TIMESHARE OWNERS OFTEN TARGET OF SCAMS
TIMESHARE OWNERS OFTEN TARGET OF SCAMS
By: Gary Isom, Executive Director of the Arkansas Real Estate Commission
For the twenty-five years that I’ve worked for the Arkansas Real Estate Commission, a consumer group that has consistently been a target of unethical activity is timeshare owners who wish to sell their timeshares. Many persons who purchase timeshares eventually find that their lifestyles no longer match the vacation product they purchased several years prior. It’s sort of like the Corvette, purchased while a teenager, that needs to be traded in for a minivan when family obligations overcome the need for speed. The difference is that there’s always a secondary market for the Corvette, while the resort industry has struggled to develop a successful secondary market for timeshare. This has opened the door of opportunity to unscrupulous individuals willing to take advantage of the owners.
Many people own timeshare property and find it fits their vacationing needs quite well. According to surveys conducted by the International Foundation of the American Resort Developers Association (ARDA) , eighty percent (80%) of timeshare owners are fully satisfied with their purchase. I’ve worked with ARDA through the years on the resale dilemma by serving on panels and speaking to resort professionals about the lack of a secondary market for timeshare. I’m convinced that this association wants to address the resale dilemma. Timeshare owners who wish to sell their vacation property should visit the ARDA website on selling a timeshare at www.arda-roc.org/resales. For additional consumer protection information and advisories visit www.arda.org. From the News and Information tab, click on Consumer Information.
Arkansas encountered problems with vacation property resale in the nineties as advance fee scams started popping up across the state. While the sales angles differed from one operator to the next, the basic business model started with obtaining a list of timeshare and resort lot owners. Next, a call center was created by hiring mostly gullible and inexperienced salespersons who did and said whatever their employer told them to in order to obtain the property owners’ credit card information. The caller would then charge the owners a fee ranging from $300 to $700 to list their properties. Working together, the Real Estate Commission and Attorney General managed to shut down the advance fee scams where the properties were only being listed for the advance fee but seldom sold. Less than one percent of properties listed by many of these companies were ever sold.
At its website, ARDA mentions an activity that may have surfaced in Arkansas recently. ARDA refers to the practice as “transfer or repurchase solicitations”. According to ARDA, the Vermont Attorney General released a statement in 2010 stating transfer companies solicit consumers to transfer ownership of their unused timeshares and, thus, “unburden” themselves of maintenance fees, taxes , and other costs. These solicitations mislead the consumer and may imply that the company will offer to pay consumers for their timeshares when, in fact, the owners get nothing and are required to pay up to several thousand dollars to supposedly transfer away the ownership of their timeshare property. Based upon comments I’ve received, the salesperson usually works on the emotion of fear and convinces the timeshare owner that keeping the timeshare will become an ever-increasing burden for the owner.
In Georgia, the Office of Consumer Protection (OCP) recently reported that it had entered into settlements with a company that provides timeshare transfer and lien release services to consumers. The Georgia OCP’s investigation revealed that the companies were sending out postcard mailers to consumers implying that they would offer consumers money in exchange for their timeshares. Consumers who responded by attending a sales presentation were instead allegedly pressured into paying thousands of dollars to transfer their timeshare deed over to the companies or to sign up for the company’s lien release services.
The California Department of Real Estate recently issued an alert and fraud warning about the growing number of scams being perpetrated against timeshare owners in connection with “timeshare resales”. According to the alert “Fraudsters pose as timeshare buyers and use such advertising slogans as ’Will Buy Your Timeshare for Cash’, ’Timeshares Wanted’, or something similar, to lure timeshare owners…”. The timeshare owner is then asked to pay a fee up front to process the paperwork. The alert also states that other scammers falsely tell the timeshare owners that they have a ready and willing buyer for their timeshare then charge the owners “legal and processing” fees and “closing costs” which can be in any amount, but appear to fall in the average range of $1,000 to $3,000.
At its website, ARDA recommends that timeshare owners be extremely cautious when solicited by a company offering to “take your timeshare off your hands” and recommends that the following questions be asked of the representative of the Timeshare Transfer Company.
1. Ask what you must pay in order to transfer the timeshare to the company and how they will accomplish the transfer.
2. Ask your resort’s homeowner’s association (HOA) or management entity to see if they are familiar with the transfer or resale company and what their experience has been.
3. Ask if they will require you to sign a “power of attorney” and, if so, ask them to send you a copy so you can have your attorney review it before you sign it.
4. Ask the company what they will do with your timeshare. (Some of these companies sell the timeshares on Ebay or other websites for a few dollars. You could do this yourself and save thousands in the transfer fee). Also, you do not want to be a party to a default which hurts other owners and could possibly hurt your credit rating if your name is not properly transferred off the deed.
5. Ask if the company will notify your resort and exchange company of the transfer and will provide proof of these notifications.
6. Ask how soon your timeshare will be legally transferred, i.e. now, in 30 days, 90 days, etc.
7. Ask who will be responsible for paying your costs of ownership (maintenance fees, taxes, etc.) while the transfer is pending.
8. Get all of the answers to your questions in writing before you pay any money, and have a knowledgeable friend or professional advisor review the information with you.
9. Ask for the names and phone numbers of other timeshare owners who have used the company’s transfer services so you can call and ask about their experience.
10. Finally, do not succumb to pressure. If this is a legitimate company offering a reputable service, they should encourage you to take the necessary time to research the company and make an informed decision. If you are being pressured to do this now, walk away. For more consumer guidelines and tips, visit ARDA’s consumer website:
Arkansas consumers should also ask the sales representative if they have an Arkansas real estate license. The Arkansas Real Estate License Law requires persons who perform activities in Arkansas involving the sale or transfer of timeshare properties to hold an Arkansas Real Estate License. If they do not hold a real estate license, the consumer should contact the Real Estate Commission at (501) 683-8010 and provide the details of the situation to a commission investigator. While a real estate license does not guarantee that the person is offering the consumer a legitimate option, it does provide some protection for the consumer. Also, the Arkansas Real Estate Commission has the authority to impose a civil penalty up to $5,000 against any unlicensed person who illegally performs “unlicensed real estate activity” in the state or Arkansas.
For more information see Arkansas Attorney General McDaniel’s Consumer Alert issued April 4, 2012 entitled PROCEED CAREFULLY WHEN RESELLING TIMESHARES at GotYourBackArkansas.orgor call Attorney General McDaniel’s Consumer Hotline at (800) 482-8982 or (501) 682-2341.