Federal Trade Commission Wages War on Timeshare Resale Fraud

The Federal Trade Commission (FTC) is determined to stop timeshare resale fraud and to protect financially desperate owners. "Con artists take advantage of timeshare owners who have been in tough financial straits and are desperate to sell their timeshares," said Charles A. Harwood, Acting Director of the FTC’s Bureau of Consumer Protection, at a recent press conference. "They persuade owners to pay fat up-front fees by saying they have someone ready to buy the property, but that’s a lie." The FTC wants scammers to know that law enforcement agencies at every level of government are working together to put an end to this problem.  

The agency’s efforts with partners from federal, state, and international law enforcement, includes 191 actions against companies scamming travelers and timeshare property owners. The widespread effort includes 3 FTC cases, 83 civil actions brought by 28 states, and 25 actions by law enforcement agencies in 10 other countries. Over 184 people face criminal prosecution.

Typical Timeshare Resale Scam

According to the FTC, the typical timeshare resale scam starts with a phone call. “A timeshare property owner gets a phone call from a reseller with an offer to sell a vacation property to a waiting buyer. The timeshare owner is asked to sign a contract and pay a transaction fee--usually with a credit or debit card--before the alleged sale can proceed. But after the contract is signed and the fee collected, the timeshare owner is rarely contacted again by the reseller.” In most cases, the buyer never existed, and the contract was only for advertising services. When the timeshare owner realizes this and calls to get the fee refunded, the scammer ignores the phone calls, or denies any refund requests, or stalls to go beyond chargeback timeframes, and may even try to evade charges by moving to another city or state and reopening under a new name.

Double Scamming

The FTC has also come across scammers that are trying to take advantage of the owners that have already been scammed by a resale fraud. These rip-off artists claim they are associated with the federal courts, the U.S. Department of Justice and the FTC. They tell the already victimized owners that the FTC has brought cases against the fraudulent resellers and the owner is entitled to a refund as part of the case. If owners give them several hundred dollars for court costs, processing fees or filing fees, the scammers claim they will help owners get the refunds owed to them. Some scammers have used an actual FTC case number and posed as attorneys to help convince unwary owners. 

FTC’s 5 tips to Avoid Resale Scams:

  • Check out the company before you agree to pay any money. 
  • Deal only with licensed real estate brokers and agents.
  • Get all terms in writing before you agree to anything.
  • Consider doing business only with a company that gets paid after the timeshare is sold.
  • Be alert to repeat scams.

ARDA Also Protects Timeshare Owners

The FTC is not the only entity policing the timeshare industry. The American Resort Development Association (ARDA), the voice of the timeshare industry, has developed ten advisories to help timeshare owners avoid scams and enjoy a safe and positive selling experience. These advisories (listed on the ARDA website) help guide consumers and owners through the secondary market that includes timeshare resellers, internet advertisers and resale companies.

ARDA has also joined forces with the FTC. Says President and CEO of ARDA, Howard Nusbaum, “We have worked closely with the Federal Trade Commission (FTC) and many states to educate consumers about scams in the secondary market. We encourage anyone trying to sell their timeshare to take the time to understand their options and to use the resources available to them.” 
The latest effort by ARDA to help owners and consumers understand the options and resources available, is an easy-to-follow Infographic (available at www.ARDA.org) that illustrates steps “to avoid the wild-west environment of the crowded resale marketplace.” 

News That Gives Timeshares a Bad Rap

You've all heard horror stories about timeshare scams; promises not kept, heavy-pressure salespeople… on and on the bad news goes. There are many reputable businesses and good people in the timeshare industry, but we often only hear about the scammers and crooks. This isn't all bad; awareness keeps us on our toes and educates us as consumers and business people.

Most Frequent Timeshare Scams

  • Paying Full Price for a Resale Timeshare
  • High Pressure Salespeople
  • "Nigerian" type transfers 
  • Paying a large up-front fee to sell or rent your week 

Timeshare Companies in the News for Bad Behavior

A few specific complaints have surface recently and are finding their way around the internet:

Festiva Hospitality Group – High Pressure and Broken Promises 

Unfair and deceptive practices in connection with Festiva's points-based "vacation club" are the charges of a suit against Festiva Hospitality Group by Louisiana's Attorney General, Buddy Caldwell. "Festiva served up broken promises to Louisiana consumers," stated Caldwell, whose office received over 98 complaints about Festiva. The suit alleges that Festiva used high pressure salespeople to sell consumers "points" for membership in a vacation club and promised consumers they could use the points anytime at any number of Festiva resorts. After signing a 40-year contract, buyers found it impossible to book a vacation because of a lack of accommodations at the resorts, especially at prime locations and peak times. Buyers, were promised they could save their "points" for another year, but when they tried to do so, were told by Festiva that they couldn't carry over the points. Buyers also received unusually high maintenance fees and special assessments, and were told they couldn't cancel their contract.

 Calypso Bay Resorts – Unexpected Fees Surprise Owners 

Complaints from owners at Florida's Calypso Cay Resorts regarding problems with higher-than-expected fees were reported by the Consumer Affairs News Service. One owner felt it was wrong of the resort to charge a maintenance fee every year if he only owned every other year. He claims he was never told he would have to pay a maintenance fee in "off years" and says, “our affordable vacation is not very affordable now."

Another owner calls Calypso Bay a "rip-off" and says the resort promises that you can deposit your weeks if you can't use them before they expire. When an owner then tries to deposit or use the weeks, they charge a fee to deposit and a fee to change a week. When you try to reserve a week, there is nothing available, but the resort offers a getaway for another fee for the same week you deposited and are trying to use.

Global Exchange Vacation Club – Lies and Harassment 

There are claims of lies and harassment from owners at Global Vacation Exchange in another recent Consumer Affairs News Report. One owner had serious complaints about a Global Vacation Exchange package he purchased, "I am sick over the whole thing and the way I have been treated, the way I have been talked to and clearly the way you all lied, scammed, beat and cheated your way into my bank account."
The owner was told that $349 for a 3-bedroom condo was the most he would ever have to pay for a week stay anywhere in the world. Global Vacation Representatives told him he couldn't talk to anyone about a trip or price until he made an $800 down payment. Then when he tried to make his first trip reservation, he found out it was much more than the promised weekly price of $349. He questioned why he should pay Global $8,000 down and more money every month that he didn't take a vacation, when it would cost far less to just buy a package from a general tour operator. When he tried to get his $800 refunded from the company, he was told he couldn't and then was repeatedly harassed by club representatives with phone calls threatening to go after his credit and destroy it, and add on a foreclosure.

Summer Bay Resort – Sinkhole Nightmare 

After several vacation units fell into a sinkhole collapse at Summer Bay Resort in Florida's Four Corners area in August, the timeshare company promised the owners that they would "make them whole." But according to the affected owners, that didn't happen. Owners were told that the company wouldn't reimburse them for their loss of personal property. In a quote from UPI News Service, owner Maggie Ghamry who claims losses of $10,000 said, "They told us they'd make us whole and this isn't making us whole. It's definitely blind-sided us." It wasn't just the property losses, but the trauma of the event. One owner was in the bathtub when the sinkhole happened, and stated that, "water started jumping, and the tub moved as the building started to twist.

The Orlando Sentinel reported that a letter to owners from Summer Bay Chief Executive Paul Caldwell stated that under Florida law "a public lodging establishment is not responsible for the loss of personal belongings, but the victims might be able to recover their losses under their personal homeowner's insurance policy." This doesn't hack it for the owners at Summer Bay Resort who feel they got "sunk" by the resort.

Doing Good Through Timeshare

Have you thought about your New Year Resolutions yet? You might want to add to your list: to do something to make someone else's life better. Maybe you have a favorite charity in mind, but you just don't have the cash to give. Perhaps you aren't using your timeshare enough to make it worthwhile, or the monthly payments are becoming a burden, or maybe you don't have any heirs to pass on your property to.  Consider donating your timeshare to a worthy cause. Donating will not only help your situation and give you a tax write off, but it will also benefit others. And, you don't have to donate your whole timeshare, you can just donate a week to organizations such as Send Me on Vacation.

Donate a Week

Send Me on Vacation, a company whose slogan is "Changing Lives, One Vacation at a Time," is one of the non-profit organizations that offer a way to donate your vacation week. The charity's mission is "to provide a much needed vacation to women with cancer who have undergone treatment and need a place to rejuvenate and heal their body, mind and spirit." Your donation of a timeshare week provides a way for these women to do just that, and provides you with a charitable tax credit.

Donate Your Timeshare

More nonprofit groups are encouraging the donation of real estate and other property. Some have planned giving departments that you can work with directly, but others prefer that you work with a third-party business that is specifically set up to assist you in donating your timeshare to a charity, such as Donate for a Cause. The nonprofit Donate for a Cause asserts on their website that they help consumers avoid the pitfalls of selling their timeshares…the unnecessary cost of listing services, broker fees, and scams. According to NASDAQ OMX Globe Newswire Donate for a Cause is the only nonprofit that takes timeshares and all associated liability on behalf of charities, thereby buffering the charities from any potential problems.  The charities get the cash and not the headaches.

Be Careful... First Check out the Business

Check out any nonprofit organization you are considering to verify that they are legitimate. The U.S. Federal Trade Commission warns consumers about timeshare resale scams which have more than doubled in recent years. Though these are mainly companies that promise to resell your timeshare for top dollar and a quick sale, they may also use the charity angle. There should not be a fee if you are donating your timeshare to charity and there should be a tax deduction. Be sure you do a thorough review of the company and check with the charities they are supporting.


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Want to Boost Your Productivity? Take a Vacation!

Here's some information every timeshare developer and HOA Board should be talking about to timeshare owners.

We all enjoy vacationing, but according to a report from ARDA Insights Blog, research shows that actually taking a vacation is not only good for overall well being, it can also boost our productivity, increase job satisfaction, and promote higher organizational morale. All these good things were shown in a study done by the Society for Human Resources Management (SHRM).

ARDA recognized the importance of the study and has joined with the U.S. Travel Association to get the word out about the research, and share it with the industry, timeshare owners, and potential new owners. The U.S. Travel Association calls its current campaign the Travel Effect. Here are some of their statistics linking vacation time and work productivity:

  • More than 3/4 HR professionals believe employees who use vacation time perform better than those who do not.
  • Six in ten organizations report employees fail to use three + days of paid vacation each year. 
  • 85% of talent managers at "use it or lose it" organizations agree that employees who take time off are more productive in jobs.

President and CEO of the U.S. Travel Association, Roger Dow practices what he's promoting, he says, "In addition to the standard HR benefit package at U.S. Travel, I believe in rewarding my employees with additional time off. Time away from work allows my team to recharge and return to the office more motivated, creative and innovative."

Reduced Burnout

There's plenty of research backing up the Travel Effect statistics.  CNNMoney reports that Americans, on average, give up $34.3 billion in vacation days by not taking all of their accrued days off. Some people don't even take a vacation at all.  Or they go on vacation but take work with them, and are constantly using their cell phone or computer to keep in contact with the office. This is not the kind of mindset you want to have on vacation. And, it's not good for you! Burnout affects all aspects of your physical and mental health. Chronic stress can contribute to depression, irritability, inability to focus, and other health issues that all affect your productivity. Workers who take vacation time to relax and recharge are more productive and creative than their over-worked colleagues.

Increased Creativity

A good vacation can really get those creative juices flowing. Remember what it's like to come back from vacationing in a place that you'd never traveled to before? Maybe it was an exotic location very different from your day-to-day environment, or just a change from your normal life's scenery, such as a vacation in a lovely beach resort. Seeing a different country, experiencing a different culture, and being in a unique environment is stimulating. All those interesting things that you've learned on vacation help recharge your creative batteries and stimulate new ideas to input into your work!

Timeshare Owners More Likely to Take a Vacation

The ARDA Insights Blog reminds us that owning a timeshare is the perfect way to assure that we take a vacation. Howard Nusbaum, president and CEO of ARDA says, "The timeshare industry has been advocating for regular vacations through our members and our consumer website, Timeshare owners are more likely to take their vacation since it's pre-paid, which is one huge benefit to owning a timeshare."   Not only that, timeshares offer a choice of resorts in highly desirable locations, and flexible time, making it easy and stress-free for busy workers to plan their vacation.

The benefits that you get from a vacation can increase your quality of life, which in turn carries over to increased quality of work. Research published in the journal, Applied Research in Quality of Life, says that vacationers who reported feeling very relaxed on their vacation experienced an increase in happiness even after the vacation. In some cases, the feeling lasted for up to two weeks!

More information about the benefits of travel for families, businesses, communities and more can be found at (www.traveleffect.com and www.vacationbetter.org.)

Top 10 Timeshare Stories in 2013

Happy New Year!

This last year was full of ups and downs for the timeshare industry. We share our top 10 stories for 2013:

1. ARDA's Annual Fall Conference in D.C. Informative and Upbeat

"2013 has been one of the busiest years ever for us in pushing and strengthening legislation for the benefit of timeshare owners. We have advocated for owners in 14 states this year, all the way from Arkansas to West Virginia, with the thrust of our efforts focused on providing specific guidelines related to resale and transfer company legislation." This quote from ARDA President and CEO, Howard Nusbaum, summed up what ARDA had been involved with this year. It will be interesting to see Nusbaum's analysis next spring in Las Vegas.

2. RCI Raises Fees

In December, RCI announced that fees are going up in January 2014. Exchange fees on RCI.com will rise to $209 and call center fees to $219. Could this cause an owner exodus to alternative exchange companies? Some owners think so.

3. 2013 Timeshare Demand Index

The top ten most in-demand timeshare and vacation properties based on the number of offers received to buy or rent through SellMyTimeshareNow are:
1. Marriott's Aruba Surf Club - Palm Beach Aruba
2. Harborside Resort at Atlantis - Paradise Island, Bahamas
3. Marriott's Newport Coast Villas - Newport Beach, California
4. Marriott's Ko Olina Beach Club - Oahu, Hawaii
5. Westin Ka'anapali Ocean Resort Villas - Lahaina, Maui, Hawaii
6. Wyndham Bonnet Creek Resort - Orlando, Florida
7. Holiday Inn Club Vacations at Orange Lake Resort West - Kissimmee, Florida
8. Disney's Saratoga Springs Resort & Spa - Lake Buena Vista, Florida
9. Vacation Village at Parkway - Orlando, Florida
10. Marriott's Maui Ocean Club - Maui, Hawaii

4. 2013 Shows Resorts Recovering

All indicators point to the timeshare and travel industry making a recovery from performance drops in 2008 and 2009. Commercial construction and investment transaction volume in the hospitality sector is up, travel providers are joining forces to offer their members more destinations, timeshare companies are coming up with more ways to entice members with value add-ons, and hiring is on the upswing.

5. Luxury and Up-Scale Resorts Lead Industry's Recovery

Luxury and upper-upscale resorts are recovering from the recession at a quicker pace than more moderately priced properties. Since 2009, personal income has recovered to pre-recession levels, but employment recovery is forecast to lag until 2015.  Moody's Analytics shows that, with personal income leading the slow economic comeback, the luxury and up-scale resort market catering to individuals with rising personal income levels, recovers faster than properties in the more moderate price range that cater to individuals who depend on employment recovery.

6. Another Trump Tower -- $360 Million Vancouver Hotel-Condo Tower 

In June, Donald Trump announced his new Trump International Hotel & Tower in Vancouver. Sticking with what the developer knows works best, the $360 million dollar tower features 147 hotel suites, 218 condos, a champagne lounge, banquet and conference center, and Vancouver's first pool bar nightclub. Also included, daughter Ivanka Trump's signature Mar-a-Lago Spa. Residential sales started in October with project completion expected in summer 2016.

7. Disney Company Doesn't Let the Economy Stop Their Expansion

At least one company doesn't accept the view that the timeshare industry is suffering from an economic downturn. Disney's Polynesian Resort at Disney World in Orlando confirmed construction of new timeshare units and broke ground on the project in September bringing Disney's total number of timeshare properties to thirteen. Disney also opened the Grand Floridian Resort and Spa in October.

8. FTC Bans National Solutions LLC from the Timeshare Business

The U.S. Federal Trade Commission (FTC) ordered a $6.3 million judgement and banned National Solutions LLC from the timeshare business because of their scheme that allegedly deceived consumers trying to sell their timeshare properties. According to the FTC, National Solutions told consumers they had buyers lined up to buy their timeshare properties, and charged consumers up to $3,150 as an "earnest money deposit" to commit them to the sale or for sale-related expenses. The company promised to refund the money when the sale closed, but customers were often not contacted again, properties were never sold, and refund demands were ignored or denied. The case against National Solutions LLC is part of the FTC's ongoing effort to stop timeshare scams and protect consumers from fraud and deception in the marketplace.

9. Vacation Club vs. Timeshare Ownership

Vacation Club membership seems to be gaining in popularity and may be challenging timeshare ownership's domination of the industry. What's the difference between the two? For one big thing...cost! Vacation club memberships generally cost less than timeshare ownership. A vacation club membership that gives members two weeks to travel per year, plus unlimited non-premium weeks per year may only be a one-time cost of about $2,000. Whereas, the average price of a one-week annual timeshare is $10,000. Vacation clubs have no maintenance fees and no exchange fees. Club memberships last 100 years. Compare that to a typical deed timeshare of 25 years.

10. Manhattan Timeshare Owners Can't Get a Break

Owners in New York's Manhattan Club report their maintenance fees keep rising and they're not getting anything in return, and it's nearly impossible to book rooms or sell their timeshares! The developer of the Manhattan Club, Bruce Eichner, faces a New York State Supreme Court lawsuit in which the timeshare owners allege he sold more than 18,000 ownerships for 286 rooms resulting in a minimum shortage of 69 rooms every week.

Happy 2014!