FTC Warns of Timeshare Resale Scams

timeshare scams
If you own a timeshare and have attempted to sell it, you already know that it’s a far more difficult process than you ever imagined it would be. The main issue is that there are far more of these vacation resort units on the market than there are buyers who want them. A main factor in all this is that as a timeshare resort gets older, the yearly maintenance fees usually rise. This makes the older resorts financially less desirable than newer ones for those few people who are in the market to buy. Which would you prefer — a newer resort with lower maintenance fees, or an older one with higher fees? What it all comes down to is that trying to sell a timeshare is quite difficult, especially those from resorts that are older than 5 years, and scam artists use this difficulty to bilk owners out of millions of dollars a year.

While there are a variety of scams out there targeting people with these vacation properties, the most prevalent scam is one where the owner is contacted by someone who claims that they have a buyer interested in their unit. Not only is there a buyer, but there is a buyer who is willing to pay far more than the owner could get anywhere else. What’s the catch? In order for the purchase to go through, the owner must first pay some type of upfront fee (this fee is usually described as a “filing fee” or a “closing cost fee” and it can be several thousand dollars). The scam artist will often play down this fee by telling the owner that once the sale goes through, this fee will be refunded. If the owner pays the fee, they will soon discover that there really isn’t any buyer that’s interested in the unit, and that there is no way to recover the upfront money that they paid.

The problem has risen to such an extent that the Federal Trade Commission (FTC) has put together an infographic specifically addressing timeshare resale scams, and what owners should be on the lookout for with these scams.

ftc timeshare reseller scam
If you own a timeshare, what can you take away from this FTC warning? First and foremost, if you are ever contacted out of the blue by someone who says that they have a buyer that is interested in purchasing your vacation unit, red flags should start waving. There are so many available units on the resale market that there should be no reason for someone to contact you directly to try and buy yours, unless they are looking to scam you in some way. This is especially true if they offer to pay you well above what units on the secondary market are selling for.

The other red flag that should send you instantly walking in the opposite direction is if the person says that you will need to make some type of payment in order for the sale to be completed. It doesn’t matter what this upfront money is called. If there is any mention that you have to pay something before the timeshare is moved out of your name and transferred to the new owner, you should quickly walk away.

Finally, it’s important for all owners to understand that these scams are prevalent and are increasing. Each year, thousands of unsuspecting owners end up getting defrauded out of millions of dollars by this scam. It’s for this reason that the FTC felt it important to highlight this scam. If you own a unit, make sure you don’t become another victim of this scam. If you have parents or friends that own timeshares, be sure to let them know as well since fraudsters often specifically target older unit owners.

If you feel you have been a victim of such a scam, be sure to contact the FTC to report it.

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15 Responses to FTC Warns of Timeshare Resale Scams

  1. laurie66 says:

    Timeshares are one of the biggest financial mistakes that a person can make. To get scammed beyond that is just icing on the cake.

  2. Steve Luba says:

    Nice to see that in Florida, the Florida Attorney General says annual complaints about timeshare have dropped from 13,000 to about 2,000 because of legislation enacted in Florida in 2012. Must be working!

  3. david says:

    I never understood the fascination people had with time shares. I think it makes them feel wealthier than they really are — like a vacation home when they really can’t afford a vacation home. One of the biggest legal scams out there in my opinion.

  4. Sophia Johnson says:

    Timeshare fraud has been around since the timeshare idea was created, but they increase during poor economy. When times are difficult, timeshare owners are stuck with properties they can´t travel to or even afford. Desperate to recoup some money to pay for bills, they can easily become victims to scams artists pretending to be their timeshare salvation who will take upfront fees -as much as five number figures in some cases- but fail to fulfill their promise.

  5. Lisa says:

    The one piece of advice that seems to be missing from all these timeshare resale scam stories is that timeshare owners MUAT avoid doing business with any entity that initiates contact.

  6. Grace Evans says:

    This fraudulent sales practice is commonly used by sales managers as well as timeshare developers; however, they are very clever and very well protected. A common way to offer the resale of existing timeshares is to hire other companies to take charge of the sale or resale (paid by customers).

  7. Olivia Wild says:

    Buying a timeshare under the impresion you will save money on the long run on travel expenses such as airfare or cruises equals to being a victim of timeshare fraud. Timeshares will barely provide you a small discount on accomodations and that´s it. Timeshares will not provide you, in most cases, any discounts on your vacation expenses.

  8. Melanie Brown says:

    Thousands of International travelers, particularly from the US and Canada, have fallen victims oftimeshare fraud while vacationing in Mexico. Resort developers hire skilled salesmen to represent their timeshares as many different attractive packages, such as financial investments, deeded properties, or vacation clubs, just to increase their sales.

  9. Natalie Wilden says:

    Think about this; If timeshares were good enough, Why would any resort give you a tour and a free breakfast to get you to attend their sales presentation?

  10. Tiffany Cox says:

    Many people purchase a timeshare expecting it to be a great acquisition and a good investment. But timeshares need to be looked up as a purchase, instead of an investment. By the time the maintenance fees and the assessment fees start to pour in, they become conscious they got their selves into what could be an exorbitant trouble, full of debts, headaches and unnecessary problems.

  11. Patricia Gilbert says:

    Unfortunately the timeshare industry is riddled with scam and fraud companies that are linked with each other. Many of the rental or resale companies that the timeshare developers recommend charge upfront fees, and are another scam. If the company is willing to work on a commission basis for a successful outcome, then they are likely reputable, but if they ask for fees in advance, this is the first sign to walk away.

  12. Kaya Romney says:

    Thousands of International travelers, particularly from the US and Canada, have fallen victims of timeshare fraud while vacationing. Resort developers hire skilled salesmen to represent their timeshares as many different attractive packages, such as financial investments, deeded properties, or vacation clubs, just to increase their sales.

  13. Lisa Ann Schreier says:

    In most cases in the US, timeshares are deeded property. That is not fraud.

  14. Kriz Carcamo says:

    Timeshares have been a boom over the last twenty years, however it has changed and evolved to give a better service, as it has, the name of this type of memberships were changed for “Vacation Club”.
    Importantly, these memberships are not an investment because they are not real estate; you are buying a service to enjoy leisure time with family and not to do business, and it is how it should be seen. In some countries, these types of memberships are for life (deeded) and can be inherited to the relatives of the owner of the membership.

  15. Maya Garson says:

    The timeshare industry has been into the lion’s mouth for the last couple of years, and it has generated lots of controversy and discussions in many forums and blogs on the web. However, since we’re living an economic downturn, anyone would expect that the timeshare sales collapse, but instead of that the sales seem to be increasing… but this comes with a trap: timeshare scams are increasing too. That leads us to the question: then, why keep people investing on timeshares?

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