Timeshare Scams to Avoid and How to Spot Them

The moment you bought it, your timeshare felt like a great investment. No more worrying about whether you could stay at your favorite resort! Knowing exactly what you’d be getting on your vacation! Over time, however, it turns out that same timeshare is costing you more than you feel it is worth. Plus, you’re tired of going to the same place at the same time every year.

When you’re ready to get rid of your timeshare, it’s normal to suddenly be inundated by calls and mail from people promising to help you get a good price. Do not jump on the first offer that looks good. Timeshare scam artists are everywhere. Learn how to spot timeshare scams, and how to avoid them, so you don’t get taken for a ride.

In the Know: Recognize the Warning Signs

Look, timeshare scammers are creative. Unlike other scammers who think that sounding threatening or spoofing their phone numbers is enough, a timeshare scam artist really is an artist. They put a lot of time and effort into making themselves look legitimate and trustworthy. Still, there are signs that the person who wants to help you sell your timeshare isn’t exactly who they say they are.

Counterfeit Correspondence

It’s true: timeshare resale scammers will take great pains to present themselves as representatives of legit resorts, reselling operations and even resort developers. Always take the time to double-check any correspondence you receive from anyone claiming to represent a timeshare opportunity. Is their email address legit, or is it a Gmail/Hotmail/whatevermail throwaway?

Does the contact information their correspondence gives you match what you find when you do a Better Business Bureau search or a corporate information search on the company?

Make a phone call to the company (using the information in their corporate filings, not the correspondence they’ve sent!) and ask for verify that the person who has been contacting you is actually on their staff.

Upfront Payments and Fee Requests

A lot of these scammers will ask you to help them cover the costs and fees that are associated with the buying and the re-selling process, and they will require that you pay an upfront fee. These are red flags. They will promise you, hand over their heart, that you will recoup that payment in the actual sale (or value) of your timeshare.

Pro tip: Don’t pay money upfront. What typically happens is that, once they’ve got you on the hook and convinced you that the process is moving along perfectly, they will start billing you for “unforeseen expenses” or “surprise fees they didn’t anticipate.” They will continue to repeat this process for as long as you keep sending the money. Once you stop, you’ll never hear from them again and you’ll still be stuck with that unwanted timeshare.

If a legitimate timeshare exit company wants payment in advance, make sure it goes into escrow. Escrow is a term that’s familiar to most homeowners. It’s when a third-party company holds onto your money until the sale is successfully completed. Escrow protects both the company and the customer.

If a Promotion Sounds Too Good to be True, Call the Resort and Ask

This is like verifying that your contact salesperson works for a legitimate resell company. Someone will contact you to let you know that the resort or managing company has too many available units so they’re offering an amazing and incredible deal, but it’s only available right then. If you don’t commit immediately, you’ll miss out.

Always call the resort and ask if this promotion is real. Often, you’ll find that it isn’t. Timeshares rarely go on “sale.”

Various Timeshare Scams and How to Protect Yourself

Here’s the truth: while occasionally a timeshare can be a reasonable purchase for your family — if you are a creature of habit and want to take the exact same trip to the exact same place at the exact same time every year, or you’re organized enough to keep track of resort points and maximize their value. Most of the time, however, timeshares are a bad investment. Here’s why:

That initial payment you handed over to the resort doesn’t really cover everything. In addition to that huge down payment, many resorts charge their timeshare “owners” annual dues and maintenance fees to help keep the property running. In 2018, the American Resort Development Association (ARDA) estimated the average fee for timeshare maintenance was around $1,000.

If the resort developers decide that they want to upgrade the property — and they will, because they need to keep everything in tip-top condition so that the units look enticing to other potential buyers — you can be sure that those costs are being passed along to you.

For example, one Manhattan timeshare unit has an annual maintenance fee of $3,000 to access a unit for one week a year. That’s $428 a night, without factoring in the cost of the timeshare purchase itself. The average cost for a Manhattan hotel room is $235 per night, as of January 2022. This timeshare offer might be a bargain if you plan to visit New York City for a week every year (and stay in the same location, in the same part of the city) and you would need to pay for two traditional hotel rooms to accommodate your family. But otherwise, you might be better off financially to opt for a hotel or look for a short-term rental. Hotels and rentals also give you flexibility, in case you want to stay in different parts of the city each year, or even during the same trip.

It’s no wonder that so many people who purchase a timeshare eventually decide that they want to dump it and move on. If you’re one of the unhappily-timeshare-saddled, you probably want to sell your share ASAP. You could sell it yourself, but that takes time.

Enter: The Exit Company

Some exit companies really are legitimate. Unfortunately, like with the initial sale, the timeshare reselling industry is rife with scammers. 

Once word gets out that you’re trying to dump your timeshare, scam artists will start calling. They will claim to be from a legitimate company and ply you with promises that they insist are not too good to be true. It is important that, before you sign any contracts or send any money to an exit company or reseller, that you do your due diligence. Check the company’s reviews and Better Business Bureau page before you commit.

Timeshare Resale Scams

There are lots of timeshare resale scams. Here are some of the types you are most likely to encounter once word spreads that you’re ready to sell.

Fake Buyers

Seemingly out of nowhere your phone starts ringing with calls from “companies” whose representatives say they have a buyer interested in purchasing your timeshare. All you must do is send them some money for closing costs and they’ll have the sale completed lickety-split.

Remember the rule about not sending money upfront?

Fake Timeshare Resale Agents

Just like there are fake timeshare sales agents, there are also fake timeshare resale agents. These folks are very tech-savvy and put a lot of work into making themselves look legit.

Always double-check both the representative’s legitimacy and the legitimacy of the timeshare company with official sources that you track down yourself. You need to make sure anyone you agree to do business with will actually sell timeshares.

Fake Timeshare Contract Cancellation or Timeshare Exit Lawyers

These are individuals who will contact you and claim that they legally represent either your timeshare company or a company that specializes in helping people exit their timeshare contracts. They will try to scare you with tales of dooming your future kids to financial ruin by keeping your timeshare or by not getting the best price during the resell process or, well, anything else they can think of. They will promise to take care of the entire process for a “small” up-front fee.

Because it can’t be said enough: never pay any money upfront without doing your homework.

Viking Ship Timeshare Companies

This one is a little trickier, and has become so complicated that actual legislation was passed to try to keep timeshare owners from making Viking Ship deals. Viking Ship, in this case, is a catch-all name used for asset-less shell companies.

Important: Viking Ship has nothing to do with Viking River Cruises, which does not offer timeshares on its vessels.

Here’s a basic rundown of how it works:

Someone contacts you to scare you into getting rid of your timeshare. Instead of selling legally selling it, you pay the company to transfer the ownership of the company out of your name and into theirs. Once the transfer is complete, they will be responsible for paying all the dues, maintenance fees, etc. Except in this case, “they” are simply a shell company with no assets (which means they cannot be sued) and one of two things happens:

They do make the transfer but then don’t do anything with it — they leave the fees, dues, etc. unpaid. The resort suffers a loss and, to recoup it, raises the fees and dues on all their existing members.

In some states, like Florida, if someone transfers ownership to one of these “Viking Ship” shell companies, and the shell company doesn’t keep up with payments, the resort can sue the previous owner for the money owed.

It is possible to legally transfer ownership of your timeshare to someone else, but you need to make sure that the person taking over the ownership (or the company that is helping you re-sell it) is legit. And remember — never pay any money upfront!

Warning Signs of a Scam

According to ARDA, the American Resort Development Association, these are the major warning signs:

• Don’t pay any money upfront (seriously, this cannot be stated enough)
• Always double-check the details with your timeshare company, HOA, or management company before entertaining any offers.
• Beware of any company that tells you to stop paying your mortgage or fees. Sometimes this can be legitimate advice, but never agree to this without checking with a lawyer. You don’t want to ruin your credit.
• Do not send any wire transfers in advance (so important it makes ARDA’s list twice!)
• Always require a written contract — and have that contract checked by your own lawyer.

How to Protect Yourself

There are a few easy ways to protect yourself and your money.

Authenticate Everything

If you think you’ve been scammed, file a report with your state attorney general’s office, and another with the AG in the state where the resort is located. Submit a complaint to consumer protection agencies like the Better Business Bureau and the Federal Trade Commission (FTC), and report it to local law enforcement. Even if they can’t help you recoup your money, they can potentially protect other people.

Your current timeshare resort is the best place to start when you’re trying to figure out if someone is trying to scam you. Your resort will have a list of timeshare exit companies and timeshare resale companies they’ve verified and had good experiences with, information on current deals for resellers, etc. Whenever someone contacts you about buying your timeshare, ask for time to consider the offer and then share the details with your resort. They’re your first line of defense against scammers.

Team Up With a Pro

Trying to resell your timeshare on your own is a headache — even if somehow you don’t find yourself on a timeshare scam artist’s radar. Therefore, many timeshare owners decide to outsource the reselling and cancellation process to a third party. If you make sure the third party you choose (never let them choose you) is on the up and up, outsourcing your resale can be beneficial because:

Some companies specialize in specific types of cases. Your timeshare contract likely had a lot of different bells and whistles in it. A company that specializes in those specific bells and whistles and customized contract obligations can save you a lot of time and money (and migraines).

Legitimate resale professionals can save you money. Timeshare scams are popular because they have the potential to be quite lucrative. For instance, in 2019 the FBI busted a Mexican timeshare scam. The scammers ran a telemarketing ring that targeted people in the United States, Canada, and countries in South America. They managed to collect around $10 million in fees before they got shut down.

Speaking of Mexico… In late 2020, the FBI and the SEC issued a warning, citing an increase in scams targeting timeshare owners whose properties are in Mexico. The scammers have been cold calling individual timeshare owners and offering to buy the properties. In addition to charging fraudulent fees and the usual grifts, the scammers have been getting timeshare owners to open and fund accounts at specific banks.

How to Prepare for a Timeshare Sales Presentation

The timeshare industry is designed to entice buyers. Everybody has seen the advertisements for timeshare presentations. These ads offer you a bunch of free stuff, just for watching a simple presentation. They will offer attendees food and gift cards to local stores, supposedly just for showing up. They will offer a “chance to win” a large cash prize or a “free” vacation to whatever resort they’re promoting. To enter for your chance to win, all you must do is sign up to learn more information! Easy peasy, right? What’s the harm?

What’s the harm, indeed.

First, these presentations are designed to make you really want to visit the resort. It’s a lot like how, when a real estate agent is trying to sell or rent a home, they’ll take wide-angle photos to make the rooms look bigger, and the air will smell like freshly baked cookies. (It might be a scented candle.)

In this case, though, you’re seeing a slideshow of photos of luxury suites, fancy restaurants, gorgeous beaches, etc. The promise is that everything you’re seeing will be included in the cost of the timeshare. If you happen to be vacationing there for the first time or somewhere nearby and can visit the resort, you will be given a tour of the fanciest suite on the property, offered samples of gourmet food “from the resort”, etc.

These promoters are well trained in sales pressure tactics. For example, between showing you the slideshow and letting you grab some free grub, they may keep you in the room for a long time. During that time, they’ll make sure to speak with each individual present. They may even bring over a manager to meet with you. They will tell you that the super special offer they have is only available that day and will expire as soon as the food is served. Their goal is to wear you down so much that you’ll sign anything they want you to sign just to be able to get out of there. Many of them will even touch you — grabbing your hand to shake it and then refusing to let go until they’ve finished their pitch.

Use these tips to prepare yourself for these types of presentations:

Research the Company Before You Go

Find out whether there is actual demand for rooms at this resort and, if not, if there is a market to which you can rent your room if you aren’t able to use it. These are most typically applicable to timeshares at Disney Vacation Clubs or in popular travel destinations like Hawaii and the Caribbean.

Check resale sites for that specific resort or property and see how many people are trying to get out of their timeshares (and why). This is particularly important if you’re leaning toward buying.

One potential buyer attended a presentation in Costa Rica. Guests were promised one week each year at the property for just $17,000, plus an additional $1,000 each year in fees. Upon checking the resale sites, the customer found multiple timeshares on the same property for sale at prices between $1-$1,000. During the presentation, this customer pointed out the sales team that when checking a popular resale site, they had found opportunities at the same property that offered two weeks for $500 and the same annual fee. Their “two-hour presentation” wrapped up after less than twenty minutes!

After reading this, if you still want to attend a timeshare presentation, here are some additional tips to help you make it through:

Don’t Act on Impulse

Instead, ask questions. Ask a lot of questions! Here are some that you should ask at every presentation you attend:

Why is the Offer Only Available at During that Specific Timeframe?

Since the property sets the prices, why do the prices suddenly go up if you choose to leave the presentation without opting in?

What, Exactly, are the Fees For?

How will your maintenance fees and dues be spent? How often does the property undergo renovations, redecorating, or remodeling? Does the property currently need any structural updates or improvements?

What Will Your Time There Actually Be Like?

This one is easier if you’re visiting in person. Check out the size of the crowds. Are the people there mostly romantic couples or are there a lot of families around? Does the property have what you need when you are traveling or on vacation? Is the property at the top of a giant cliff with the beach at the bottom, and if so, is there complimentary transportation up and down to the ocean? What is the proximity to town and is transportation readily available?

Will You Have the Ability to Cancel Contracts?

Most contracts have a clause called the “right of rescission” or “cooling-off period.” What this means is that, after you sign the contract, you have X number of days to change your mind and have the contract canceled without having to pay any penalty fees or be charged annual dues, etc.

If you do decide to cancel your contract, send a letter to the seller by certified mail and ask for a return receipt. This will prove that you followed the terms of the contract if they try to get out of honoring your cancellation.

Take time to study the paperwork on your own. Get everything in writing. Get a public offering statement if you’re buying an undeveloped property. Have a lawyer (your own, not anybody referred to you by the property or timeshare company) vet everything before you sign anything.

Buying Timeshares ― What You Need to Know

Timeshares can be a great investment if you know what you’re really buying.

Be Careful of the Sales Pitch

Remember, those wily salespeople know what they are doing. They know how to read you and figure out your tells. They will tell you what you want to hear and hope that you don’t notice that they aren’t saying any of the things you need to hear.

Remember that this is a Long-Term Purchase

How you vacation is going to change as you get older and your life changes. It is important that any timeshare you buy be flexible enough to accommodate those changes. For example, some years you might just want a week away with your sweetie. Other years you might want to bring your kids or other family members. Your timeshare property should be able to accommodate both of those requirements.

Know What You’re Buying

This is different than buying a home or even going into a joint purchase of property with people you know. A timeshare is deeded real estate and not every timeshare is the same. Here are the three most common types of timeshares you can buy:

• Traditional timeshare: The buyer chooses which days or weeks they want to spend at the property each year. For instance, they may decide that they will spend September 1-7th at the resort every year for the foreseeable future. The room they stay in might change, but their time at the property will not.
• Deeded timeshare: This is like a traditional timeshare, but the buyer also gets to choose which room on the property they will occupy while they are on-site. Essentially, they will “own” the room for the duration of their annual stay. They will have access to it during those dates every year forever (or until they decide to sell) and can do whatever they want with it — let friends use it, gift it to their kids, whatever!
• Points-based timeshares: Your “down payment” buys you a certain number of points each year — if you stay current with your dues, maintenance, and whatever other fees they charge annually. You can choose to use those points every year or you can “bank” them and save up for a longer stay every other year, a bigger room, or use them at a more upscale location within the resort’s portfolio, etc.

Before You Sign the Timeshare Contract

• Find out the actual cost of ownership.
• If there’s an exchange program, make sure you know exactly how it works.
• If you have a points-based timeshare, memorize its rules. For example, will you have the points you need to take the kind of vacations you want? And will you be allowed to buy points and, if so, how much do they cost?

Know the Annual Fees

Remember that the annual maintenance fee will almost certainly go up and add that fee to your actual cost of ownership. Does the fee plan have a cap?
Yes, it is true: You’ll have to pay annual maintenance fees whether or not you use the unit.

Know the What Happens if You Need to Get Out of the Contract

It can be really hard to sell a timeshare. Find out if the property has an exit program and how that program works. If you’re considering a vacation club, make sure you understand its cancellation policy backward and forward. The laws that govern timeshares are specific to the state where the property is located.

A Timeshare Example: Disney Vacation Clubs

The purchase price is $201 per point. A package of 150 points starts at $30,150. Closing costs start at $628. Annual dues start at $105 per month. Financing starts at $417 a month for 10 years with 10% down. So for a basic membership, you’ll pay $5,004 a year for 10 years, or $50,004. Remember that this is the low-end price, so it will be for the least desirable months and properties. Then ask yourself whether you want to spend a week at a Disney property every year, especially once the kids are older. If you’re a Disney enthusiast who loves the idea of spending a week a year at a Disney property for the next 30 years, this may be a good deal. But you’re still better off buying secondhand. There are thousands of DVC resale properties listed for sale online.

The Bottom Line

Most of all, it is important to understand that the sales staff will tell you that a timeshare is a solid financial asset. Here’s the truth: the actual value of the timeshare is in its value as a vacation destination, not as an investment in your portfolio.

If you do think that owning a timeshare is a good idea for yourself or your family, it is usually better to buy a resale timeshare than a brand new contract. After all, this isn’t like buying a home. Whether you buy a new contract or one that’s being resold, you’ll be staying in the same rooms. If you buy from a legitimate seller, you’ll potentially save thousands of dollars.

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