Navigating the Timeshare Exit Maze: A Guide to Avoiding Costly Scams
For millions of Americans, a timeshare once represented a dream of predictable vacation bliss. Today, for many, it has become a financial burden they are desperate to escape. This desire to unload an unwanted property has created a fertile ground for predatory scams that have bilked owners out of tens of millions of dollars.
A 2020 study from the American Resort Development Association revealed that nearly 10% of the nation’s 10 million timeshare owners intended to sell their share within the next two years. Whether due to shifting lifestyles or the crushing weight of annual maintenance fees, this large pool of motivated sellers has become the primary target for what are known as timeshare exit or resale scams.
The Anatomy of a Timeshare Exit Scam
The fundamental mechanism of these scams is both simple and devastatingly effective. Unscrupulous companies contact timeshare owners with an enticing promise: they already have a buyer lined up or can rent the property quickly. To secure this service, they require a substantial upfront fee, often ranging from a few thousand to tens of thousands of dollars.
Once the fee is paid, the company either disappears entirely or engages in a prolonged stalling campaign until the owner gives up hope. The FBI issued an alert in March 2023 highlighting the scale of this fraud, citing over 600 complaints and $39.6 million in losses just from owners of timeshares in Mexico.
A particularly egregious case illustrates the damage. The operators of Pro Timeshare Resales were sentenced to federal prison for defrauding more than 8,000 timeshare owners, most of them elderly, out of $18 million. The company falsely claimed to have buyers or renters ready, charged thousands in upfront fees, and often returned to demand more for fictitious closing costs. Over its five-year operation, the company never sold a single timeshare interest. Authorities were only able to recover $2.7 million for the victims.
Critical Red Flags: How to Spot a Scam
Protecting yourself begins with recognizing the warning signs. The single biggest red flag in any timeshare exit proposal is the demand for a large, upfront fee. Legitimate services typically operate on a performance-based or escrow model, where payment is due only upon a successful exit.
Other major red flags include:
- Unsolicited Offers: Be wary of unexpected calls or emails, especially if the caller claims to represent your original timeshare company.
- High-Pressure Sales Tactics: Scammers often invite owners to seminars held at upscale locations to create a false sense of legitimacy and urgency.
- Fear-Based Pitches: They may stoke fears about skyrocketing maintenance fees or warn that your heirs will be permanently saddled with the debt.
- No Right to Cancel: Legitimate contracts for services like this should include a three-day right to cancel, as mandated by the FTC’s Cooling-Off Rule. Scammers will often pressure you to sign a contract that omits this protection.
Proactive Steps to Protect Your Finances
Before engaging with any company that promises to help you exit your timeshare, take these essential precautions:
- Contact Your Resort First: Reach out to the original developer or resort. Many have internal programs, like deed-back options, that can help owners in good standing exit their contracts.
- Vet the Company Thoroughly: Research the company with the Better Business Bureau and conduct online searches using the company’s name along with terms like “scam,” “complaints,” and “reviews.”
- Use a Credit Card: If you decide to proceed, pay any fees with a credit card. This provides an additional layer of protection and makes it easier to dispute the charge if the company fails to deliver on its promises.
The Secondary Threat: Recovery Scams
Tragically, the victimization often does not end there. The FBI warns that owners who have lost money to a timeshare exit scam are frequently targeted a second time by “fraud recovery” scams. These operations claim they can recover your lost funds, sometimes impersonating government agencies. The story is the same: they demand an upfront fee, produce no results, and disappear with more of your money.
Vigilance and due diligence are your strongest defenses. By understanding the tactics used by scammers and taking deliberate, cautious steps, you can protect your hard-earned money while seeking a legitimate solution to your timeshare obligations.
Stonegate Firm
1309 Coffeen Ave., Suite 1200, Sheridan, WY 82801
(866) 568-0071
info@stonegatefirm.com
