What Are Vacation Club and Timeshare Scams and How to Avoid Them
Table of Contents
- By Steven
- Published: May 20, 2024
- Last Updated: Jun 17, 2024
In early 2023, the FBI made a public service announcement warning that scammers had been targeting owners of timeshares in Mexico; they reported an estimated $39.6 million in losses involving only Mexico timeshares. Worldwide, countless more scammers are influencing consumers into signing binding contracts and pushing them into an endless cycle of issues.
When created, timeshares and vacation clubs were exclusive, high-end vacation options. Each offered a unique option to those who purchased the services. After they began to gain popularity in the marketplace, they began to attract malicious characters, and quickly after that, the niche of timeshares and vacation clubs became synonymous with scammers.
What are Timeshares and Vacation Clubs
When not part of a consumer fraud scheme, timeshares (and vacation clubs) are typically luxurious vacation options offered to low and middle-income families (or the nuanced elites of society). Vacation clubs are a type of timeshare, but not all timeshares are vacation clubs. More often, timeshares are associated with consumers seeking lasting family memories, with the budget of newlyweds or recent socioeconomic class-breakers. In comparison, vacation clubs are closely associated with those with investment portfolios and are usually over 50. Thus, although timeshares and vacation clubs are closely related in the scam world, they share more differences than similarities.
Timeshares began as a travel option in the early 1960’s in Europe. Property developers began renting rooms to vacation-goers as a new marketing strategy, and within a decade, thousands of timeshares appeared worldwide. Timeshares are best known for their affiliations with destination locations, with various property types appearing everywhere and on most continents. However, there are significant flaws with timeshares.
For example, timeshares work by many people purchasing a small portion of a property, including land, houses, condominiums, hotel rooms, event boxes, and other high-value assets. As each person “buys” a portion of the asset, they become entitled to spend time in the location, enjoying excursions. However, timeshares are notoriously flawed, as consumers purchase a right to use but are only entitled to a fraction of the time—typically a week or two per year. In exchange, the consumer pays thousands in principle, possibly thousands more due to hidden fees, and is entrapped in an unbreakable contract cycle.
Vacation clubs, in comparison, also appeared in Europe in the ‘60s. However, vacation clubs have the additional history of Disney offering then-new vacation format options in 1992. Under Disney’s oversight, consumers were allowed to purchase points in exchange for a timeshare equivalent benefit; the change came with the benefits of increased vacation flexibility for scheduling while offering “add-on” experiences and interests.
Vacation clubs are a type of timeshare where the shared property is usually a hotel room or a set of rotating rooms on a predetermined schedule. These may be vacation clubs, cruise line clubs, golfing clubs, wine clubs, or any other destination event. Vacation clubs are the better option of the two. However, there remain problems; these groups may shower unrestricted fines and fees onto their members, threatening to revoke their status if not paid immediately, they may attach property and account maintenance fees, or they may entrap victims in legal contracts.
The Reality of Timeshare Scams
Apart from everything said above, are timeshares scams? They can be. Genuine opportunities for them are limited and never offered to consumers without prior associations. As a result, most timeshare opportunities in the world are potential scams. Nevertheless, those wanting to explore their options should remain wary of danger:
- High-pressure sales tactics: Timeshare scams often involve high-pressure sales to get consumers to sign their contracts. Scammers may create scenarios, falsify information, or present “limited-time” offers that push consumers into compliance. Other times, scammers can work together, creating websites, presentations, and testimonials to convince consumers to sign the deed.
- Promises of unrealistic returns: Consumers sometimes fall for timeshare scams when convinced of the potential money-making opportunities from the location. Scammers trick consumers into “buying a share” of a location, and when the destination becomes a high-volume option for travelers, the scammers promise unrealistic investment returns.
- Requests for upfront fees: Timeshare scams extract money in many ways, most commonly with scammers collecting payments and fees from their potential victims without intending to fulfill those obligations. Consequently, timeshare discussions that require thousands of dollars for a down payment to “save a spot” or some other up-front fee are typically orchestrated scams.
- Confusing or overly complex contracts: Some timeshare scams have authentic locations and benefits—but these are only used to entice and entrap potential victims. Scammers that use real benefits are some of the most challenging to recognize criminals. They build rapport and can offer victims authentic instances of goods; however, if the timeshare owner attempts to read their contract, they won’t understand it. These contracts lock victims in legally, slowly draining the target of their liquidity over months or years.
- Highly restrictive schedules: Depending on the timeshare structure used by the scammer, they might offer a week a year in a destination; two weeks are rarer, and any offerings over two weeks are nearly impossible. Moreover, that one-week-a-year schedule is typically predetermined, forcing timeshare owners to schedule their life around their once-a-year vacation. Most scammers aim to make the process difficult. The harder it is to schedule time off, the more challenging it is to go to the destination (and collect on any obligations).
Vacation Club Scams
Comparatively, vacation club scams are more insidious, targeting elders like investment senior scams. Like timeshares, vacation clubs exist, and consumers can become members, but these are even more challenging to enter than authentic timeshares. Consequently, they must be highly cautious when invited to join a vacation club. Vacation club scams tend to include:
- Misleading membership benefits: A significant draw to vacation clubs is the potential membership benefits provided by the club. These benefits include cruise line tickets to resort stays, golfing tournament tickets, and polo games. However, if the club is a scam, these benefits may not be available or misleading; for example, if the club promises access to a tennis court, only for the club members to be relegated to a ping-pong table or volleyball sand pit.
- Non-existent property listings: Some potential victims of vacation club scams join specifically to have access to destination locations. For example, a wealthy couple may join a club to have vacation options in Europe, Asia, or the Middle East; however, if those locations aren’t actual vacation options, the couple may have signed themselves into a trap under pretenses.
- Fake emergency funds collections: A common practice of many communities, emergency funds collection is another sign of malicious activity. These schemes typically impact those who show concern about the well-being of others; scammers target these people because they are the most likely to give to whatever “needs” the club requires. However, if nothing ever comes of that donated money, it may have been a plot to extract more information and money from the club’s members.
- Investment opportunity scams: Vacation clubs are rife with networking and investment opportunities, which make them high-risk targets for malicious actors who scheme alone or with others in the group. Additionally, because seniors are a significant demographic that joins vacation clubs, scams that target them—like investment scams—can be particularly vicious and destructive when successful.
- Threatening behavior towards exiting: Timeshares (and vacation clubs) are successful because they entice or trap their members with staying and paying. They create confusing contracts that essentially sign away a person’s wealth, and when a member runs against that contract and tries to exit, they may find themselves being threatened with staying. Seniors are particularly susceptible to threatening behaviors, and subsequently, the families of those seniors must be aware of those people with whom the senior surrounds themselves.
How to Protect Yourself from Scams
There are countless types of cyber attacks online these days. They range from unsolicited messages attempting to phish information to fully staffed offices attempting to trap consumers in timeshare contracts. The vast variety of online scams demonstrates the broad attack vectors that target consumers and, by extension, display the particular securities an individual may need to consider if a specific scenario relates to themselves.
- Research companies before communicating with them. Avoid answering unsolicited messages from anyone—and thoroughly research and verify people from the organization before contacting a representative. Verifying the authenticity of companies before you reach out to them is essential, because consumers don’t think to re-check that verification after a rapport is built.
- Read the complete document before signing anything. Timeshares, in particular, are known for their hidden terms and fees. Read over the entire document before signing anything a representative gives you—away from them. Time away from the potential scammer allows you to research and verify their claims.
- Ask questions throughout the process and whenever possible. Most scammers won’t have immediate answers to questions, and their ability to lie is limited. By continuing to ask questions, the scammer may out themselves while answering.
- Avoid making immediate choices, especially when under pressure. Some scammers might try to manipulate consumers into joining timeshares by saying the opportunity is only available for a limited time; ask the scammer why, and they’ll spout an excuse. The actual reason is that they want to avoid you speaking with a financial adviser because, without them, consumers are likely to sign the deed.
- Contact legal or financial professionals when in doubt. Although scammers trick their victims into thinking it—no one can force another to pay for a service they no longer want. Use caution when searching for an exit, as some companies claim to be “timeshare exit experts” and are a second layer of scammers posing as helpful service technicians.
Timeshares and vacation clubs are exclusive, luxurious options for rest. They were initially popular by allowing low and medium-income families to “afford” a vacation once or twice a year. When they were away from the property, other families and their guests would stay in the same location, taking their turn. However, since then, the market for both travel options has been limited, and their niches are overrun with scammers and opportunists.
Although authentic timeshare and vacation clubs can be excellent options for members, the potential dangers of these scams are rampant; consequently, those interested in pursuing timeshares or vacation clubs must heavily research companies before interacting with them, read all contracts before signing them, and continue to ask questions about the process. Skepticism, vigilance, and diligence will help everyone avoid these scam
