U.S. and Florida officials said they filed almost 200 civil and criminal cases for timeshare resale frauds over the past two years as scams in the business have increased, with defendants now more likely to have violent and drug-related backgrounds.
Florida this year sued nine timeshare resale companies based in the state for fraudulent activity, and has requested temporary restraining orders against six of them, according to Miami U.S. Attorney Wifredo Ferrer and Florida Attorney General Pam Bondi, who announced the actions at a press conference today in Miami.
“We cannot allow our elderly and vulnerable real property owners to continue to be the target of fraud schemes,” Ferrer said in a statement. These victims “looked to sell their units to help make ends meet or pay other bills. Instead, they were defrauded out of more than $14 million in total.”
Some 83 civil cases have been filed in 28 states and more than 184 people are facing criminal charges in federal and state court. In the timeshare resale cases, “boiler room” operations were set up to call timeshare owners to sell the properties for a “deposit” of hundreds and sometimes thousands of dollars.
“The majority of the folks who have been doing this are from Florida and are victimizing people from outside states,” Ferrer said. “The white collar nature of these scams seem to be a thing of the past,” he said, noting many of the defendants had violent and drug-related criminal records.
Timeshares give owners the right to use a property for a set period of time each year, typically a week. Fractional ownership plans usually offer longer stays at a property and tend to include more services and amenities, according to the American Resort Development Association, or ARDA, a Washington-based trade group.
Marriott International Inc., owner of the JW Marriott and Ritz-Carlton brands, spun off its timeshare unit in 2011 as the business had been slow to recover from a decline in consumer spending.
Timeshare fraud “involves telemarketing companies that market their advertising services to timeshare owners interested in selling or renting their timeshare interests,” Florida officials said. “Many of these companies charge exorbitant fees and perform few services.”
The Florida Legislature in 2012 passed the Timeshare Resale Accountability Act requiring timeshare resellers to provide consumers with specific disclosures before providing services and also bars timeshare resellers from taking advance fees from consumers, according to the statement. The year following the law’s enactment, the number of timeshare resale fraud complaints received by Bondi’s office fell by more than 57 percent, she said.
“Timeshare resale scammers have cheated tens of thousands of timeshare owners out of tens of millions of dollars by convincing them to pay for a false promise,” said Charles Harwood, acting director of the Federal Trade Commission’s Bureau of Consumer Protection.
Harwood said that, beginning in 2009, timeshare scams began spiking, with 2011 being the worst year. The number of complaints his office received dropped slightly in 2012.
Bondi said in a statement that the nine companies sued as part of the Florida initiative include International Timeshare Exchange LLC, Travel Buy Owner Inc., Premium Marketing Solutions Inc., Universal Timeshare Sales Associates, Resort Property Depot, Resort Solution Trust, BML Marketing Company Inc., A1 Marketing Unlimited and Access Travel Network. Calls to the companies for comment either weren’t immediately returned, messages couldn’t be left or numbers were disconnected.
Tracy Casaceli, of Jupiter, Florida, said at the press conference that she fell for a timeshare scam twice before reporting the third offer to sell her timeshare to the FTC.
“Like a lot of individuals, I was ready to get rid of my timeshare when they called,” she said. The first time she was scammed, the phone number of the company to which she paid $600 was disconnected just two months later, she said.