FTC Warns of Timeshare Resale Scams
By Jeffrey Strain
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.
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.