One in 10 people who have owned a timeshare has been scammed.
Timeshare scams are becoming increasingly common, with an estimated $1.5 billion lost yearly to timeshare fraud. Despite fraudulent activity becoming more well-known, timeshare companies remain a hot commodity within the travel industry. So, why do buyers consistently fall for a number of timeshare scams despite knowing it's a bad idea?
Timeshare scams can be difficult to spot, as they often involve legitimate businesses and well-trained salespeople. Timeshare companies often target seniors, who may be more vulnerable to fraud. When you step back and look at the data, you'll notice similar stories telling how someone came to own their timeshare. For example, almost everyone experiences some sort of gift offering before attending a sales presentation. Once there, they encounter highly-trained salespeople who use high-pressure sales tactics until they feel they have to agree to buy whatever is for sale.
If these vacation properties are as valuable as they allege, they should not take a deceptive approach when selling them. Let's look into what makes up a timeshare, and perhaps we will find out what you can do to avoid timeshare scams.
Timeshares are vacation properties sold as shared ownership. Essentially, timeshares have several different owners per unit who split up the property costs and the time spent there. On paper, it sounds like a great vacation option. That feeling will quickly fade when all the extra charges start piling up, and you find yourself with a mountain of debt and very few options to escape timeshare ownership.
Even if you are up to date on all your property payments, it can still be difficult to book your weekly vacation each year. Imagine paying thousands of dollars on a vacation property and being unable to stay there. Many timeshare owners experience common symptoms of timeshare scams: a lack of flexibility, their best interests ignored, limited access to their shared destination, and countless questions. Do you want to join them?
The absolute best-case scenario as an owner is that you are reserving your vacation for future years. Again, this could be ideal if you only plan to visit the same place and at the same time every year, but even then, most owners are left unaware of the specifics of their agreement. That includes added costs to be paid every year, whether or not you've paid off the timeshare's mortgage and increasing maintenance fees. The fact that timeshares are sold as investments when in all actuality, they are money pits you cannot escape from is one of the most significant issues that owners face.
According to the American Resort Development Association, the average cost for a timeshare unit from a resort developer in 2018 was just below $21,000. So one would think that paying off their timeshare mortgage after many years would be a cause for celebration. Well, hold the confetti because you may be unaware of maintenance fees.
Maintenance fees often get left out of the sales presentations; if not, their impact gets drastically undersold to potential clients as minimal payments. These fees may seem reasonable initially, so many owners will just let it slide, but here's the catch: The cost of an annual maintenance fee increases every year, and the yearly average price in 2018 was close to $900 and rising. It’s difficult to put a numerical value on the average amount of money lost to timeshares. Timeshares aren't like traditional real estate, so don't expect to be free of payment if you purchase one.
High purchase prices, insurmountable maintenance costs, and limited flexibility define timeshare ownership. Timeshare properties should hold a high value as an investment should. But, just as timeshares mask themselves as real estate, they also attempt to disguise themselves as an actual investment. If you are constantly paying for something and not receiving anything in return, or what you receive is insignificant compared to the price, it's a poor investment. That is, if it's considered an investment at all.
It is standard for owners to feel regret and shame after realizing what a timeshare truly is. They often attempt to get rid of their timeshare once they recognize their mistake in purchasing it. Unfortunately, selling a timeshare on the secondary market, or using it as a vacation rental, will be nearly impossible. If you buy one of these units, expect to pay a hefty amount, but do not ever expect to get anything back from it.
The common process used by the timeshare industry to scam people is mail. Folks often receive flyers or see advertisements online inviting them to attend live presentations to learn more about timeshares. Some promoters go as far as to offer free vacations and other rewards in exchange for listening to their sales pitch. The environment at these presentations often gives the false sense that you’re already on vacation. The sales staff show off photos of luxurious resorts and even provide tours of comparable units up for sale.
Sometimes these salespeople utilize tactics to pressure individuals into purchases. For instance, they can drag out presentations to unbearable lengths by having you meet with many people, including long waiting periods. To get you to act now, they might inform you that a unit is only available on that particular day and that you will miss out on a great deal by waiting. By the time the presentation is over, they want you to be so fatigued that you'll sign anything to leave.
Below are a few suggestions on handling deceptive timeshare presentations and how to prevent an unwanted purchase:
When purchasing a timeshare, there is a policy called the rescission period in your contract. This period is the easiest way to get out of a timeshare agreement. If you are lucky enough to still be in the rescission period, you have to write a cancellation letter to your timeshare company, and there shouldn’t be any trouble from there.
Now, are you ready for the catch? This cooling-off period typically lasts only a couple of days after the purchase.
So let's say you attended one of the mandatory sales presentations at the resort on one of the first few days of your vacation and purchased a timeshare. When your vacation is over, and you return home, you will most likely be out of the rescission period and stuck with the timeshare. Once this period has passed, canceling a timeshare becomes tenfold more difficult because many more stipulations are in place.
Canceling a timeshare is difficult due to miscommunication and finances. There are financial repercussions to purchasing a timeshare. You may have paid a large down payment with your credit card or taken out a mortgage. Both affect your credit score. There's also the short term of the rescission period. Your salesperson may not have mentioned that you only had less than a week to cancel your timeshare for free.
You were probably rushed through the signing process when purchasing, and it all seemed relatively easy. Don't expect the same treatment when trying to get out. Attempting to cancel can be a cruel course for you and your family, costing you money and time. The timeshare companies know that many of their clients will regret their purchase and attempt to exit. So they make sure to fill their agreements with conditions and provisions that will make leaving very difficult.
Timeshare resorts go far out of their way to ensure the company remains financially protected if an owner ever attempts to leave. The resort company ensures it will never be obligated to the burden. Many owners feel helpless and hopeless because they can no longer afford their property costs but receive little to no help from the company to solve these issues.
Timeshare resale con artists call timeshare owners while assuming the identity of a reseller or real estate agent. The con artist promises to sell the timeshare for a fair price or asserts that he already has a buyer. They will then attempt to convince you to sell your property unit right then, and all you have to do is pay the upfront costs to close the deal. If you follow through, you could lose thousands of dollars and remain obligated to make future timeshare payments.
The only thing worse than one scam is getting scammed again when trying to get out of the first one! If you got scammed before, you should be aware that the chances of it happening again are high, and you need to be extra careful. Due to the extreme difficulty in canceling a timeshare and owners looking for other ways out, such as selling them, there has been an increase in instances where scammers take advantage of these people by pretending to be a timeshare resale company.
Spotting a timeshare resale scam may be difficult. Be wary of anyone who claims to be able to sell your timeshare quickly or for a profit. Avoid high-pressure sales by hanging up the phone. Don't fall for flashy websites or well-known company names or addresses. A reseller who appears to be a local company might be a fraudster in another country.
If you attempt to sell your property and post it online, you will most likely encounter scammers. Be skeptical of anyone who calls you out of the blue, saying they can immediately sell your unit. Also, it is crucial to never pay any upfront fees when speaking with an alleged timeshare resale company.
These timeshare resale scam companies prey on those already scammed before. Knowing these people are desperate and weak, as they attempt to get out of their first scam, they will go to extreme lengths to convince you they are a legit company. It would be best to take your own time to research properly before working further with them.
If it is an unsolicited phone call, email, or piece of mail regarding your property's resale, it is best to ignore it. If there are warning signs, then this is one. Credible and honest-living timeshare exit companies will not be cold-calling people by saying they can sell your unit. These scammers will use similar tactics to timeshare salespeople and may attempt to incentivize you to speak with them or mislead you into believing they offer a legitimate service. Whenever you advertise your timeshare for sale online, you will encounter these scams left and right, but unfortunately, a genuine buyer will not be as easy to find.
These scammers will push you to act fast and tell you that you must pay an upfront fee to complete the sale. Never pay upfront. There are many ways to say this, but it needs to be understood. That is an immediate red flag. When they ask you to pay anything upfront, hang up because they are not a trustworthy timeshare reseller but only there for your money. You already lost thousands of dollars on a timeshare you want out of, so don't fall for another rip-off.
Timeshare scams are the number one complaint the Federal Trade Commission received, with more than 7,000 complaints in 2019.
The timeshare business is full of scams and dishonest companies looking to undermine innocent people into making poor decisions. Do your research before purchasing a timeshare, and if you have already fallen into that trap, then be sure to do the proper research to find a legitimate way out. These hotel chain resorts need many owners to fill all their units and stay afloat financially, so they will take extreme measures to secure ownership, even if it is done in a disingenuous way. Once you have fallen for the first sham, you will be susceptible to more. If you are in such a predicament, the best thing to do is find credible help within the timeshare exit industry.
If you're hiring a cancellation company, look no further than Wesley Financial Group, LLC (WFG).* Since 2011, WFG has canceled over 16,000 timeshares and eliminated $300,000,000 of timeshare mortgage debt. Schedule a free consultation with WFG representatives today to plan your best action!