Skip to section:
- Beware of Cyber Fraud and Timeshare
- Beware of Phoney Timeshare Legal Firms
- What Is A Timeshare Ponzi Scheme?
- Bogus Bonus Timeshare Week Calls: How To Spot A Scam
- Timeshare Resale Fraud
- What Is “Double Dip” Timeshare Fraud?
The timeshare industry is, unfortunately, fraught with bad players seeking to take advantage of vulnerable individuals. Whilst timeshare companies and resorts have been to blame in the past, and still sometimes are, there are opportunistic fraudsters operating outside the industry itself, unscrupulous groups and lone wolves looking to make a quick buck.
In the years we have spent helping people get out of timeshare, timeshare fraud is one of the most common problems that we encounter. Countless distraught timeshare holders contact us on a regular basis who have fallen victim to fraudulent timeshare companies.
As such, we are dedicating this extensive guide to detailing the different types of timeshare fraud. The aim is to help you identify any such scam that may be targeting you or someone you know and to prevent you falling prey to one yourself. We can also offer you guidance should you feel that you’ve already been duped by a timeshare con, so do contact us if you require further help or information.
You can also find out more about timeshare fraud cases by taking a look at the many news pieces on the subject which we have covered in the past:
Beware of Cyber Fraud and Timeshare
As we all know, we are living in a digital age. Shopping online has all but overtaken the high street, and that includes booking holidays. But there’s a dark underbelly to the online shopping world when it comes to booking trips abroad. Cyber fraud and timeshare are lurking, with an aggressive rise in travel fraud reported recently.
Travel Cyber Fraud
The main problem with cyber fraud is that it can be very difficult to spot. Fake websites masquerade as the real deal, sometimes to a very convincing extent. These sites can look so sophisticated, so professional, that hardly anyone would notice the difference.
One cyber fraud scam is website cloning. In these cases, a fraudulent website would look exactly the same as the real deal. The prices will undercut the real site considerably, tempting you to take advantage of their unbelievable discounts. But there’s a reason they’re so unbelievable: they aren’t real. If you book on one of these sites, there’s a good chance you’ll end up out of pocket and with no holiday.
Travel fraud is currently estimated to be costing UK consumers £11.5 million a year, rising 425% year-on-year, according to data by the City of London Police.
Timeshare and Cyber Fraud
It isn’t just holidaymakers that are falling victim to cyber fraud, however. Scamming like this is also rife in the timeshare industry, unsurprisingly.
Whilst we are all-too-aware of people being scammed into buying fraudulent timeshares that don’t exist or contain illegal clauses, this isn’t limited to the dreaded timeshare presentation. Those who find themselves looking to buy into a holiday club,‘points system’, or timeshare product of any sort online, for whatever reason, will probably also find themselves victims of cyber fraud.
The internet is a place where fraudsters can often hide in plain sight, using the same methods of professional-looking websites and unbelievable offers to tempt unsuspecting consumers. Older individuals, who may be less aware of the risk of such online scams, are particularly vulnerable to cyber fraud in timeshare or holidays.
We advise anyone who finds a website selling holidays or timeshare-style products to steer clear, and alert the authorities if cyber fraud is suspected.
If you fall for one of these cyber fraud scams, it can be extremely difficult to get your money back or claim compensation. We advise booking any kind of travel product via credit card, which offers you protection in the event that you are defrauded or mis-sold.
Whilst both the travel and timeshare industries are working hard to eliminate cyber fraud, there is still some way to go before we are able to fully stamp out these fraudsters. In the meantime, it’s important to remember never to part with your hard-earned money until you are 100% certain of the legitimacy of what you are buying. Take care, be smart, and seek advice if anything feels not-quite-right.
Beware of Phony Timeshare Legal Firms
A devious network of phony Tenerife timeshare legal firms has been found to be operating. It is very important that we inform you of this news to avoid you falling prey to their scams. Such fraudulent activity in timeshare law is less common than in the timeshare industry itself, so this news is incredibly alarming.
Three connected companies, Litigar Abogados, Litigious Abogados, and Abogacia Espanola, are three phony Tenerife timeshare legal firms that are all linked. They claim to be founded by different Directors, but it seems more than likely that they are all working under the same scam to try and con people who are seeking justice for bad timeshares.
Each of the websites references the legal body of lawyers in Tenerife, which is a clear ploy to give website visitors the illusion that the companies are regulated by the legal body.
The first company, Abogacia Espanola, has been found not to exist at all, and considering that all three websites are designed in almost identical ways, there is good reason to believe that the other two do not exist either.
The findings have come to light following a ‘client’ of Litigious Abogados speaking out. The person’s legal case regarding their timeshare was due to be heard in November 2016, according to the company. But the plot thickens. The first alarm bell is that the person was contacted by the ‘firm’ (not the other way round) which should never be the case. The person was told that there was a hearing due on the above date, and that all the person would have to do was to pay a fee and they’d get it handled and let him know.
The person paid 1200 Euros.
You may think he never heard from them again, but he actually did! It’s not good news, though. They told him that his case had been successful and that he had been awarded over 30,000 Euros. All he had to do was (you guessed it!) pay the court fees and taxes of around 6000 Euros to release the money.
Luckily, he didn’t pay this second sum. Instead, he did some research and found out that he had been conned… the company did not exist.
It is harrowing to think that the fraudsters are now cottoning on to the fact that people are increasingly taking timeshare companies to court and winning – and exploiting that. Where people have been conned once and are seeking justice, these fraudsters are ready and waiting to con them a second time.
Before you get started with your court case against a timeshare company, make sure you’re not falling for one of these phony timeshare legal firms, or one from elsewhere. Do your research before handing over any money, and certainly don’t engage a timeshare legal firm that calls you. Lawyers never approach you – it’s your job to seek them out. Remember this, and find a legitimate timeshare legal firm who is committed to helping you get justice.
What Is A Timeshare Ponzi Scheme?
Recent reports have shown that timeshare Ponzi scheme fraud is still in operation within the industry. The timeshare Ponzi scheme is one of the most sophisticated and potentially damaging forms of timeshare fraud, affecting many victims in one fell swoop. It is important that you know what a timeshare Ponzi scheme is, how to spot one, and what you can do if you think you have been targeted.
A timeshare Ponzi scheme is an investment scam, in which victims are promised high rates of return at little or no risk. Similar to a pyramid scheme, a timeshare Ponzi scheme benefits the first ‘investors’, whilst sucking money from everybody who joins thereafter to award those at the top; new investors’ funds are used to pay the early backers of the scheme.
These kinds of scams have been around for decades (in fact, dating back as far as 1880). As technology has evolved, including the advent of the internet, so too has the Ponzi scheme. You could be approached at your resort, by phone call or letter, by email, or by visiting a website. Some fraudsters infiltrate people’s social groups to recruit new victims by sharing their ‘top secret’ guaranteed get-rich-quick scheme.
Signs of A Timeshare Ponzi Scheme
Though not limited to timeshare, all Ponzi schemes tend to have similar characteristics. Do any of these sound familiar?
- Promises of guaranteed returns with little to no risk
- Regardless of market conditions, a consistent flow of returns is promised
- Investments are not registered with the regulatory body for the industry
- Details of the investment strategy are obscured; dismissed as ‘too complex’ to understand, or ‘secret’
- Official paperwork for the investment is not available to the ‘investor’
- Removing money from the scheme is difficult
Real estate, such as hotel and apartment developments for timeshare, are among fraudsters’ most favoured vehicles for their Ponzi scams. Why? Well, one of the main reasons is that real estate, particularly in popular holiday destinations, is considered to be a lucrative investment. Secondly, it’s easy to be dazzled by the idea when you can envision a bricks and mortar embodiment of your investment.
A Timeshare Ponzi Scheme Case Study
One of the largest timeshare Ponzi schemes to hit the headlines, back in 2012, found two men guilty of extracting nearly £164 million from ‘investors’. The scam centred around the purchase of two timeshare resorts in the Dominican Republic. It began with the purchasing of a resort, Confresi, which they had bought with the aim of finishing its construction and opening it for business.
When they ran into financial problems, however, they began selling securities in the resort. These securities offered the purchaser the opportunity to either occupy a room at the Confresi resort, for an amount of time proportional to their investment or instead allow the room to be rented out in exchange for an “annual non-use fee”. This fee was paid out quarterly to investors, at a rate of between 8% and 12%.
After five years, the investors were offered the chance to cash in their principal or roll it over for another five years at a higher non-use fee. These investors were assured that their investment was guaranteed, and that – over time – they would additionally benefit from the appreciation of the value of the timeshare itself.
Off the back of this, while the Confresi was still being constructed, the pair purchased another resort in the Dominican Republic. Sun Village Juan Dolio. They used the same investment strategy on this second resort, but also came up with a new plan.
The new “Passport” product they enacted at the Sun Village resort promised investors fractional ownership interest as opposed to a timeshare. Instead of the non-use fee paid out at the Confresi, at Sun Village investors were promised a 5% return, again paid quarterly, until the Sun Village resort opened. The idea was that, after the hotel opened, investors would then be able to split the net rental proceeds with the hotel. Thus, an investor would make half their investment by cash and the rest on a promissory note.
After a presentation roadshow across the western United States, a total of 1,200 people had purchased $72.6 million in the Confresi, and $91.2 million in Sun Village.
What the investors were not told, however, was that only a tiny fraction of their money would go towards the construction of the resorts. The rest of the money went to existing investors, as ‘commission’. These commissions totalled nearly $60 million and continued to be paid out even in the face of yearly operating losses on both resorts. Both properties were lost to foreclosure in 2009.
Worse still, a significant proportion of investors’ money went on the purchase of a yacht, a small aircraft, and on additional property (that was not part of the scheme).
Despite having charges filed against them, the pair is still on the loose, currently operating a new luxury vacation rental website.
How To Avoid A Timeshare Ponzi Scheme
- Don’t let anyone pressure you into an investment. If you feel you’re being pressured, that is a sign that something is awry. Walk away if you sense any pressure tactics being applied. Always take your time in making your investment decisions.
- Remember, if it sounds too good to be true, it probably is. Be highly suspicious of anything that sounds like a dream come true, because it is unlikely that it is as good as it seems. Investigate it as much as you can before you hand over your money.
- Bear in mind that the returns in a timeshare Ponzi scheme don’t necessarily have to be unbelievable. Suspiciously steady and consistent returns may well be just that… suspicious. Real investments returns fluctuate.
- If you do enter an investment, carefully examine the information with which you are provided. If anything seems amiss, and you are not given it straightaway, this could be a red flag.
Remember that timeshare is not an investment and should never be marketed as one. If you hear the word ‘investment’ during a timeshare presentation, or believe that the product you are being sold as an investment seems a lot like timeshare, do not sign up.
What To Do If You Think You’ve Been A Victim of a Timeshare Ponzi Scheme
As with any timeshare that turns bad, it is important to seek legal advice as a matter of urgency. Fraudsters who run timeshare Ponzi schemes make a lot of money by cheating ordinary people out of their savings. They must be stamped out, and the only way to do this is to stand up and make it known that you, and possibly others, are being swindled by the scheme.
Bogus Bonus Timeshare Week Calls: How To Spot A Scam
The offer of a bonus timeshare week sounds like good news all round, but a recent swathe of bogus bonus timeshare week calls may mean that the too-good-to-be-true offer is exactly that.
If you receive an unsolicited phone call offering you one or more extra weeks of holiday in your timeshare, beware.
The call may make the offer seem both tempting and genuine, and the caller may claim to be from your timeshare resort or company itself, or to be representing the company. They may also know some details about your timeshare, enough that you believe that it is a real offer. If you query the reason behind the offer, you may be told that it is a reward for your long term ownership or membership.
Free Bonus Timeshare Weeks – At A Price
Such a bonus timeshare week is almost unheard of in the timeshare industry… unless there is a hidden motive. With these sort of scams will lure you to a destination in order to hard-sell you another product.
The cold caller will probably tell you that the offer is limited to particular resorts, but that they have unlimited availability at those resorts. Sounds good, but the reason is that the entire ‘offer’ is designed to lead you into a gruelling timeshare sales presentation.
As usual, this presentation is supposed to be ninety minutes, but – as we know all too well – they can go on for several hours. There is a clever psychological reason for this. After several hours, you’ll be so inundated with information, and so worn out and bored, you’ll be more susceptible to their manipulative tactics. Even if you are confident in your ability to resist, they have a persuasive method that tends to sign up even the most sceptical of people.
As part of the bonus timeshare week call or presentation, you may be asked to hand over some money. This is illegal. No payment should be taken within the first fourteen days, so hold onto your money. Once you have given them card details, it can be a challenge to get that money back, so if you are offered a bonus timeshare week, do not agree to anything before double checking directly with your resort or timeshare company yourself.
What Will They Try To Sell Me?
You already have a timeshare, so why would they try and sell you one again? Well, the idea is to sell you other ‘offers’ related to holiday products, such as:
- The offer to take over your existing timeshare
- A cashback scheme
- A ‘reclaim’ certificate
- An ‘investment’ scheme
- A ‘holiday club’ membership
- A ‘discounted travel’ membership club
Some of these offers may seem particularly attractive to you, depending on your circumstances. For example, many people wish to be rid of their timeshare once it has become a financial burden. In cases like this, however, it is usually the case that this ‘takeover’ does not actually take place, and consumers are left with just a document that isn’t worth the paper it is printed on, and remain bound to their timeshare contract.
‘Investment’ schemes in timeshare are also far from the case, with consumers losing money almost unanimously, whilst any ‘memberships’ you’re offered could turn out to be nothing more than thin air.
If you think you have been the victim of a bonus timeshare week cold calling scam, then it is important that you get legal representation straightaway. Often, these fraudsters are quick to disappear into the mist shortly after taking your money, so time is of the essence if you wish to gain justice and recoup your losses. Get in touch with a member of our team of legal experts, who will listen carefully, help you understand your rights, and what your next step should be.
Timeshare Resale Fraud
If you purchased a timeshare before 2011, then this guide to timeshare resale fraud is for you.
Before the implementation of Member States of European Directive 2008/122/EC on 23rd February 2011, many people were falling prey to companies who fraudulently claimed to be able to sell their timeshare for a high price. These scams came in various guises, but all have one thing in common: fraud.
The Meeting and the Mis-Selling
When consumers were told that the company could sell their timeshare, it was often stated (or, at least, implied) that there was already a buyer ready and waiting. With this tempting news, the consumer was then invited to a meeting to receive an ‘offer’ on their timeshare from the potential buyer. These meetings took place either in the UK itself or abroad, often as part of a ‘free trip’.
Of course, when the timeshare holder arrived at the meeting, there was no buyer. What there was instead was a high-pressure sales presentation, urging the timeshare holder to buy a new product. This product was usually membership to an ‘exclusive’ travel club or similar, which was often sold without a cooling off period (i.e. a period in which no money could be taken after signing) prior to the implementation of the above EU Directive. What’s more, these timeshare products also tended to come with very little or no consumer protection.
Other than the ‘membership offer’, consumers were sometimes sold a ‘cashback’ or ‘reclaim certificate’ scheme, on the basis that they would cash in a generous return within a few years. There are endless streams of people who fell for these schemes, ending up out of pocket when the scheme simply didn’t pay out, went into liquidation, or paid out just a small dribble of the returns they were promised.
Some consumers were told the company could take their timeshare off their hands for a price. These people were left in a situation where no such transfer actually took place, they just lost even more money, and still had the financial responsibility of the timeshare.
All of these are clearly not the reason that the person agreed to come to the meeting in the first place. So, aside from the fraudulent products themselves, the misrepresentation about the meeting is a form of timeshare resale fraud.
Not only was the consumer still responsible for the timeshare they wished to sell, along with all its incumbent maintenance fees and so on, they now had a new product that they did not really want and no way to get rid of it.
What Should I Do If I Become A Victim of Timeshare Resale Fraud?
If any of the above applies to you, there are several actions you can take:
- If you were enticed into a meeting under false pretences, and ended up paying a deposit, you may wish to consider ceasing all further payments. You will be chased and intimidated with threats of legal action, so this is the point at which you should engage a timeshare lawyer to represent your case.
- It is not straightforward to get your money back from the company who committed timeshare resale fraud against you. However, if they simply have your debit or credit card details, you can contact your bank and ask them to cancel and reissue you a new card.
- Check your contract and any other documentation from the company. What the documents state may be different to what you were told on the call, at the meeting, or at any subsequent presentation.
- Make sure all correspondence you make with the company is by post, and sent by recorded or registered delivery. Avoid speaking to them on the telephone, as you need proof to bring to court with you. You should not record any phone calls, as there are laws against what can and cannot be recorded and used in evidence.
- If you feel that you were misled into the meeting or to purchasing the product, then write to the company and express your concerns. Be clear that you are unhappy with being mis-sold a product, and misled into attending a meeting under false pretences. You are entitled to ask for your money to be refunded on the basis of having misled you. Be polite, precise, and clear.
- Keep copies of all letters you write to the company, as well as all you receive. All documentation, including invoices and receipts (particularly for the recorded/registered delivery letters you send), should be collected and stored together in one file.
- If you paid on credit card, you are in a good position. You should contact your credit card company and explain that you were sold a product that was misrepresented to you, told a buyer was waiting, and that you were therefore lured into the meeting on false pretences. You can also show them the contract paperwork that differs from what was said on the initial phone call. You have six years in which to claim against this fraudulent behaviour, though this is now probably too late if you were a victim before 2011.
- Get legal representation. If your attempts so far have failed, then gather all the documentary evidence above, and speak to a timeshare legal expert to assess your case and take the company to court for timeshare resale fraud.
Misrepresentation is fraud, and it is something we come across all the time at Timeshare.lawyer.
What Is “Double Dip” Timeshare Fraud?
As the name suggests, the “double dip” scam is one in which you are conned not once, but twice, by the same fraudsters.
The usual timeshare lawyer fraud strategy is to cold-call you out of the blue and offer to get you out of your timeshare. You’ll be charged an upfront fee, which isn’t unusual in itself, but once they have your money, their services fail to materialise, whether immediately, or over time.
At the point when you realise you’ve been duped and are considering steps to try and recoup your losses, you’re then contacted by another, supposedly unrelated, company. This is the “double-dip”.
This new company will know about what happened to you with the first fraudsters, and offer to help you get your money back. Of course, you’ll have to pay them a fee to get started, too. Guess what happens next?
Yes, that’s right… they disappear too. You have now been conned not once, but twice, and lost out on two substantial sums of money. What’s more, you’re still paying out for the timeshare you wanted to get out of in the first place.
“Double dip” timeshare lawyer fraud is committed by the same individuals in both ‘dips’, though they will seem to be completely different. They may also seem completely legitimate, with a professional-looking website and branding.
So how can you ensure you don’t fall victim to “double-dip” timeshare lawyer fraud?
Look out for these tell-tale signs:
1. Unsolicited contact
You should always be wary if you are contacted out of the blue. No legitimate company will contact you without you having requested it. Their contact could be by a phone call, email, or a letter in the post. Whatever way, if they contact you without you asking them to, it’s probably a scam.
2. Too Good To Be True
You know how the saying goes: “If it seems too good to be true, then it probably is”. The timeshare resale market is dry as a bone. People are trying to offload their timeshares on eBay for as little as £1 – so why would any company have a long list of buyers just waiting to take yours off your hands?
3. Hand Over Money… Now!
As we mentioned above, it isn’t unusual to be asked for money upfront, even by a legitimate timeshare lawyer. There are costs involved with getting a legal case going, and any timeshare lawyer needs to be paid for that work. But you should be careful if you are asked to send that money abroad, or if the sum they ask for is suspiciously high.
In some cases, the sum asked actually exceeds what you paid for your timeshare in the first place! Another tell-tale sign that you’re being inculcated in timeshare lawyer fraud is if they ask you to pay by bank transfer or cheque. For insurance purposes, you should always pay for anything like this on credit card, and if they don’t accept it, there’s probably a sneaky reason.
All of these points apply to both single- and double-dip timeshare lawyer fraud. So if you have fallen for it the first time, then reading these pointers may help you avoid the second round of scams. Hopefully, you will have read this before they come to prey on you in the first place and can stop them in their tracks. But if not, at least you know how to avoid being fooled again.
If you think you have been the victim of any kind of timeshare fraud, it is very important that you seek expert legal advice now. There are plenty of legitimate timeshare lawyers out there who can help you without you being scammed, and we are among the best of them. Whatever has happened to you, whether with your timeshare or with a scam, we can offer you expert advice to help. Telephone 0800 0239 032 or email firstname.lastname@example.org.