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FTC Takes Action Against Timeshare Exit Scammers
2022-11-22
Consumers lost $90 million in scheme
The Federal Trade Commission (FTC) announced the filing of a formal complaint against a timeshare exit company that allegedly defrauded consumers of $90 million.
The complaint alleges that Consumer Law Protections and their related companies scammed consumers - mostly older adults - of more than $90 million in a timeshare exit scam.
“The defendants used scare tactics and high-pressure sales pitches to coerce seniors into forking over thousands of dollars for timeshare exit services they didn’t deliver,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC appreciates the partnership of the Department of Justice and the Wisconsin Attorney General in putting a stop to this scheme.”
The FTC complaint alleges the companies involved in the scam used a number of tactics to convince consumer to part with their money, including:
Making bogus affiliation claims: The complaint alleges that the defendants’ sales pitches falsely employed logos of legitimate timeshare companies and trade groups to lead consumers to think their services are endorsed or “authorized” by major timeshare companies.
Deceiving consumers about their options: According to the complaint, the defendants falsely told consumers that they could not exit a timeshare on their own without paying the defendants an exorbitant amount of money. They also threatened consumers to buy their service on the day of the sales pitch or they will never be able to exit their timeshare.
Stoking baseless fears about how heirs may be affected: The complaint notes that the defendants use fears that consumers’ heirs will be saddled with ever-increasing maintenance fees after the consumers die as an incentive to pay for the expensive exit services. In fact, states have procedures allowing heirs to disclaim any timeshare inheritance.
Failing to give consumers promised refunds: The defendants’ sales documents include a “guarantee” that if the defendants do not deliver on their promises, consumers will receive a full refund. When consumers call to request refunds, the defendants cite non-existent litigation, the COVID pandemic, or other phony reasons why they haven’t secured the timeshare exit, and then deny nearly every refund requested.
Pressuring consumers to sign contracts with non-negotiable and unenforceable terms: The complaint alleges that the defendants pressure consumers to sign contracts that say consumers are not allowed to cancel. Including such a contract term violates the FTC’s Cooling-Off Rule, which guarantees consumers the right to cancel a contract like this within three business days of the sale.
A final decision on the complaint and any penalties will be decided in court.
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