As we have reported on many occasions there are significant numbers of bogus scam companies working primarily to supposedly exit owners from their timeshare contracts. This problem is acute in both Europe and the USA. The European authorities seem, in the main, to ignore this fraudulent industry, but in the States, there seems to be a concerted effort to stamp out perpetrators.
On perusing the Federal Trade Commission website we spotted the following headline:
FTC, Wisconsin Attorney General Takes Action Against Timeshare Exit Scammers for Cheating Consumers Out of $90 Million
Naturally we had to investigate.
TCA Investigation
The FTC investigation stated that the Missouri-based scam operated under a number of names, including Square One, Consumer Law Protection, Premier Reservations Group, Resort Transfer Group, and Timeshare Help Source. Since at least 2018, these organisations used direct mail and in person “seminars” to pitch a dizzying array of deceptive claims to pressure consumers into paying for their services.
Basically it was the old con of attracting timeshare owners who were unable to exit their timeshare contracts directly with the developer, a common problem in the USA. For the most part, owners were elderly and desperate to get rid of their timeshare so presented easy pickings.
Slick sales presentations convinced owners that the organisations mentioned above would, for a substantial fee, end the misery of their timeshare ownership, only problem, they didn’t.
“The defendants used scare tactics and high-pressure sales pitches to coerce seniors into forking over thousands of dollars for timeshare exit services they didn’t deliver,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC appreciates the partnership of the Department of Justice and the Wisconsin Attorney General in putting a stop to this scheme.”
The FTC investigation highlighted a significant number of issues in contravention of the law:
- Making bogus affiliation claims: The complaint alleges that the defendants’ sales pitches falsely employed logos of legitimate timeshare companies and trade groups to lead consumers to think their services are endorsed or “authorised” by major timeshare companies.
- Deceiving consumers about their options: According to the complaint, the defendants falsely told consumers that they could not exit a timeshare on their own without paying the defendants an exorbitant amount of money. They also threatened consumers to buy their service on the day of the sales pitch or they will never be able to exit their timeshare.
- Stoking baseless fears about how heirs may be affected: The complaint notes that the defendants use fears that consumers’ heirs will be saddled with ever-increasing maintenance fees after the consumers die as an incentive to pay for the expensive exit services. In fact, states have procedures allowing heirs to disclaim any timeshare inheritance.
- Failing to give consumers promised refunds: The defendants’ sales documents include a “guarantee” that if the defendants do not deliver on their promises, consumers will receive a full refund. When consumers call to request refunds, the defendants cite non-existent litigation, the COVID pandemic, or other phony reasons why they haven’t secured the timeshare exit, and then deny nearly every refund requested.
- Pressuring consumers to sign contracts with non-negotiable and unenforceable terms: The complaint alleges that the defendants’ pressure consumers to sign contracts that say consumers are not allowed to cancel. Including such a contract term violates the FTC’s Cooling-Off Rule, which guarantees consumers the right to cancel a contract like this within three business days of the sale.
At present the case has been referred to the Department of Justice (DOJ) who in turn will review the evidence. The case will now go to trial and be decided in court.
TCA comment
It’s refreshing to see authorities anywhere taking action to stamp out fraud, especially in the timeshare industry. Whilst we applaud such actions, we have to wonder at the cost of investigation and court time such prosecutions involve.
As we have stated before, if only the timeshare industry would recognise and accept the fact that for whatever reason, timeshare owners would like to exit their contracts, cases such as highlighted above would be a thing of the past. Instead of developing stupid programmes such as Diamond “Transitions” or Westgate “Legacy program” developers could introduce a simple to understand and execute exit programme, if they did, these sorts of prosecutions would cease to exist.
Developers have to share the blood on their hands when their owners fall victim to fraud. Their intransigence to allow a simple termination of contracts breeds scam and fraudulent companies. It needs to be remembered that the progression of age, illness or financial worries make the victims even more susceptible to engage fraudulent companies in sheer desperation to get rid of their timeshare when the developer says “the answer is no, now what’s the question”.
The so called trade body for timeshare in the USA, The American Resort Development Association (ARDA) must also take responsibility. ARDA is by no means a tiger without teeth and could easily recommend to its members that structured exit strategies are the way forward for the industry to join in the fight against fraud. Will this happen? We doubt it; the ARDA membership ranks both the smallest and the very largest of the timeshare developers, a veritable who’s who in the timeshare industry.
ARDA survives on these very members paying substantial membership fees. Given that ongoing maintenance fees make a significant contribution to the developer bottom line. If ARDA pressured the subject of exit strategies then letting owners jump ship whenever they want is hardly going to go down with their fare paying passengers.
There certainly are bona fide exit companies who can negotiate and assist with timeshare exit but these are few and far between. If the figure of $90m quoted is accurate, and an assumption of a fee of $10,000 per case was taken, this means as many as 9,000 US timeshare owners fell victim to this fraud. This is only one case so it begs the question, how much this scam industry is costing innocent victims overall.
A full transcript of the proceedings so far may be downloaded here:
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk