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.
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.
"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.