The Bureau of Consumer Protection at the FTC is warning anyone who owns a timeshare to expect a call from phony companies perpetrating a fraud. The scheme has become so widespread that the FTC says timeshare owners all over the country can expect to be approached and offered phony deals. These scams can have serious financial repercussions for owners of vacation properties who were relying on the profits from the sale to cover other expenses.
The fraudsters are perpetrating an unusually sophisticated scam that leaves victims without a lot of recourse. Potential victims are first contacted by phone and told that there is an international buyer for their timeshare and that the third party company that is calling them will arrange the sale. Then they will be asked to sign a contract and put down a deposit for a transaction fee. After owners have signed and paid, the company will disappear.
Victims who attempt to get their money back soon discover that the contract they signed was for advertising only, and the company will ignore calls, deny refund requests, and generally stall the victim to evade credit card company risk controls.
The complexity of these scams and the fraudster’s reliance on technicalities to lure in victims illustrates how important it is to have an attorney review any documents that you sign for sale or purchase of a property. Property deals may seem straightforward, but tricky contract language and illusive third party buyers can make a simple transaction into a headache and a financial loss.
Some states where the fraudsters have been particularly active are changing the laws that govern these types of sales to help provide better recourse for victims.
Source: USA Today, “Time share fraud lands on law enforcement’s radar,” Jayne O’Donnell, May 1, 2012.