Timeshares, Vacation Clubs, and Related Scams

How To Handle Sales Presentations 

Did you enter a raffle to win a free vacation, or get flyers in the mail, text messages, or emails inviting you to attend free live presentations to learn about timeshares or vacation clubs? Promoters often offer free vacations or other prizes if you attend a sales presentation. Once you’re there, the entire atmosphere is set up for you to feel like you’re already on a vacation. They show you amazing photos of luxurious resorts, or they take you on a tour of a similar unit you might consider buying as part of the timeshare.

Sometimes promoters will use different tactics to put pressure on you to buy now. They might try to wear you down by making you wait a long time between parts of the meeting or meet with several people. They hope that by the end of the presentation you’re so exhausted that you’ll sign anything just to get out of there. Also, promoters will often tell you the offer is only good now and won’t be there tomorrow to increase the pressure to act quickly.

Here’s some advice to help you handle timeshare or vacation club presentations:

• Research the company before you go to a presentation. Search online for complaints about the resort developer and the management company offering the presentation. See what others are saying about them.

• Don’t act quickly or under pressure. You’re committing to paying thousands of dollars — potentially for decades or for the rest of your life. Take your time. Ask the salesperson why today is the “only” day the deal is available. The company sets the rates, so why aren’t those available later? This kind of rush is a warning sign: they may not want you to talk to trusted advisers about the timeshare offer or stop and think about what you’re getting into.

• Ask about your ability to cancel the contract. This is sometimes referred to as a “right of rescission” or a “cooling-off period” — a time to cancel the deal after you’ve signed the papers. State law or your contract may say how long this period is. If you decide to cancel, send a letter to the seller by certified mail and ask for a return receipt, so you’ll have a record.
• Study the paperwork on your own. You have the right to get all promises in writing. If you’re looking to buy a timeshare in an undeveloped property, you also have a right to get a public offering statement. Take all the documents with you after the presentation and review them on your own or with someone you trust before you commit.

What To Know Before You Commit 

Timeshares

When you enter into a timeshare agreement, you’re paying for the right to use one or more vacation properties. Some timeshares give you the right to stay at the property for a specific length of time and with a specific frequency — for example, one week every year. Some timeshares are “points-based,” which allows you to use your points at different properties throughout the year. Timeshare “owners” usually pay an initial fee to get into the timeshare agreement, plus regular maintenance fees and other recurring charges.

Not all timeshares work the same way. For example:

• Some timeshare agreements give you the right to stay at a specific resort for a specified period of time at a specific interval (for example, the second week of August every other year). The week you get may change every year or it may be consistent from year-to-year.

• “Deeded timeshares” let you buy a specific unit for a specific week each year. Legally, these timeshares are considered real property that your heirs may inherit.

• Points-based timeshares provide you with a specified number of points that you can use throughout the year at designated properties. The number of points needed will vary depending on the property, location, length of stay, and time of year. For some timeshares, your points expire each year, so unused points from one year won’t carry over to the next year. Instead, you’ll get new points each year.

The laws that govern timeshares are specific to the state where the property is located. The sales staff may tell you that a timeshare is a solid financial asset, but the value of a timeshare is in its use as a vacation destination, not as an investment. Plus, your timeshare may include hefty ongoing and recurring fees for maintenance and other items.

Vacation Clubs

Some vacation clubs are a variation of a timeshare: you pay an initial fee, and once you’re enrolled, you select resorts to stay at. The difference is you pay each time for the cost of staying there. Other vacation clubs claim that, once you enroll, you’ll get discounts on travel, lodging, or other amenities during your vacation.

Before you enroll in a vacation club, be clear on what you’re getting. Even if marketers and salespeople are using the term “vacation club,” they might be talking about different things.

Before you commit to a timeshare or a vacation club

• Find out the true cost. Add up all the payments, including the initial payment, fees, taxes, and travel costs to get there, plus any other yearly charges. Is that the amount you want to spend on a vacation every year?

• Get the details of any exchange program. If the timeshare or vacation club claims that you can exchange your points or weeks to vacation at different properties, find out if there’s an extra charge for booking a property through the exchange — or additional charges for different types of properties. Is this still a good deal?

• Get the details of any point system. Many timeshares and vacation clubs use a point system, but not all work the same way. Typically, the number of points you need to stay where you want depends on
  • the length of your stay
  • the type of unit you’re booking
  • where the resort is located
  • when you want to go

Consider whether you’ll have the points you need to take the kind of vacations you want. If you’re allowed to buy points to upgrade, find out how much it will cost.

• Factor in increases to annual timeshare maintenance fees. Most timeshares have an annual maintenance fee. Those fees typically increase at rates that equal or exceed inflation, so ask whether your plan has a fee cap. You’ll have to pay fees and taxes, even if you don’t use your timeshare.

• Know what happens if you want to get out. Selling a timeshare might be difficult. Find out if your timeshare company offers an exit program and how it works. If you’re considering a vacation club, make sure you know how to cancel if you don’t want to be enrolled anymore.

How To Avoid Timeshare Resale Scams

Getting out of a timeshare might be tough. Before you pay a company to help you sell your timeshare, contact the timeshare developer or the resort’s management company and ask about your options. The American Resort Development Association (ARDA) has a tool to help you identify the company that you need to contact, along with other resources.

You’ll see or hear lots of ads from companies claiming to be experts at selling timeshares — they’re online, on the radio, and on social media. But sometimes these companies exaggerate or flat-out lie about what they offer you. They take your money and then do little to nothing to help you.

These are some of the things you’ll see in timeshare resale ads:

• “The market is ‘hot,’ so we’ll sell your unit fast.” (That’s a lie.)
• “Your timeshare will sell quickly,” or “it will sell in months.” (Unlikely.)
• “We have lots of buyers ready to purchase your timeshare.” (Doubtful.)
• “We guarantee you’ll get big returns on your resale.” (That’s a lie.)

Be careful — these could be ads from timeshare resale scammers who will take your money but won’t help you sell your timeshare. The truth is, the timeshare market is overcrowded, and it might be hard, if not impossible, to sell a timeshare. Anyone who guarantees a sale or big returns is a scammer.

To avoid timeshare resale scams, make sure to

• Check out the seller. Contact the state attorney general and local consumer protection agencies in the state where the reseller is located. Ask if they have any complaints on file. Also, search online for the name of the reseller, plus words like “complaint” or “scam.”

• Ask about fees. It’s better to do business with a reseller that takes fees after the timeshare is sold. If you have to pay a fee in advance, get refund policies in writing.

• Find out if the reseller’s agents are licensed to sell real estate where your timeshare is located. Deal only with licensed real estate agents and brokers. Check with the real estate licensing agency in the state where the timeshare is located. Also ask for references from satisfied clients.

• Ask how the reseller will advertise and promote the timeshare. Will you get progress reports? If so, how often? You want to make sure that the company will be active in selling the timeshare. If they’re only putting the property on a resale list, that may not be very helpful.

• Get everything in writing. Read the contract carefully to make sure it matches the verbal promises you’ve gotten. Make sure it includes the services the reseller will perform, plus any fees you’ll have to pay and when. If the deal isn’t what you expected or wanted, don’t sign the contract.

Don’t assume you’ll get back what you paid for your timeshare. Consider using a timeshare appraisal service to analyze the value of a timeshare you might want to buy or sell. Make sure the appraiser is licensed in the state where the timeshare is located. Check with the state where the timeshare is based to see if the appraiser’s license is current in that state.

How To Avoid Timeshare Exit Scams

Even when you’re not looking for a way out of your timeshare, scammers might use public records to find your contact information and try to convince you to sell. They’ll say they can help you get out of your timeshare, and maybe even make money. Other scammers and shady companies place ads where they “guarantee” results, but ask you to pay in advance for listing, advertising, or legal services.

If you make a payment, scammers might do nothing. Sometimes they’ll take your money and simply contact the timeshare company on your behalf — something you could do for free.

Here are some signs to help you spot timeshare exit scams:

• Unsolicited calls or messages offering advice or assistance to get out of your timeshare
• “Guarantees” or “promises” to cancel your timeshare contract 
• Demands you pay large up-front fees before they do anything
• Instructions to stop paying your mortgage or fees

Want to explore your exit options? Start by contacting your timeshare company directly. Some include exit programs that let you get out of your contract. If you decide to hire a timeshare exit company, before you pay or sign any documents:

• Research the company. Search online for the company's name, plus the words "scam" or "complaint." See what other people are saying about their experience.
• Study the paperwork on your own. Get all promises in writing. It’s your right.
• Ask about your ability to cancel the contract. In certain circumstances you have the right to a cooling-off period — a time when you can cancel the deal after you’ve signed the papers.

Buying Undeveloped Property and Timeshares in a Foreign Country

If you’re interested in buying undeveloped property in a foreign country

• Get detailed documents from the developer showing how and when they expect to complete the development. Get copies of the permits that the developer must have to do the work.
• Do some independent research. Don’t make a decision based solely on what you see on the company’s website or what the developers say. Talk with other people about their experience and visit the area before buying any land.
• Consult with an independent financial advisor. Talk with someone not associated with the development, or its marketing firm, to get a full picture of the investment. Ask them to help you figure out how buying abroad would impact your finances.
• Hire an independent real estate agent in the foreign country. They can help you look at properties in multiple developments so you can comparison shop.
• Get everything in writing and don’t sign any documents you don’t understand.
• Use an escrow account as the payment method. Escrow services accept and hold payment from you until you get and approve the purchase. Then, the escrow service forwards the payment to the seller. That’s one way to help protect your money.

Report Timeshare Scams

Report timeshare resale scams or other scams related to timeshares and vacation clubs to

• the FTC at ReportFraud.ftc.gov
• the state attorney general in the state where the timeshare is located
• the Better Business Bureau (BBB)