Timeshare Scams: Recognize Fraud and Protect Your Rights

Thousands of consumers each year discover they’ve been misled or overcharged by deceptive timeshare practices. Learn how to recognize common scams, protect your rights, and when to get an attorney for help.

What Is Timeshare Fraud?

Timeshare fraud occurs when:

• A timeshare company intentionally or recklessly makes deceptive statements that influence a consumer to buy a product or service
• The consumer relies on the deceptive statements in making the purchase
• The consumer is harmed financially as a result of relying on the deceptive statements

Failing to follow state or federal regulations can be supporting evidence of unfair or deceptive practices. Timeshare transactions often involve multiple jurisdictions. It’s important to speak with an experienced attorney because multiple jurisdictional laws and federal laws can apply.

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Common Timeshare Scams and How They Work

Knowing common timeshare scams will help you see the red flags early on and avoid predatory companies. When you see the warning signs, walk away from the timeshare contract.

Deceptive Sales Tactics

The most well-known timeshare scam involves the salesperson using high-pressure tactics or deceptive sales presentations, such as:

• Overstating potential benefits of the timeshare offer while hiding recurring costs or maintenance fees
• Misstating timeshare contract terms and cancellation rights
• Creating a sense of urgency to persuade buyers to sign without fully reading or analyzing the terms

Timeshare Resellers and Exit Scams

An entire industry caters to timeshare owners who are looking to resell or exit their contract. A reputable timeshare resale company won’t make guarantees it cannot achieve.

Common deceptive promises include guaranteeing a buyer or rapid sale. Timeshare resale scams typically require payment regardless of the sale outcome. Timeshare owners end up paying thousands in upfront fees and nothing happens.

Phony Debt Relief or Timeshare Cancellation Services

One type of timeshare scam involves firms promising to cancel, rescind, or negotiate away your timeshare obligations for a large upfront fee. After taking upfront payments, they will do no work or only token actions that don’t resolve anything. Some request wire transfers and then disappear.

Scammers often use urgency and discourage owners from speaking with an attorney. Be wary of firms that require nonrefundable “legal fees” without the protection of an escrow agent.

How To Report Fraudulent Timeshare Activity

Consumers have several options for reporting fraudulent timeshare activity:

• Federal Trade Commission (FTC). The FTC maintains an online portal for submitting complaints about fraud. The FTC notes that timeshare resale scams should also be reported to the state attorney general’s office in the state where the timeshare is located.
• Better Business Bureau (BBB). While it doesn’t have legal authority, the BBB can advocate on behalf of consumers to recover money. However, the BBB is more effective with reputable companies. A fraudulent company has no incentive to work with the BBB.
• Consumer Financial Protection Bureau (CFPB). Can help if the timeshare sales involve financing, hidden loan terms, billing errors, or debt. Consumers can file a complaint on the CFPB website.
• Law enforcement. Going to local law enforcement, the Federal Bureau of Investigation (FBI), or the Internet Crime Complaint Center (IC3) may be appropriate in some cases. However, law enforcement agencies typically become involved only when the timeshare scam involves identity theft, interstate calls, wire transfers, or other criminal behavior.

Reporting the fraud does more than vent frustration. It helps build a record of evidence that can support potential legal action. Before reporting, gather and preserve a complete record of your interaction. Make copies of the timeshare contract, resale or exit service contract, advertising materials, emails, letters, and screenshots.

Take notes during phone calls to create a communication record. Include dates, times, the name of the person spoken to, and what was promised or discussed. Save any marketing materials provided that make promises or guarantees.

Suing for Damages in a Timeshare Scam

A victim of a timeshare scam can sue to recover compensation. The elements of a successful claim can vary depending on state laws. In general, a plaintiff must show:

• What the timeshare seller said — or didn’t say — was deceptive, and that the seller knew or should have known that the statement was false or misleading.
• The buyer reasonably relied on the false statement in deciding to purchase, exit, or pay fees
• The reliance caused monetary harm

Several types of damages can be claimed in the lawsuit, including a refund of timeshare fees, attorney’s fees, punitive damages, and a voiding of the timeshare contract.

Be Aware of the Time Limit To File a Timeshare Lawsuit

There are deadlines to file lawsuits known as statutes of limitations. Filing before the deadline is vital. If you’re too late, you can’t sue.

Timelines can vary significantly, both by state and type of claim. The time limit for filing a timeshare lawsuit typically ranges between three and five years. If you think you are a victim of a timeshare scam, it’s important to speak with an attorney right away. Otherwise, you risk missing the statute of limitations and being barred from recovery.

Victims of Timeshare Fraud Have Legal Recourse

Timeshare scam victims have multiple resources available to them. The first step is to talk to a qualified real estate or timeshare attorney who can help you identify potential legal issues and enforce your legal rights under timeshare law.

A lawyer may negotiate with the timeshare developer, management company, or resale firm. Their goal will be to limit further financial losses by securing a settlement agreement or release of obligations.

If this fails, the lawyer may advise pursuing legal action with full litigation. Representation includes preparing and, if needed, filing a lawsuit or arbitration demand, collecting evidence, drafting pleadings, and guiding you through the process.

Timeshare Class Actions

When many owners are affected by the same unfair timeshare practices, you may be able to bring a class action. Several benefits come with filing as a group:

• There is cost-sharing among the plaintiffs for legal representation
• The plaintiffs have greater leverage and negotiating power against a large developer
• There is potential for systematic change to protect consumers in the future

However, class actions can take longer, which can delay recovery.

Arbitration Agreements in Timeshare Contracts

Many timeshare contracts include arbitration clauses that require disputes between owners and developers or resellers to be resolved through private arbitration. The arbitrator’s decision may be final with very limited grounds for appeal. Discovery may be limited, compared to court litigation.

An attorney can review your contract and provide legal advice on the enforceability of the arbitration. You may be able to argue that the arbitration terms are unfair, which could affect their validity.

Find Legal Help

Timeshare fraud can leave consumers feeling trapped and financially strained, but legal help can make all the difference. An experienced attorney can assess your situation, explain your rights, and help you recover what you’ve lost.

Use the Super Lawyers directory to find a qualified consumer protection or real estate attorney near you.