Consumer Alert

Beware of the Timeshare Sales Pitch

Alaskans love to travel, and timeshare companies know it. A sales pitch for a condo in a warm sunny place can be enticing, but while timeshares work for some people, it is important to know the details of what you’re getting into before you make a financial commitment. If you own a timeshare and want to sell it, be sure that any reseller that offers to assist you is legitimate. A recent initiative by the Federal Trade Commission and state consumer protection agencies focused on fraud in this segment of the industry, and brought 191 enforcement actions to stop travel and timeshare scams.

Buying a Timeshare

Buying a timeshare generally involves purchasing a share of property, such as a condominium, which you then get to use for a specified amount of time each year. If you purchase a “deeded” timeshare you buy an actual share of the property. A non-deeded timeshare, often called a “right to use” or “vacation interval” timeshare, means you are purchasing the right to use the property for a specified time period but you do not own the property.

In either case, it is important to get the purchase agreement in writing, and make sure you have read and understand the terms before you pay any money. In addition to paying the purchase price for the timeshare, you may be required to pay annual fees—such as maintenance fees, property taxes, or utilities—whether you use the property or not, and the fees may increase over time. There may also be restrictions on your ability to use the property. Keep in mind that a timeshare may be difficult to sell, and you may end up selling it for less than you paid for it.

Selling a Timeshare

If you own a timeshare and want to sell it use caution if you are approached by companies that specialize in reselling timeshares. Fraudsters engaging in timeshare resale schemes may claim to have ready buyers or renters who will pay you top dollar for your timeshare property, and attempt to trick you into dishing out hefty up-front fees. They falsely claim that they can rent or sell a timeshare for a certain amount, although no buyers or renters are in place. You may ultimately end up losing thousands of dollars in bogus closing costs while your property remains unsold. Many of these scammers also fail to deliver refunds as promised.

Consumer Tips

The Consumer Protection Unit offers these tips to consumers who are interested in purchasing or selling a timeshare:

Review the information about timeshares and vacation plans on the Federal Trade Commission’s website
Be wary of companies that mail, cold-call, cold-text, or email you out of the blue – before you do business with a company you don’t know, search online for consumer complaints
When purchasing or selling a timeshare, work only with licensed real estate brokers or agents and consider doing business only with someone who gets paid after the timeshare is sold
Get all terms in writing before you agree to anything, and thoroughly read the agreement including any fine print
Watch out for high-pressure sales tactics and companies that can’t – or won’t—give you specifics
Before you purchase a timeshare, add up all the costs—can you really afford to pay the purchase price plus annual fees and travel costs each year?
If you are considering purchasing a timeshare in another country, use caution—if you sign a purchase contract in another country, you will not be protected by U.S. laws
Beware of companies that use robocalling— robocalls from companies are illegal if you haven’t given a company permission to call you; even if you haven’t signed up for the Do Not Call Registry
Avoid companies that request upfront fees before providing services; request that you pay cash or by wire transfer; advise you that you do not need to read or understand the agreement; request that you provide personal or financial information over the telephone or internet; refuse to meet with you in person; make unqualified guarantees that they can get your timeshare sold; or advise you that you can simply “walk away” from a timeshare by transferring it to some third party

If you think that a business is engaging in unfair or deceptive conduct, you can file a consumer complaint Alaska Attorney General's Office.

Consumer Protection Unit
June 2013