How to Recognize and Avoid Timeshare Scams

In many ways, timeshares are unique real estate products. By their nature, they are rooted in specific times as well as physical properties. These characteristics, which lend themselves to lower prices than one would pay for a traditional vacation home, can also make timeshares difficult to sell for both developers and people looking to enter the resale market.


Ethical developers and resale companies in the timeshare industry find ways to do their jobs in a legal and proper way. Developers can offer superior products or desirable contracts to potential buyers. Timeshare resellers should follow basic and accepted real estate and escrow practices when selling timeshare units.


Unfortunately, not all developers or resellers are ethical. The American Resort Development Association (ARDA) has cautioned consumers to be aware of scammers in the industry. These scammers seek to make a quick buck and then disappear before their victims know what is happening. 


Timeshare scams can happen in the primary market, where unethical sales practices force buyers into unfair and burdensome contracts. Resale companies, though, can be just as bad. These companies can talk desperate people into spending money they don’t have in the vain hope of easily finding a buyer for their timeshare unit.


This article will examine some common timeshare scams and how to recognize them in both the primary and secondary markets. We’ll also take a look at how to avoid these scams before you are a victim and what to do if you have already been conned.


Timeshare Scams by Developers


timeshare scams: person showing another person where to sign on the contract


Though not every timeshare presentation should be thought of as a scam, the truth is that many of them are. Often, they happen at popular vacation destinations like Hawaii or Las Vegas. You may have seen an advertisement for a free dinner cruise or concert tickets. All you have to do, of course, is go to a timeshare presentation that they promise will only last one or two hours.


Often, however, the sales pitches last much longer. They can involve multiple salespeople with a variety of tools to talk you into signing a contract. If you say that you don’t have the money, they will be prepared with information about financing. They may seek to exploit personal information that you or your family share in order to amp up the pressure to sign.


While the contract they put in front of you may have a cancellation clause in it for you to back out of the sale later, the salespeople will do their best to hide it or convince you that you don’t need it. 

You may think that there’s no way these tricks could work on you. Don’t be so sure. No one thinks that advertising or marketing works on them, yet companies pour money into advertising because it works. Keep in mind that, by one estimate, 85% of timeshare owners regret their purchase. Those people probably thought they could handle the high-pressure tactics, too.


Also, keep in mind that the contract you are signing could be grossly unfair and one-sided. Unconscionable, buried maintenance fee increases or even illegal terms could be in your contract. If you’re not a lawyer or real estate professional, it can be difficult to know what’s normal. Contacting an experienced company like Centerstone Group can help you understand what you are looking at.


Timeshare Scams by Resellers


timeshare scams: person putting money into his suit jacket pocket


Even assuming that your initial sale was completely legitimate, you can still be scammed when you are seeking to sell your timeshare unit. The term “timeshare resale scams” describes what is unfortunately a booming industry in the United States. 


Here’s how they work. These scams target unhappy timeshare owners and promise them a quick sale of their unit. Scammers and their associates comb publicly available information and listings for people who are trying to sell their timeshares. Once they have a mark in mind, they call that person and start their own high-pressure sales pitch.


Resale scammers tell the timeshare owner that they can sell the unit in 30 days. They may even represent that they have lined up a buyer who is interested in this person’s specific unit. They can give a variety of details that make these offers sound very real. While doing the sales pitch, these scammers will find and exploit the timeshare owners’ vulnerabilities.


Then, the scammer will go in for the kill. In order to get the “sure thing” sale off the ground, all the owner needs to do is pay some upfront fees. A common story is that the owner should pay $2,000-$3,000 to open an escrow. Once the money is paid, the scammer takes it and runs, leaving the timeshare owner still holding their unit and thousands of dollars poorer.


Any resale company making an offer that seems “too good to be true” requires careful scrutiny. And asking for upfront fees, rather than taking them out of the sale proceeds, is the reddest of red flags. With any resale, it is also important to understand who the escrow/title company is and what their policies are. 


Any reputable company should be willing to answer these questions. As a timeshare exit company with over 33 years of experience in dealing with timeshare issues, Centerstone Group can help ethically and legally guide you to a proper resolution using several different tools not available to timeshare resale companies.


Fighting Timeshare Scams


building facade with trees


If you have fallen victim to a timeshare scam, it’s important to know that you are not alone. These scams are so popular because they are so well-crafted. It’s easy to fall for them. Also, keep in mind that these scams are often (though not always) blatantly illegal under state and federal law. There are ways to fight back.


High-pressure sales tactics and unconscionable contract terms can make a timeshare contract illegal and/or unenforceable. Centerstone Group can help by reviewing your contract and telling you whether this situation might apply to you.


And if you have been the victim of a real estate scam, you should know that states are taking the fight to scammers. Attorney general’s offices and consumer protection groups in several states, including Florida, California, and Arizona, have operations dedicated to fighting these scams and securing compensation for victims.


The Federal Trade Commission is also a useful resource on timeshare and resale scams. The FTC recently sent $2.7 million in refunds to thousands of customers who were scammed by a company called Pro Timeshare Resales, LLC.


Additionally, local law enforcement will likely also be interested in any fraudulent activities related to timeshares. Centerstone Group works with law enforcement at state and federal levels to ensure that scammers are brought to justice and that more people will not fall victim to these schemes.

Finally, you should always check the Better Business Bureau (BBB) rating of any company that you do business with and leave feedback (or complaints) regarding any experiences that you have. While a good BBB rating doesn’t guarantee you are dealing with a legitimate company, it can be a powerful tool to help protect against timeshare scams.


Arm Yourself With Knowledge


Timeshare scams are not a new phenomenon. They will be with us for as long as scammers can keep dreaming of new ways to take advantage of people. The best protection against these fraudsters is to educate yourself about their tactics.


If you do find yourself victimized by a scheme, don’t despair or beat yourself up. You can take charge of your situation by contacting Centerstone Group for a free consultation that takes into account the legal and factual nuances of your situation. Contact Centerstone Group today to see what we can do for you.


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