a Florida-based timeshare company.

The settlement addresses complaints about the company's alleged use of deceptive "contests," misleading sales presentations and improper contracts in the marketing and sale of timeshare vacation packages in Pennsylvania.

Attorney General Tom Corbett says the agreement, known as a Consent Decree, resolves a consumer protection lawsuit filed in October 2008 against BlueGreen Corporation, BlueGreen Resorts, BlueGreen Vacations Unlimited, Inc. and Great Vacations Destinations, Inc., all of Boca Raton, Florida. BlueGreen contacted consumers by phone and through kiosks at shopping malls, fairs, and festivals throughout Pennsylvania, along with the use of sales facilities in Hershey and King of Prussia.

"As a major part of this settlement, BlueGreen has agreed to cancel contracts and pay refunds to consumers who have filed valid complaints about their timeshare purchases," Corbett said. "Those complaints include consumers who were unable to use their timeshare, false promises about when or where consumers could travel and situations where timeshare purchasers did not receive extra services or discounts that were promised during the sales presentation."

Unhappy consumers

Jim of Valles Mines, MO, tells ConsumerAffairs.com, "As a BlueGreen owner, I have experienced high pressure sales tactics used by the sales staff. The sales staff attempts to push the packages on you every time you visit. The sales staff lie and misrepresent the products to customers, anything to sale a package." Jim says this has caused him "numerous financial problems."

"I am getting ripped off by BlueGreen," writes Elisabeth of Prior Lake MN. "I cannot book a vacation to save my life, am paying monthly and now am being charged ridiculous fees for a property I cannot use. I want my money back but the people are too rude to even say no." Elisabeth tells ConsumerAffairs.com that this is causing her both emotional and financial damage. "I feel trapped with no way out!"

Settlement terms

Corbett noted that the settlement he reached applies to complaints by Pennsylvania timeshare purchasers that have already been filed with the Pennsylvania Office of Attorney General, along with any new complaints filed within the next 30 days. Also, BlueGreen has agreed to turn over all complaints involving Pennsylvania residents that were filed directly with the company.

Additionally, Corbett said his office is reviewing complaints filed with other state agencies, such as the Pennsylvania Real Estate Commission, along with other consumer protection agencies, including the Florida Attorney General's Office, where BlueGreen is headquartered, as well as the Federal Trade Commission and Better Business Bureau offices in Pennsylvania and Florida.

"Many of the complaints filed with the attorney general's office involve consumers who spent between $20,000 and $40,000 on vacation packages they were unable to use," Corbett said. "This part of the settlement could result in more than $1 million in refunds to consumers, depending on the total number of additional complaints we receive over the next 30 days."

Corbett said the settlement also includes payments for consumers who were promised various "free gifts," including airline tickets, hotel accommodations, gas cards and other valuable prizes.

"For most consumers, the promise of a 'free gift' or 'valuable prize' turned out to be nothing more than vouchers or coupons which required other expensive purchases before they could be used, or were limited by massive "fine print" restrictions," Corbett said. "As part of this agreement, BlueGreen is paying $125,000, which will be used to compensate people who were deceived about "free" prizes -- so consumers who filed valid complaints will get a check for the value of the item they were promised."

Finally, Corbett said the settlement includes a special reward for each consumer who filed a complaint about BlueGreen's use of telemarketing sales calls that violated Pennsylvania's "Do Not Call" law.

Under the provisions of the state's Do Not Call law, consumers can receive up to $100 when they file a complaint that results in a lawsuit or fines against a company charged with telemarketing violations. A total of 29 people filed Do Not Call complaints about improper BlueGreen calls and each of those consumers will be receiving a check for $100.

Timeshare tips

Consumers who are shopping for a timeshare vacation package should consider the following tips:

• Take your time. Treat a timeshare purchase like the purchase of a home or any other significant commitment. Don't let high-pressure sales tactics and long presentations force you into a hasty decision.

• Do your research. Check the market and the value of the vacation property before you buy and investigate the seller, the developer and the management company. Ask for references and contact current owners to verify their satisfaction with the property.

• Know the cancellation period. Pennsylvania provides a five-day cooling off period for buyers to change their mind and cancel a timeshare contract. Consumers must notify the seller in writing via certified mail or return receipt mail.

• Recognize that timeshares can be difficult to resell. Buy a timeshare only if you plan to use it. It is an option for future vacations, not an investment.

• Consider extra costs. Most timeshares require consumers to pay annual assessment fees, maintenance fees and taxes, closing and broker commissions, and finance charges. Some fees can rise dramatically in the future so it's important to ask if there is a cap on future fees.

• Beware of scams. If you are offered a prize as an incentive to attend a timeshare presentation, ask for details and watch out for hidden conditions and fine print. Keep in mind that the value of promotional gifts may be low in comparison to the fees and charges associated with a timeshare purchase. Any 'free' travel or vacations you are offered may have blackout dates and other restrictions.

• Read everything before you sign. Carefully review contracts and all other paperwork before you sign anything, and get all special promises about discounts, waived fees or other promotions in writing.

By Wayne Stenehjem
Attorney General, North Dakota

Millions of people have solved this problem by buying a timeshare or vacation plan. If you are considering purchasing a timeshare or vacation plan, do your homework before the purchase.

There are two basic options available to you: timeshares and vacation interval plans. Remember, these options should not be viewed as investments but as vacation destinations. Resale value of a timeshare or vacation interval plan may not be as high as what you paid for the plan in the first place as there are so many options available today.

Both timeshare and vacation plans require you to pay an initial purchase price and periodic maintenance fees. The initial purchase price may be made all at once, or over time; periodic maintenance fees are likely to increase every year.

When you buy a timeshare, youre purchasing the right to use a specific unit for a specific time every year, and you may rent, sell, exchange, or bequeath your specific timeshare unit. You and other timeshare owners collectively own the resort.

You can return that same week each year, or you may be able to exchange it and stay at a different resort at another destination. Owners share in the use and upkeep of the units and of the common grounds of the resort property. A homeowners association usually handles management of the resort. The total cost of your timeshare includes your mortgage payments, annual maintenance fees, taxes, travel costs, and other miscellaneous costs.

Right to use vacation interval options are a little different. The developer owns the resort and each unit is divided into intervals either by week or equivalent in points. You purchase the right to use an interval at the resort for a specified number of years, usually between 10 and 50 years.

The specific unit you use at the resort may not be the same each year. You will also have to pay an annual maintenance fee that is likely to increase each year.

Here are some tips on how to avoid timeshare scams:

• Dont ever buy (or sell) on the spot. Take the time to evaluate the deal and sleep on it if necessary.

• If you are offered a free gift or free tickets, be aware that most timeshare offers include a lengthy sales presentation to qualify for the gifts. If the presentation is too high pressure, leave. You have the right to leave whenever you wish. Dont let them argue with you. Excuse yourself and leave.

• Read the contract and have it reviewed by an attorney. All promises made to you by the salesperson should be in the contract. If not, dont rely on those promises as they wont be enforceable. (Timeshare sales contracts often include clauses that disclaim any promises made during the sales pitch.) Make sure the contract includes clauses concerning both non-disturbance and non-performance. A non-disturbance clause ensures that you will be able to use your unit or interval if the developer or management firm goes bankrupt or defaults. A non-performance clause lets you keep your rights, even if your contract is bought by a third party.

• Ask for references and follow through by calling them.

• RESEARCH and EDUCATE yourself on the market and the value before making a purchase. Check the track record of the seller, development, and management company.

• Ask about your ability to cancel the contract or the right to cancel. Each state has specific right-to-cancel laws, so depending on where the sales presentation/purchase is made, you should check on that states laws.

• Use an escrow account if you are buying an undeveloped property. Get a written commitment from the seller that the facilities will be finished as promised.

• Keep in mind cancellation issues, disputes and other potential legal issues may not be subject to the law in your state if the property is located in another state or the transaction or agreement occurred out of state.

• Be wary of timeshares or vacation plans in foreign countries. If you sign a contract outside the U.S. for a timeshare or vacation plan in another country, you will not be protected by U.S. laws.

To learn more about timeshares and vacation interval plans, you may wish to contact the American Resort Development Association. However, be aware it represents the vacation ownership and resort development industries. You may reach them by calling 202-371-6700 or by visiting their website at www.arda.org.

Editor's Note: For the verbatim experiences of real consumers, see ConsumerAffairs.com's Timeshares Section.

Florida Attorney General Bill McCollum continues to go after those in the timeshare resale industry who engage in questionable and - in some cases - fraudulent practices.

Among the actions is what the AG's office calls "a significant settlement that could yield as much as $1.3 million in consumer refunds" and the filing of a lawsuit against a major player in the state's timeshare resale industry.

McCollum also unveiled ongoing investigations into at least 17 timeshare companies and their affiliates throughout the state for deceptive trade practices.

"Florida's consumers are trying to make prudent financial decisions," the attorney general noted, "but many timeshare resale companies are blatantly scamming people by promising sales or refunds and failing to provide services even after taking hefty up-front fees."

Timeshare resale complaints have recently surpassed mortgage-related complaints as the most commonly reported consumer complaint received by the office's Consumer Hotline.

ConsumerAffairs.com has received a sizable number of complaints about the practices of timeshare sellers from consumers across the nation.

"In September of 2007 I paid Timeshares Only almost $600 to list my timeshare which was to be a one time fee and they would run the ad until it sold," says Shannon of Harrisburg, NC. "Well, I have not had one call regarding an offer for my timeshare although I have reduced the price a few times. I also decided to check the ad myself on the web site and could not find it. When I contacted them to ask why they told me I had to periodically 'reactivate it'. If I paid you a fee and you agreed to run the ad until it sold, I should not have to call and reactivate it! This business is a complete SCAM!"

"I was told by timeshares only they guaranteed to sell my timeshare or rent it," John from Baltimore writes ConsumerAffairs.com. "Well it's been over three years since they took my money and still not one call to sell or even rent. I was also promised that they would refund my money if I sold it before they did. Well I did sell it and still no refund either."

The lawsuit filed in Florida against Resales Buy Owner.com, Inc. contends the company engaged in a systematic pattern of deception that improperly induced consumers to pay up-front fees for timeshare resale services that were never provided.

According to consumer complaints, the company would indicate it either had a buyer or renter interested in the timeshare and that there would be no problem renting or selling the timeshare within 90 to 120 days. The lawsuit maintains the company merely advertised the property listings, if taking any action at all, and allegedly charged consumers' credit cards even after consumers opted not to do business with the company. The lawsuit seeks an order prohibiting the company from engaging in further deceptive conduct and seeks full restitution on behalf of victimized consumers, civil penalties and reimbursement for fees and costs.

McCollum's Office also announced a significant settlement with Virtual Group, Inc., resolving allegations the company failed to provide promised refunds to consumers. Virtual Group, which does business under the name Realty Trade, offered timeshare resale and rental advertising services to consumers looking to sell or lease their timeshare properties.

As a result of the investigation, Realty Trade has already paid over $800,000 in refunds to 799 consumers. The company will also make another $500,000 available to consumers who make new refund requests.

In addition to the litigation and the settlement announced today, in recent months, the Attorney General's Office has subpoenaed 17 timeshare resale companies and their affiliates over allegations of potentially deceptive business practices.

Common complaints about these companies involve the use of false and deceptive claims to entice consumers to pay up-front fees, including assertions that buyers are allegedly ready and willing to buy or rent the consumers' timeshare.

Companies also often allegedly fail to honor cancellation policies, misrepresent the actual services that will be provided to consumers, and fail to comply with elements of state and federal telemarketing acts.

The initiative was launched in 2009 in response to the growing number of timeshare resale complaints received by the Attorney General's Office.

The State of Florida has gone to court to block two related South Florida timeshare resale marketing companies from operating in the state. The suit claims the defendants preyeed on desperate timeshare owners trying to unload their properties.

Attorney General Bill McCollum filed a lawsuit and has requested an emergency injunction against Universal Marketing Solutions, Creative Vacation Solutions, and owner/manager Jennifer Kirk.

The suit claims the companies allegedly collected over $4 million in marketing fees on a monthly basis, but rarely if ever marketed, advertised, or facilitated sales for the timeshare owners who had contracts with the companies. The injunction requests the companies' cease doing any timeshare business while the lawsuit is pending.

An investigation conducted by the Attorney General's Economic Crimes Division indicated that Kirk and her companies were charging marketing fees as high as $2,500 for timeshare resale advertising services. The companies were soliciting hundreds of consumers nationwide via the Internet and though aggressive telemarketing calls, allegedly making empty promises and false misrepresentations that they would actively match timeshare sellers with prospective buyers.

According to the lawsuit, when prospective buyers contact the companies to purchase a timeshare, no attempt would be made by the companies to match those prospective buyers with sellers who had contracted with the companies, thus making the advertising and marketing claims a complete sham.

Advance fees

To solicit more customers, the companies allegedly boasted of their "superior marketing tools," including marketing events, presentations and seminars. Kirk and her companies allegedly claimed they could "definitely" sell timeshares within a certain period of time and that they had buyers waiting with approved financing to buy the consumers' timeshare. Consumers were also verbally assured contract terms during telemarketing calls, but were furnished contracts with entirely different terms regarding the resale services.

Additionally, the companies would allegedly charge consumers' credit cards or cash consumers' checks without and/or before obtaining a signed written contract from the consumer delineating all the terms and conditions of the services to be provided.

Consumers who complained to the Attorney General's Office reported that the companies have not performed the promised services and that they were unable to contact the companies or get refunds. The Attorney General's Office believes that there could a total of more than 400 victims affected by the two companies' deceptive practices, and has been receiving approximately 10 complaints per day against these companies.

The lawsuit seeks an injunction prohibiting the defendants from engaging in any timeshare resale business while the litigation is pending. The lawsuit also requests full restitution on behalf of all victimized consumers, civil penalties, and reimbursement for fees and costs related to the investigation.

With spring break here and families planning for summer vacations, Florida Attorney General Bill McCollum is warning consumers to be wary of the various scams and fraud which could be associated with vacation packages and other travel-related services.

McCollum encouraged consumers to report travel-related fraud involving Florida companies to his office (at myfloridalegal.com, particularly issues related to improperly disclosed surcharges, misleading advertisements or problems associated with timeshares.

Florida is well-known for its allure to travelers, from both within the state and other locations, and we must protect not only our citizens and our guests but also our reputation as an attractive destination, said McCollum.

The Attorney Generals Office announced settlements earlier this week with two cruise lines over the imposition of a fuel supplement on cruise passengers. Royal Caribbean Cruise Lines and Celebrity Cruises agreed to refund $21 million to consumers nationwide who were charged the fuel surcharge after they had booked their cruise.

Timeshares

Other common travel-related problems are associated with vacation timeshares, which give consumers the right to use a vacation home for a limited, preplanned period. Timeshare scams occur both at the time of the original purchase and at the point of resale.

Victims of unscrupulous timeshare sales companies are often contacted either over the phone or are mailed a postcard asking the victim to call a toll-free phone number. Before consumers decide to either purchase or resell a timeshare, McCollum advised them to consider the following tips:

• Be wary of the hard sales pitch When it comes to purchasing a new timeshare, the salesperson may give the impression that the papers have to be signed that same day. Consumers should remember that they always have the right to leave the sales office and come back later.

• Consumers should always read their contracts to determine what cancellation rights they have after the papers are signed. Before buying a timeshare, consumers should consider whether they will want to return to the same vacation spot each year.

• Be wary of too-good-to-be-true claims when it comes to resales The company's salespeople are likely to claim that the market in the area where the resort is located is "hot" and that they are being overwhelmed with buyer requests for that resort. In some cases, the salespeople may even claim they have a buyer waiting in the wings who wants to buy the timeshare. Consumers should be skeptical of these types of claims.

• Question up-front fees Most resale companies require consumers to pay a $300-500 advance listing fee before the sale of the timeshare can take place. In a typical real estate transaction, the fee is paid from the proceeds of the sale at the time of the sale. Consumers should also find out if the salespeople are licensed real estate brokers and should contact the licensing agency in the state where the company is located to determine if their license is valid, and whether there are any complaints lodged against the broker.

• Consider other options when it comes to resale Consumers may want to try selling their timeshares "by owner" by placing advertisements in a newsletter or magazine read by potential timeshare buyers. A licensed real estate broker in the area where the resort is located may be another option. Some companies also offer contracts which allow consumers to exchange their timeshares for units in different areas.

Travel-savvy consumers need to consider timeshares as a viable alternative to rising hotel bills. So says Lisa Schreier, author of "Timeshare Vacations for Dummies" and "Surviving a Timeshare Presentation."

Most Americans know next-to-nothing about timeshares, she says, and are therefore afraid to investigate. The Orlando-based author lists nine things potential buyers should know:

1. If things seem too good to be true, they usually are. Avoid salesmen who use the words "free," "perfect," "always," and/or "never."

2. Don't believe the hype. Location is key; people interested in trading for different locations in peak season (i.e. the French Alps in the winter, Hilton Head in the summer) need to own a timeshare in an area with year-round high demand, such as Las Vegas or Orlando.

3. Never assume anything. Most timeshares are deeded in perpetuity, others are not, and some operate on a "points-based" system that is not inflation-proof. Ask questions and don't be afraid to say "no."

4. Keep an open mind. If you are going to a timeshare presentation for the gift (usually dinner, cash, or theme park tickets) and because you are required to go in order to receive the discounted hotel room, allow the salesperson to do his or her job.

5. Don't purchase a timeshare as a real-estate investment. Even if the timeshare is deeded, it should not be considered a financial investment but an investment in your future vacations.

6. Do your homework ahead of time. Have some general ideas about timeshare and be truthful about how much you spend for vacation accommodations.

7. Don't cave in to high-pressure sales techniques. Make sure you understand the product and/or resort and be sure you would use it if you bought it.

8. Focus on the long-term; you will not be saving money in the short term. Hotel rates will rise every year, while your timeshare cost is generally locked in.

9. Compare apples to apples when considering cost and value. Even if you don't save money over the long term, you will be having a better vacation in a two-bedroom villa at a quality resort as opposed to a hotel room measuring 400 square feet. According to Schreier, the average cost of a two-bedroom timeshare in 2006 was $15,500. Renting a $200 hotel room for one week would cost $1400 even before taxes were added, the timeshare would pay for itself in less than 10 years, depending upon how fast the hotel rates increased.

"Go back two or three years and determine how much you spent for your hotel, motel, or condo," says Schreier, "and don't forget the hidden room tax.

"On top of that, you can't trade hotel rooms but you can trade timeshares. Most, if not all, timeshare resorts allow you to exchange or trade off to other member resorts."