PDF Consumer Alert Regarding Timeshare Resale Scams

Consumer Alert Regarding Timeshare Resale Scams

Illinois Department of Financial and Professional Regulation

Division of Real Estate

Issue Date: 9/18/2014

Purpose of alert:

The Illinois Division of Real Estate ("the Division") is issuing this alert because of a growing number of scams being perpetrated against timeshare owners.

The current economic climate has left many timeshare owners looking for ways to lower their costs by selling off their timeshare interests. Others are simply no longer interested in owning a timeshare. Many of these timeshare owners choose to engage the services of resale agents. The services that resale agents provide can range from advertising your timeshare on a listing service, to employing licensed real estate brokers to assist you in selling or renting your timeshare. Resale agents can also offer to buy your timeshare, help you give it to charity, or put your timeshare in a travel club. Timeshare owners should beware, as there are unscrupulous people acting as timeshare resale agents who target timeshare owners eager to rid themselves of their timeshare interests. The Division has provided information to help timeshare owners identify certain types of resale scams and avoid becoming victims of these scams. The Division has also provided tips on reselling your timeshare interest as well as steps you can take if you become victim to a scam.

Most Common Types of Resale Scams & How to Spot Them:

The various types of timeshare resale fraud can be difficult to spot at scammers can often appear credible. Most will have professional looking websites. The contracts and sales documents they provide will appear to be genuine, and they can be very persuasive and professional sounding on the phone. Some of the most common aspects of resale scams and some red flags you should look out for are:

- Requests for an up-front fee (the fees have many different titles, such as a "tax fee" or "processing fee", title search fee, appraisal fee, or commission fee) before providing you with a written agreement or performing any resale services. o Remember, when selling your timeshare in a legitimate manner, the fees come out of the closing costs.

- Unqualified guarantees or promises that you will be reimbursed the up-front money immediately after the sale.

- Unsolicited phone calls, letters, postcards, or emails from an individual or company claiming to be able to sell your timeshare quickly or promising to take your timeshare "off your hands".

- Companies using 900 numbers. The prefix is often associated with suspect companies.

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- Claims that they have a buyer ready to purchase your timeshare, promise to sell your timeshare within a specific period of time, have already sold your timeshare, or guarantee to sell your timeshare.

- Claims that the market in your area is "hot" and that they are overwhelmed with buyer requests.

- Requests for payment by money order, cashier's check, or wire transfer, which makes it nearly impossible to get your money back later on.

- Requests that you provide personal financial information, such as a bank account number or credit card number over the phone.

- An unwillingness to meet in person, or to provide a business card. Scammers are usually vague about where their business is located. Their websites usually have no direct contact information.

- Advise that you can simply "walk-away" from your timeshare by transferring it to a third party.

- High pressure tactics used to force a quick decision. - Not providing enough time to review legal documentation or consult with an attorney,

accountant, or family members regarding the offer. - Refusal to identify the "buyer" and/or the name of the buyer not mentioned on the contract

or sales documents. - They have more frequently been using the identities of licensed Illinois real estate brokers in

order to appear legitimate and put the timeshare owner at ease. - In some cases, the scammers use a mailing address in Illinois, although operating from

outside the state. - More recently, there have been scams targeting owners with timeshare interests located in

Mexico. The callers claim that there is a buyer waiting to purchase their timeshare for what seems like a decent price. The scammers typically claim that there is a "tax" or "fee" required by Mexican law to be paid before the transaction is complete (usually thousands of dollars). The resale agent will claim that the money you pay will be held in their escrow or bank account until the sale is completed, at which point the seller will be reimbursed. Regulators and timeshare industry groups warns timeshare owners to be skeptical of this claim, as the sale often is never completed, and the money paid by the seller is never returned.

o Those timeshare owners wanting to back out of the deal are sometimes charged a commission fee (sometimes thousands of dollars).

Questions to Ask a Resale Agent:

If you are contacted by a resale agent, here are some questions to ask them. This is not an exhaustive list, but it will help you gather information so that you can make an informed decision, and also let scammers know that you are not an easy victim.

- Are you licensed by the Illinois Real Estate Division? If not, why not? If they are licensed, ask them for their name and license number. You can check the status of the license by going to

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the IDFPR website () and clicking on "search and verify licenses" to enter their information.

o Also, it is recommended that you look up the name and license number on the internet to see if there is a business phone number and address. Many scammers steal the identities of licensed real estate brokers to pass themselves off as legitimate. If you find a phone number through your web search, call it and verify if the person who contacted you actually works at the number you called.

- How many timeshare resale transactions have you successfully performed? Make certain to get specifics, and do further checking.

- Do you have a list of current and past "satisfied" customers? If so, get it and contact them. Ask if they would use this person or entity again. Also, be aware that the "satisfied" customers you are talking to might be friends or relatives of the scammer and could be part of the scam.

- Do you have a list of business and banking references? If so, get the list and check them out. - How long have you been providing timeshare resale services? - Ask them if they are a specialist in the area of timeshare resales. If the answer is yes, ask

what qualifications they have and what course(s) of study they took to become specialized. - Where and when was your business formed? Ask if they are registered with the Illinois

Secretary of State to legally do business in this state. You can check on the status of the entity (if they are a corporation) by visiting the Secretary of State's website () - What are you actually going to do to market and sell my timeshare? What specific services will you provide? Ask for it in writing.

What Can I Do to Avoid Becoming a Scam Victim?

- Do not be afraid to ask questions (see above) and make sure you understand all the details of the offer.

- Request everything in writing and be sure to look over all documents thoroughly with an attorney or other professional before you sign anything.

- It is recommended that you do not send money in advance of any services being performed. o If you believe them to be legitimate, ask to have any payments you make in advance of services performed placed in an independent trust or escrow account of your choice to be held until the sale is completed.

- Do not provide financial information over the phone. - Thoroughly research the resale agent and the company he or she is representing. Perform

an internet search by typing the name of the company and "timeshare scam" in the search box and see if anything comes up. Also, see if they are listed on the Better Business Bureau. Have there been any complaints filed against this company? Be sure to check the Division's Timeshare/Land Sales Page for a listing of Resale Agents known to be running scams. - If they claim to have a buyer ready, ask them to identify the buyer of your timeshare. If they refuse, you should probably walk away from the offer.

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- Remember that old saying: If it sounds too good to be true, it probably is! - Instead of going through a resale agent, you can attempt to list and sell your timeshare

interest on your own. Please see below for tips on re-selling your timeshare.

If you decide to utilize a timeshare resale company, the American Resort Development Association (ARDA), an industry group representing timeshare owners, has a wealth of information to assist you in choosing the right resale company, as well as consumer advisories related to timeshare resale issues (). ARDA's Resort Owners' Coalition (ROC) has a Timeshare Resale Resource Center which provides comprehensive information about the resale process (resales).

How Can I Re-sell My Timeshare On My Own?

Below are some suggestions as to how to re-sell your timeshare without using a Resale Company. This is not an exhaustive list. You can find many useful tips as well as a checklist of information and documents you should have prior to selling your timeshare at ARDA's website (). At the homepage, click on "For the consumer," and then click on "Resale Guidelines."

- Contact your developer (if they are still selling) or the resort management company to see if they either offer a resale program or are affiliated with a broker to handle resales.

- Place a classified ad in a newspaper (a local paper or a paper in the state where the timeshare property is located, or a national publication that has a travel/leisure section).

- You can contact a licensed Illinois real estate broker. - Contact your timeshare property's owners' association. They may know of a reputable

company in the area that is in the business of re-selling timeshares. - Check with other owners at your resort. Those who own the weeks before or after you may

wish to purchase more time. - Place a classified ad in "TimeSharing Today". This is a bi-monthly publication exclusively

geared toward timeshare owners. It has a section for timeshare rentals, sales, and exchanges. TimeSharing Today can be reached at :

TimeSharing Today 140 County Road Tenafly, NJ 08670 Ph # 201-871-4303 Fax# 201-871-4305 Email: staff@tstoday Website: . - Place a listing on . This is a website dedicated to listing timeshare interests for sale, rent, or exchange. There is a nominal fee. - List your property on websites such as Craigslist or EBay.

Never give up the right to use your timeshare while you are selling it.

If you successfully sell your timeshare, be sure to notify both your resort and your exchange company in writing.

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What Can I Do If I Have Been Scammed or If I Become Aware of a Scam? - If you are an Illinois resident, you can file a complaint with the Illinois Department of Financial and Professional Regulation. The Department can file a cease and desist order against the person or entity if they are unlicensed. If they are licensed, the Department can pursue disciplinary action. - File a complaint or report the fraud to the Illinois Attorney General () - Contact the Federal Trade Commission (). They can track and prosecute timeshare resale scammers. - Contact the Federal Bureau of Investigation (FBI) at . The FBI also has a dedicated Internet Crime Complaint Center (IC3) at . - File a complaint with the Consumer Financial Protection Bureau, at . - If you made any payments through postal mail, you can file a complaint through the U.S. Postal Inspection Service (. - File a complaint through The Better Business Bureau ().

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