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I’ll never forget when my mom and dad got a free weekend stay in San Diego. As a ten-year-old, I was thrilled.
Of course, I didn’t understand that free vacations don’t exist. There’s always a catch. In this case, my parents had agreed to listen to a timeshare sales pitch. Listen to an hour-long proposal in return for a free weekend getaway – why not?
As my mom later described, they were held “captive” for over three hours by overly pushy salespeople who tried to push them into signing documents then and there. When my dad said he’d like some time to review the information presented, the salespeople balked.
My parents didn’t buy the timeshare that day or at any point in the future. Many people do buy into timeshares. Sometimes they feel pressured by intense sales pitches. Other times they see real value in owning one. For example, my husband’s family has a deeded timeshare in Hawaii that they adore.
If you’re thinking of buying or selling a timeshare, though, there are a few things you need to know. Timeshare fraud is a real issue, and it can cost you thousands. Understanding what it is and how it happens is the best protection.
What Is A Timeshare?
Before we dive into timeshare fraud and how to protect yourself from it, it’s important to know what a timeshare is. It’s also crucial to understand that different types of timeshares exist.
Generally, a timeshare refers to an agreement giving rights to use a specific property for a specific time. Typically, these properties are within resorts or condominium complexes in desirable locations – like on a beach in Hawaii or along the ski slopes in Aspen.
The length of time varies. Sometimes it’s a week every two years. Other times it’s one week each year. It depends on the property and the number of timeshare owners.
Timeshares always require an upfront fee to join the agreement and regular maintenance fees. On top of this, there can be other fees and assessments hidden in the fine print of your contract, which is why it’s important to read through them in full before signing.
There are several different types of timeshares.
With a resort property, you might get a week every year within the resort, but the exact location will change. So, you might have an ocean-view room one year and a garden-view room the next.
If you opt for a deeded timeshare, you’ll get a specific unit for a specific week that doesn’t change. Deeded timeshares are legal property, meaning you can even give them to your children or other family members.
Then there are points-based timeshares. These are timeshare agreements that allow you to buy or earn points. Then, you can use those points to swap your original timeshare with a different property, each with its own point value.
For example, if you buy a timeshare in Santa Fe worth 1,000 points, but you want to visit Orlando, which is worth 5,000 points, you could apply your 1,000 point share and then pay the difference for an Orlando vacation.
Points-based timeshares give lots of flexibility, but depending on the point system, the value may or may not be so great.
Timeshare vs. Vacation Clubs
Marketers and salespeople may use the terms timeshare and vacation club interchangeably, but these are two different things. Like a timeshare, vacation clubs require an initial fee, but you’re not paying for a specific property or set length of time.
Instead, you’re purchasing access to a club that allows you to book stays at select resort properties at a discounted price.
The Problem With Timeshares
Timeshares can be great for family vacations, but they’re also known for being risky. There are several reasons why:
- Marketers and salespeople tend to be unclear and pushy. They create situations like “hour-long” timeshare pitches that are meant to feel intense. And they often push people to buy before they can read the fine print.
- Fees always increase. Maintenance fees aren’t going to go down as time goes by. Once affordable yearly fees can skyrocket for timeshare owners, forcing them to walk away or sell.
- Timeshares are difficult to get out of. Buying into a timeshare isn’t like buying a piece of property. While you can view your home or land as an investment, a timeshare is only as valuable as a vacation spot. Unlike a home or a car, that can make it tough to sell later on.
That’s where fraudsters come in. See, timeshare owners often become very desperate to sell their shares. Unfortunately, that leaves them vulnerable to advanced and complicated scams.
Timeshare Resale Scams
There are many different flavors of timeshare scams, but they almost all look something like this:
1. A Typical Timeshare Fraud Scenario
You have a timeshare that you’re ready to sell. Maybe the maintenance fees got too high, or your family situation changed. Whatever the case, it’s time to get rid of it.
You decide to post an advertisement on a few timeshare resell sites, hoping to find a buyer. You also start researching how to sell a timeshare online.
Suddenly, you start getting phone calls, Most of them sound like scammers, and you’re not so easily fooled. But one comes from a broker that claims they have an interested buyer for your timeshare.
You ask the broker to send you some basic information, and they do. Everything is on the company heading, there are no misspellings – it all looks good.
You’re ecstatic because you thought the process would be a lot harder. You ask the broker what the next steps are. They inform you that there are certain costs the seller will need to cover, all normal closing costs.
That makes sense, You’ve sold a house before, and you know closing costs can be two to three percent of the sales price. So, you agree to wire the funds to the broker’s escrow service.
Once you do that, the funds are gone…and so is the “potential buyer.” This means you’re stuck with the timeshare and short a couple of grand.
2. Other Timeshare Fraud Cases
This isn’t the only way timeshare owners get scammed, of course. In some cases, fraudsters pose as someone other than a broker.
For example, the U.S. Embassy in Mexico issued a warning in May 2023 for timeshare owners.
Fraudsters there were calling and impersonating the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). The fraudsters claimed that the OFAC “blocked funds” related to timeshare sales and that the owner needed to pay a fee to release those funds.
Other scammers have been known to register with the BBB, impersonate real title and escrow companies, and even file paperwork with the local government registering as official businesses.
That makes spotting timeshare fraud particularly difficult. Fortunately, there are things you can do to protect yourself.
How To Avoid Timeshare Fraud
The following is a list of best practices to avoid timeshare fraud. Taken together, it can help you steer clear of scammers.
1. Beware of Exaggerated Advertisements.
Most sellers want to find a buyer for their timeshare quickly, and many hope to make back their initial investment. That makes advertisements that promise fast sales for high dollar amounts very tempting.
Unfortunately, if you run into an ad like this online or elsewhere, it’s almost certainly a scam. Timeshares don’t sell fast, nor do they typically make a profit. In most cases, you’re lucky to recover your initial investment – thus timeshares are for creating family memories, not for growing your nest egg.
So, if you run into an ad that seems too good to be true, don’t call, click the link, or otherwise show interest. Doing so is a good way to end up on the wrong end of a timeshare scam.
2. Don’t Fill Out Vague Internet Forms.
Look what happens when you click the top sponsored link after searching for how to sell a timeshare:
You get a form to fill out. Don’t do it.
I have no clue if the Newton Group is legitimate or not. They might be, and if they are, there will be other ways to contact them. You should look up their website and take the other steps on this list to vet them.
Since this industry is so fraught with scammers, reaching out to timeshare resellers is much better than letting them reach out to you.
3. Research Your Reseller.
If you find a reseller that seems legitimate, it’s crucial that you vet them thoroughly. To do this, start by calling the state attorney general’s office for the state the reseller is located in. Ask for any on-file complaints about the company.
Do the same thing with local consumer protection agencies. You can find state consumer protection agencies by looking them up at usa.gov/state-consumer.
Finally, search the reseller’s name plus the words “complaint” and “scam.” See what comes up. If blog posts, articles, or reviews say the company has scammed others, you shouldn’t use them.
4. Ask about Fees and When They Are Due.
Sometimes legitimate timeshare resellers have upfront fees, but ideally, they won’t charge you until after your timeshare sells.
If there are upfront fees, ask for an explanation of what they’re for and request a refund policy in writing.
5. Ask to See a License to Sell.
If you’re considering a resale company or broker, ask them if their agents have licenses to sell within the state where the timeshare is located. Then, confirm that information with the local real estate licensing agency.
6. Ask How Often You’ll Receive Updates.
If a company is going to resell your timeshare, they should be able to give you a timeline of what to expect. Typically there will be daily or weekly updates that let you know about potential buyers, market conditions, etc.
If they can’t give you a straight answer, like “We update sellers every Monday night,” there’s a good chance they’re not actively selling your timeshare. After you give them a few “necessary payments,” they may disappear.
7. Get Everything in Writing.
If the company representative makes verbal promises, like guaranteeing they’ll sell your timeshare within a specific timeframe, ask them to provide those promises in writing. Chances are they won’t.
However, legitimate real estate agencies that work with timeshares will provide everything in clear, written form. Of course, they also won’t make big promises they can’t keep.
8. Consider Hiring a Timeshare Appraiser.
If a potential timeshare reseller promises you a large sum for selling your place, you should verify their statements by hiring your own appraiser.
Timeshare appraisers specialize in determining a timeshare’s actual market worth. They’ll give you a realistic idea of what you can sell yours for.
9. Invest in Internet Security and Privacy Tools.
On top of the above steps, consider purchasing online privacy tools.
Timeshare fraudsters often use tactics like phishing, creating fake but legitimate-looking timeshare real estate websites. They may also utilize targeted ads. So, when you search for things like “How to sell my timeshare,” you’ll start seeing ads from scammers wherever you go online.
You can use services that provide ad tracker blockers and anti-phishing software to protect yourself.
While you’re at it, you should also invest in identity theft protection services. After all, even if you work with a legitimate timeshare reseller, the selling and especially the closing process will require you to exchange a lot of personal information with others.
A service like Aura is a good choice because it offers internet privacy tools, identity protection, and identity theft insurance in one package. It can save you from timeshare scams, travel booking scams, home title scams, real estate scams, and most fraud that involves a place and your personal information.
Selling Your Timeshare The Right Way
If you’re trying to sell your timeshare, it’s too easy to cross paths with fraudsters and thieves. Even using the above steps, you may give your information to a “company” you wish you hadn’t.
There are better ways to sell a timeshare and avoid fraud, but they may not be available in every scenario. If it applies to your situation, you should go one of these routes.
- Upscale timeshares typically have partnerships with local real estate agencies.
These agencies specialize in resales; the timeshare management company has already handled vetting. All you have to do is call the management company, tell them you want to sell, and they’ll connect you.
- Resort timeshares may offer a resale or give-back program. If your timeshare is with a big brand name group, they likely have an in-house team to help you sell or walk away from it.
You may hesitate to use these services because other companies will get you a better deal, either by selling quickly or for more money. Yet in all likelihood, the other companies you’re considering are fake. You’re better off going with a group your timeshare management group can vouch for.
Timeshares can be tons of fun and completely worthwhile. As long as you understand it’s not an investment and only valuable as a vacation spot, you should be fine purchasing one.
When it comes time to sell, fraudsters and scammers are too eager to take advantage because timeshares typically don’t do well on the secondary market. You’re often lucky to recoup your initial investment; finding a buyer can take a long time.
Fraudsters see that as an opportunity. They’ll make promises that are impossible to keep to desperate timeshare sellers.
So, to avoid timeshare fraud, you have to take extra steps. Thoroughly research any company you consider using and use the company your timeshare management group recommends or has in-house.
If you’re about to sell your timeshare, it’s a good time to consider an identity protection service. Ones like Aura often include online privacy tools that make it much harder for fraudsters to reach or affect you. With that and your new knowledge, you can avoid timeshare fraud.
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