Posts filed under 'Avoiding Timeshare Scams'

Orlando Timeshare Scams Explode!

During the last month alone, 3 high-profile timeshare scams have been raided by police in Orlando, Florida. In at least twenty news pieces on these developments, the public has been treated to images of SWAT teams busting down doors, police confiscating computers and printers, and the ubiquitous ‘deal board’ being dragged from a shady office by regulators. Taken at face value, these images may be reassuring; certainly, scandalous Florida-based timeshare resale companies give the industry a bad name. But, it takes a timeshare industry insider to recognize these stories are not good news – not at all. Behind the headlines are regulatory follies that threaten the very existence of a secondary timeshare market.

Exactly one year ago, this blog warned of a timeshare scam designed to convince owners that their properties were ‘already sold.’ Of course, to complete the deal required payment of an enormous up-front fee. Despite our best efforts (and those of numerous other legitimate timeshare companies) to warn timeshare owners, some continue to fall for this obvious fraud. The effects of the ‘It’s Already Sold’ scam have been devastating to real timeshare resale companies: forcing them to become apologists for their now-tarnished industry.

Making matters worse for the industry, reporting on timeshare scams rarely draws a distinction between real timeshare resale companies and criminal fronts. A notable exception is Illinois Attorney General Lisa Madigan, who warns of “scammers posing as timeshare resellers,” describing them as “fake.” All too often, descriptions of timeshare-related crimes are so vague and subjective they border on misleading: The Orlando Sentinel quoted police Sgt. Amy Ameye, stating victims “were told If you send money… we will get the paperwork going, we will get your timeshare sold for you” – a statement that could conceivably apply to any timeshare resale company, legitimate or otherwise.

In a press release from July 2010, the Florida Attorney General describes “actively pursuing timeshare resellers as part of a statewide initiative” – a blanket statement that presumably includes all timeshare resale companies. Given Florida’s prejudices, should it really surprise anyone that timeshare scams there have exploded? The State’s witch-hunt regulatory environment leaves no room for legitimate timeshare resale companies.

The Florida Department of Agriculture and Consumer Services

The ‘It’s Already Sold’ timeshare scam is clearly a crime that should be prosecuted. Possible Federal and State charges include Grand Theft, Organized Fraud, Intentional False Advertising, Mail Fraud, Wire Fraud, and that’s just for starters. So what crimes were the Orlando timeshare scammers charged with? Unlicensed Telemarketing, a third degree felony in Florida.

In Florida, timeshare resellers fall under the authority of the Florida Department of Agriculture and Consumer Services (DOACS), where they are regulated as telemarketing companies. According to DOACS investigator Sasha Velez the problem of timeshare resale scams in Orlando is “huge… We have over 40 to 50 cases unlicensed right now that we are looking into.” Of course, no one asked Ms. Velez the obvious questions:

What if these Orlando timeshare scams had telemarketing licenses? Would you have allowed them to continue defrauding consumers across the country? What if they scammed people in person, or via email?

This is the down-side of excessive regulation; the need for regulators. Folks that may be well-meaning, but just don’t get it. Solutions put forth by the DOACS, and others in Florida, have sought to criminalize the entire timeshare resale industry. The problem in Florida is not timeshare resale companies, it is criminals. If your State has criminals committing wide-scale fraud, the solution is not issuing telemarketing licenses, it is criminal prosecution.

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12 comments February 16th, 2011

Are Timeshare Owners Dummies? Part 6, Conclusion

Over the course of this series, we’ve examined the battle for timeshare owners’ hearts and minds – in-depth, and from various perspectives. We’ve done our best to define the battle lines between those that believe in timeshare, despite its flaws, and those that malign it, in spite of its value. Ultimately, the argument comes down to one simple question, “Are Timeshare Owners Dummies?” After much examination, I’m glad to say the answer is categorically NO!

Buying Timeshare Makes Sense to Me!If anything, timeshare is a product whose time has not come yet. Timeshare owners are simply the early-adopters; out-of-the-box thinkers able to see the value behind the sales-pitch. Ask any veteran timeshare owner about their experiences, and they will tell you: Timeshare is a tremendous way to vacation in luxury on a budget, once you learn how to make the system work for you. (And that they wish they’d bought timeshare resale in the first place.)

So then, if timeshare owners not dummies, why are there so many schemes to deceive them and erode the value of their timeshare investment? To answer this question is folly; to do so is to concede the question itself has merit. It does not. The world is full of ways in which fools and their money are quickly parted.

Timeshare, like all other industries, has its share of scams to be avoided. However, since the number of timeshare owners is still quite small (around 6% in the U.S.), and the timeshare community fairly insular, a vocal minority can quickly turn the conversation negative. If timeshare owners as a group have a flaw, it’s a certain naivety about the industry …and that is ultimately the reason for this series: to educate and empower timeshare owners.

Warning: An Industry Full of Scams & Complaints?

Some will still maintain that timeshare as a product is no-good, worthless, or even worse; insisting that the prevalence of complaints is evidence enough that timeshare is not to be owned. Hopefully, if you’ve read and understood the message of this series, you’ll turn a deaf ear. Should you feel inclined to defend your decision to own timeshare, perhaps you’ll find this fact useful:

A recent L.A. Times story reported the results of an annual consumer survey, conducted jointly by the Consumer Federation of America, the National Assn. of Consumer Agency Administrators and the North American Consumer Protection Investigators. The survey showed that “it’s clear from the nation’s economic woes that consumers and consumer agencies were hit hard last year.” The product with the highest number of complaints? The Car.

Perhaps, then, we should all be riding bicycles.

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1 comment July 28th, 2010

Are Timeshare Owners Dummies? Part 5, Selling Your Timeshare for Less than Zero

The continuation of our series examining the battle for timeshare owners’ hearts & minds: As fraudsters of all varieties work in the shadows to exploit the timeshare owner, it’s clear that some see timeshare owners as dummies, but are they? HelpTimeshare.com doesn’t think so.

Less Than Zero – No, It’s not the popular Bret Easton Ellis novel I’m referencing, it’s the value of your timeshare…  At least, that’s the value according to the latest fad to hit the secondary timeshare market like a storm: The “Relief,” “Exit,” or “Transfer” company. These firms have been quietly traveling the nation, advancing a notion that defies all logic. The Relief/Exit/Transfer crowd doesn’t just think your timeshare is worthless, oh no. These companies think your timeshare has a negative value – try -$3,000. (or if you prefer, -$5,000 – That’s a lot less than zero!)

At this point most owners probably think I’m joking, and I wish I was. After all, your timeshare is essentially just a 1/52 share of actual real property. In a mathematical feat exceeding those of even the savviest politicians, Relief companies are buying timeshares from owners every day for thousands less than zero. How many timeshares have been sold for less than zero? No one knows for sure, but well into the hundreds of thousands per year! To put this into perspective, ARDA reports the average sale price for one interval of timeshare was $20,468 in 2009, and there are 7.2 million intervals currently owned by Americans. That places the retail value of all timeshares owned by American citizens at over $140 billion. If the Relief companies succeed in “relieving” Americans of the “burden” of timeshare ownership, they will have “transferred” up to $160 billion in real estate and cash from hard-working timeshare owners to themselves… Bernie Madoff’s got nothing on these guys.

Once your timeshare mortgage is paid-in-full, the lender (usually a subsidiary of the resort) must file a “Satisfaction of Mortgage” or “Release of Deed of Trust” in the jurisdiction where the property is located. Once this document enters the public record, the Relief companies send you a postcard inviting you to a meeting. (Some even state they will be “buying timeshare” at the meeting.) What happens next remains a closely guarded secret. According to a WFTV Orlando investigation, owners are told the resale market is bad, maintenance fees are going up, and if you die with a timeshare your heirs will be stuck paying for it. Elsewhere, owners have reported being shown slide-show presentations of timeshares for sale on eBay for $0.01. The bottom line: In short order, owners are coerced into believing their timeshares are worth less than zero, before paying thousands to be “relieved” of them.

Why haven’t you heard this story? The State of Florida issues a flamboyant press release every time it succeeds in fining a small-time boiler room operation with dubious timeshare resale practices, while numerous Relief companies, far more damaging to consumers, operate with impunity. It could even be argued that the success of Relief companies in Florida is the reason why resale companies there are failing at selling timeshares for market prices.

A Victimless Crime?

Okay, disgusting as this scheme is, if a timeshare owner wants to pay thousands of dollars to transfer their timeshare, who does it hurt?  On the surface, it may appear to be a victimless crime, but that’s only half the story. All of these freshly transferred timeshares don’t just disappear – they are, after all, deeded real estate. What exactly does a Relief/Transfer/Exit company do with the timeshares it collects? As largely privately held companies, they don’t have to say… What is clear from public records is that they don’t hold onto them for long. Remember those slide-shows of timeshares on eBay for a penny? You know, the Relief companies’ “evidence” of how worthless timeshare is. Maybe it’s just coincidence, but the larger the relief companies get, the more penny timeshares appear on eBay. Insidious is an understatement; the relief companies liquidate valuable timeshares for pennies, thereby reinforcing their assertion of worthless timeshare. So, who does it hurt? If you own timeshare, the answer is you.

We all know the real estate bubble burst, and many of us are anxiously waiting for homes in our neighborhoods to start selling again – without recent “comparable sales” it’s nearly impossible to know what your home is worth. What would it do to your home’s value if your neighbor sold for negative $50,000? The same is true for your timeshare property. The ramifications are even bleaker if you want to sell your timeshare: Even if you ask just a fraction of retail value, you cannot compete with Relief companies selling for a penny.

Let us Not Forget, There is Hope.

All is not lost. Many of what we consider “high-line” timeshare properties already have “First Right of Refusal” clauses. These require owners that want to sell, first allow the resort to buy at the agreed sale price. (Hopefully your resort will not turn down an offer of -$3,000.) If your resort does not yet have such a policy, attend a HOA/POA meeting and suggest one. This is the single best protection against poor/non-existent timeshare resale values. Check auction and classified sites for resales at your resort priced at near-zero; if you find a listing, contact your resort immediately.

States’ Attorneys handle all types of civil and criminal cases, with few if any having specific knowledge of timeshare. Contact the Attorney General where you live, or where your resort is located, and ask why they are not pursuing Relief/Exit/Transfer companies – Take a few minutes to help them understand the problem. ARDA (the American Resort Development Association) is hard at work drafting misguided legislation aimed at regulating timeshare resale companies. If the Relief/Exit/Transfer companies are not stopped, they needn’t worry: there won’t be any timeshare resale companies left to regulate. How do you compete with a penny?

Lastly, be careful! There are scams in every industry: You need to fact-check and investigate any company before doing business with them. Legitimate businesses have nothing to fear from you taking a few moments to investigate their practices. Pressure to act right now is sure sign of trouble.

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2 comments July 21st, 2010

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