Scam alert: Beware timeshare resale ads and e-mails
The U.S. Federal Trade Commission and several state attorneys general have issued alerts cautioning consumers about selling a timeshare through a reseller and all gave similar warnings that you should know who you are dealing with and what you are getting before you sign an agreement.
It was the promise of fast cash for selling her timeshare points -- similar to frequent flyer miles -- that prompted a Consumer Ally reader to ask if the unsolicited e-mail was legitimate. The deal is tempting in this tight economy: For a $1,000 upfront fee, the agent would take her points from her Florida timeshare and sell them for others to use -- potentially netting a $2,600 profit for our reader. A sample contract attached to the e-mail detailed that the upfront fee was to cover marketing costs for 90 days.
The Florida attorney general's office said most resale companies require a $300 to $500 advance listing fee before the sale can take place, but recommended choosing a company that collects its fee after the sale goes through.
That same Consumer Ally reader also got e-mails from another agent looking to sell timeshare points foreclosures quickly at deeply discounted rates. That sales pitch alone should raise a red warning flag, according to the Florida attorney general's office. A salesman might try to convince you that the market is "hot" and buyers are flooding in to snatch up the timeshares -- be skeptical about those claims and don't be pressured by sales tactics.
Timeshares are big business, with total sales of $9.7 billion in 2008 -- the latest year the numbers were available, according to Industry trade group American Resort Development Association. The United States has 1,629 timeshare resorts with Florida, California and South Carolina -- in that order -- leading the way and account for 39% of U.S. timeshare resorts.
Once you start talking about that amount of money, it's no wonder scam artists look for ways to get in on the action. RCI, one of the main timeshare exchange companies, warned its members to be wary of people contacting them, claiming affiliation to RCI and offering to help sell or rent a timeshare for an upfront fee.
In revealing another scheme, Oregon Attorney General John Kroger said consumers in that state have been contacted by con artists who pose as an agent or broker from a legitimate-sounding company and offer to help sell their timeshares. But before the sale is finalized the consumer is told that taxes or fees are owed -- once those are paid the broker and agent isn't heard from again.
Kroger gave these tips to avoid being taking in by a scam:
- As a rule, never give your credit card number or other personal information over the phone.
- Be wary of companies that charge up-front fees of any kind. Choose a company that offers to sell for a fee only after the timeshare is sold.
- Ask them to send you written information on the offer and make sure it matches any offers made over the phone.
- Do your research before doing business with any company and compare their offers to industry competition.
- Verify the business address and phone number and contact them yourself.
- Ask if the company's salespeople are licensed to sell real estate where your timeshare is located. If the company says yes, be sure to verify the license -- many states allow you to look up licenses through their official sites.