2016 Was a Record Year for Timeshare Fraud: Were You a Victim?

The United States Department of Justice responds to allegations of fraud.  Every year, small and large resorts and vacation clubs are charged with timeshare fraud for misleading consumers about the purchase, terms of contract and long-term costs of ownership.

If you are curious about how many cases are prosecuted annually, visit the United States Department of Justice website for a summary of published charges and legal outcomes, for dishonest and illegal sale (and resale) practices.

The timeshare industry has endured a reputation for misrepresenting timeshare ownership to consumers who are looking for an affordable way to enjoy annual vacations.  When you consider the pitfalls of vacation ownership, it is not surprising that high-pressure and misleading tactics are frequently used.  Can you tell if you and your family have been the victim of timeshare fraud?  In this article, we will explain some of the laws that govern timeshare sales, and what you, as the consumer, can do about it.

1. You Received an Offer to Pay Cash for Your Bonus Weeks

A recent case involved a company called Condosmart LLC., which was based in Arizona.  The company specialized in the resale and advertising of timeshare rentals.  According to the Consumer Affairs website, consumers in Arizona, California, Florida, Georgia, Nevada, South Carolina and New York were sold an advertising package, that promised to successfully rent “extra weeks” out, to help timeshare owners recoup fees and annual costs.  The packages were sold to timeshare owners for $995 to almost $2,000 for services, which were never received.

While telemarketing laws vary by state, it is illegal for a company to promise results in exchange for charging a fee.  The timeshare owners involved in the lawsuit reported that they did not successfully rent out their timeshare, or earn any residual profit through Condosmart. There are many companies that accept a fee for rental administration, but only after the timeshare has been rented, and payment from the guest vacationers has been received.  Legitimate companies may take a percentage of the rental income by owner agreement, for administering the rental and payment process.

The Attorney General for the state of Arizona successfully sued Condosmart LLC., for fraudulent misrepresentation and for failing to attain registration required for telemarketing, and failure to maintain a surety bond.

2. You Were Not Informed of a ‘Cool-Down’ Period

Regardless of where you purchase your timeshare, including outside of the United States, most contract purchases and agreements have a legal “cool-down” period.  These laws are in effect to protect consumers that regret the purchase, after being subjected to an aggressive sales experience.  In other words, if you were sold your timeshare under pressure, and you had a day or two to think about it and changed your mind, there are laws that allow you to cancel your contract without penalty, and receive a full refund of any payment or deposit.

Naturally, a disreputable timeshare company and sales team will try to avoid highlighting your “right of refusal” and refund.   If you were not legally informed of this right, or if you attempted to cancel your contract within the specified time window, and you were denied a refund, you have legal grounds to file a suit for fraudulent sales practice.   In the United States, the “cool-down” period varies by state, and we’ve provided a list of the back-out periods and limitations on our blog.  Read: “How to Rescind Your Timeshare After You Purchase”.

3. A Timeshare Reseller Asks for Taxes Up Front

One of the growing areas of fraud in the timeshare industry, involves consultants who require an upfront fee to help you sell or transfer ownership of your timeshare.  Consumers who need to end the financial burden of ownership are willing to pay a professional who promises that they can sell, rent or help them donate their timeshare and cancel their contract.

A relatively new scheme used by fraudulent timeshare resellers offers to assist timeshare owners with the return, or refund of their original purchase price, after they have paid local taxes.  This scheme is published in a variety of locations, but increasingly American companies are contacting timeshare owners to offer them ‘assistance’, after they pay the taxes on their Mexican timeshare.

Consumers are becoming more aware of the scams solicited by timeshare resellers, and it is becoming more difficult for these companies to convince owners to pay a fee up front.  This method tricks unwary consumers into paying the equivalent of a fee, while being mislead to believe that paying “overdue taxes” will enable them to cancel their contract.


How and Why We Are Different

American Consumer Credit does not buy timeshares.   We do not offer to rent or resell a timeshare, to help our clients.   Our team of timeshare experts are the original timeshare cancellation team, and we’ve been helping families like yours since 2004.  We work with you, the timeshare owner and with the resort to find a solution that does not involve filing bankruptcy.  Our trusted services start with a free consultation by phone.  Call us at 1-800-587-EXIT.