Timeshare Scams and How to Avoid Them
Today’s timeshare industry offers numerous legitimate vacation ownership options, but it is also plagued by scams that prey on unwary buyers and owners. Being informed about common scams and knowing how to sidestep them is crucial for protecting yourself. This revised post highlights a specific prevalent scam involving bogus rental opportunities and provides practical tips to help you avoid such fraudulent schemes.
Common Timeshare Scams
Unethical Salespeople
While there are plenty of ethical salespeople and countless great experiences with timeshare ownership, the latter can also be true. Occasionally these presentations can be led by salespeople with more deceptive intentions. Often conducted during complimentary vacation stays, these individuals will over promise certain benefits – like availability, investment opportunity from rental income and high resale values. These are conveyed orally but do not appear in the contracts – or within the ownership benefits itself. The developers have insulated themselves in these circumstances with something called the "oral representation clause,". This clause typically states that no verbal statements made by the salesperson can be relied upon by the buyer, and only the written contract is binding. This practice can be problematic so make sure you read your contracts and understand your rescission period. Keep in mind – a good car doesn’t need to fly to be of value and the right timeshare for your family can still offer great value without over promising these extraneous benefits. Being knowledgeable about a timeshare’s value and also their limitations will empower you to make the right choice.
Phantom Rental Scams
One of the more insidious scams involves fraudulent rental companies that contact timeshare owners with an offer to rent out their “bonus weeks” from their exchange company. Let’s start with this: bonus weeks do not even exist – at least not in that format. Bonus weeks are weeks deposited into an exchange company – like RCI – and are available for its members to rent themselves for extra vacation time. In other words, you can use them for your own vacations, but you can never monetize them for someone else’s. Hard stop.
Here’s how it works: Scammers claiming to be from some random non-branded rental company will cold call a timeshare owner. They claim to have ready renters for their bonus weeks and all that the owner needs to do is pay an upfront fee to finalize the deal. Unfortunately, once the fee is paid, the company vanishes, and the promised renters never materialize. Those upfront fees can be hundred – even thousands – of dollars based on a promise that thousands more in “profit” will return. Read this article, which contains a transcript from a recorded call from one of these scammers so you can learn what to look out for.
This is a fairly elaborate scam, but there are more simple ones too. Be wary and prepared. If you are interested in renting your unused weeks or points, there are a handful of verified and effective options for you to consider. Review the list here.
Resale Scams
Similar to rental scams, resale fraud involves fraudsters posing as brokers or agents who promise to sell your timeshare for an upfront fee. Once the fee is paid, the supposed agent disappears, and the sale never occurs. This has become so pervasive that there was even a NY Times article about it – one family even lost $900,000 in a timeshare scam. If they’re not on our list of trusted resources, do your own due diligence!
Tips for Avoiding Timeshare Scams
Research and Verify
Always verify the credentials of any company or individual claiming to offer services related to selling, buying, or renting a timeshare. Check online reviews, Better Business Bureau ratings, and confirm state licensing where applicable. Also, ask Facegroup groups - many are insightful sleuths looking to help other owners.
Be Wary of Substantial Upfront Fees
Legitimate companies do not require huge fees before services are rendered. Be highly skeptical of any request for upfront payment, particularly if asked to use untraceable methods like wire transfers. That said, there are examples where upfront fees can exist in reputable companies. For example, Redweek charges nominal listing fees and fees for full service rentals, it’s free to list on KOALA but has optional yearly membership subscriptions, TUG has a small membership option also and there are some resale brokers that charge set up and listing fees. However, all of these can provide a lot of value depending on the individual. It’s very important to know the difference between these and scams fees for fraudulent services. Chances are, if you cannot find them on Google, they are a scam (see #1).
Read their Terms and Conditions
Before engaging in any transaction involving your timeshare, read the company's terms. If there are none, that’s a red flag right there, if they’re claiming to have online renters or buyers - they should have their terms of service posted online too. If they don’t transact online (also a red flag) ask for a copy of the contracts that these supposed renters or buyers have signed. It’s quite rare for a timeshare to be rented or sold prior to even listing it so using this process, you will quickly get to the truth.
Conclusion
Awareness is your best defense against timeshare scams. By understanding the types of scams prevalent in the industry, being diligent and implementing the tips above, you can protect yourself from rental and resale fraud. Not sure if the company you are speaking to is a scam? Ask us here!
