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SALT LAKE CITY — If you are a middle-class, mid-aged and educated family looking to save some money on vacations, beware.
Timeshares are sold as a way to split lodging costs with a group of strangers, presumably saving all participants some money. There are now more than 7 million timeshare owners in America.
But there is a dark side of timeshare sales designed to fool people into buying something that saves no money, surprises them with fees they never anticipated, and promises they can get out of the timeshare by selling it. But sometimes it's not that easy.
There are a lot of scammers out there, a lot of bad companies. But there are also a lot of good companies.
The timeshare pitch often says you can stay at fancy resorts all over the world for a fraction of the regular cost. But Susan Lofgren says the fees for her timeshare are "killing us," and she's desperate to get out of hers. She says she's turned to a few companies that offered to sell it for her, if she gave them money up front. She claims she has lost hundreds of dollars to such companies.
Indeed, the FBI says scam artists often hide "administration fees," or the company decides it's going out of business after it takes your deposit. Sometimes, they offer free items for buying a timeshare that you never actually get.
The Better Business Bureau says Americans are losing millions of dollars a year from these timeshare rip-offs. Jim Jewkes with Timeshare Travel says he's been fighting this battle for almost 30 years.
- Ask the salesperson for all information in writing.
- Ask if the reseller's agents are licensed to sell real estate where your timeshare is located (verify this with the state's real estate commission), and get references.
- Ask how the reseller will advertise and promote the timeshare unit. Will you get progress reports? How often?
- Ask about fees and timing. It's preferable to do business with a reseller that takes its fee after the timeshare is sold, but if you must pay a fee in advance, get refund policies and promises in writing.
- If you want an idea of the current value of the timeshare, consider using a licensed timeshare appraisal service.
- Before you sign any sort of contract, make sure you get the details of its terms and conditions. It should include the services the reseller will perform; the fees, commissions, and other costs you must pay and when you must pay them; whether you can rent or sell the timeshare on your own at the same time the reseller is trying to sell your unit; the length or term of the contract to sell your timeshare; and who is responsible for documenting and closing the sale.
Source: Federal Trade Commission
"I've seen some of these scammers for 10 years change their name four or five times. Then 10 years later they are still scamming people and in business," he said.
The FBI and BBB put out multiple warnings about these bogus companies. In the last two years, the problem has surged. In fact, it's tripled since 2010.
"They set up a phony website," Jewkes said. "They make themselves look like they are a big company, but they're really one person working in the basement."
The BBB says one sure sign of a scam is the salesperson asking for an up-front fee.
Here are some suggestions:
- Beware of requests for up-front fees
- Ask the company for its physical address, and then verify it. Often times the company will hang up rather than answer that question.
- If someone says they'll sell your timeshare for a profit, ask why they would sell yours if they've got their own to sell? That's hard to do in a good economy.
- Don't send anybody any money. Let them send the profits after the sale, although suggesting this may also lead to a hang up.
Even though there are a lot of scams, Jewkes feels there's no better time to be a timeshare owner. He says they're still a great way to go if you know who you're dealing with.
"There are a lot of scammers out there, a lot of bad companies. But there are also a lot of good companies," he said.
If you do get a timeshare, most owners say they are pretty happy with their situation. Satisfaction rates are close to 85 percent, with nearly 60 percent saying they would recommend timeshare ownership to others.