The Department of Consumer Protection (DCP) have issued a warning to timeshare owners after a surge of complaints from locals being scammed by people claiming to be able to buy and sell timeshares.
Resale scams are nothing new but local authorities in Connecticut U.S. are concerned after several people reported losing money to them. Timeshare resale scams are more common in the U.S as most contracts are in perpetuity, meaning they last the entire duration of your life and upon your death will be passed down to your loved ones. They are also deeded properties which means people own an interest in actual real estate and if they defer from making payments are subject to foreclosure and negative impact on their credit scores.
Timeshare ownership in the U.S works pretty much the same as everywhere else apart from a few subtle differences. Generally, in Europe timeshare provide for a stay in a fixed week, in a fixed room and at a fixed time of the year. The same is true in the U.S, except that timeshare are usually subject to a deed, meaning that the timeshare itself is registered. The laws differ from state to state; however they usually operate in the same way. The main difference from Europe is that contracts in perpetuity were deemed unlawful a few years back and timeshare resorts are no longer allowed to sell timeshares with everlasting contracts. U.S timeshare contracts are also harder to extricate the consumer from, as they are deeded which is not a simple contract, it means an owner owns an actual physical interest in a timeshare property.
Because of this U.S timeshare owners are more likely to fall for a re-sale scam, especially as they are also sold as investments because they are deeded. Many owners are still under the illusion that timeshare is an investment, and they can sell it on when they no longer want to use it, or, like many others, become fed-up with paying maintenance fees. This simply is not true; timeshares are a depreciating asset and a financial liability. They lose money the second you purchase and rarely will you see a return on any investment made in one. However, unlike Europe, there is a fairly buoyant re-sale market in the U.S and some legitimate companies that trade and sell timeshare, but it is hardly lucrative and many people end up listing their timeshares for years on end hoping for a sale that never comes. So, it is unsurprising that people hoping to make back some of the cash they spent are susceptible to anyone claiming they can sell their timeshare and possibly make a profit.
What is a Timeshare Resale Scam?
A timeshare re-sale scam will usually start with a person being cold called by a company or ‘real estate agent’ claiming to be able to sell a timeshare for a fee. Fraudsters or criminal gangs pose as genuine real estate brokers and cold-call timeshare owners claiming to have buyers ready to purchase timeshares for inflated prices. Victims often report that they are offered sometimes up to 70% more than what they originally purchased it for.
The fraudster will ask the timeshare owner for an upfront payment of property taxes, and escrow fees before any funds can be released. The scammers continue to extract money from owners for fees, lawyer costs and taxes until finally the victim realises, they have been conned. Fake companies will pose as legitimate businesses using slick looking websites and fake reviews, to help fool victims.
How to spot a timeshare scam:
A cold call informing you they have a buyer ready to purchase your timeshare, they may even offer you more than you paid for it. The chances of someone offering to buy your timeshare for more than you paid for it, is extremely unlikely.
Do not be fooled by a professional looking website, the cost of creating these sites is very affordable and easily set up.
Stay Safe Online Check the web address is legitimate and has not been altered, you can check this by looking to see if there are any slight changes to a domain name.
Check paperwork you should check all your paperwork including receipts and invoices as well as terms and conditions.