Every day, people get unknowingly scammed into buying a timeshare. Timeshare scams are very prevalent, but how do they work?
What is a timeshare?
A timeshare is an arrangement between many parties whereby many people can share the cost of a vacation property. The commitment to share the cost of the property gives each shareholder a predetermined amount of time that they have access to it.
Types of timeshares
There are two primary types of timeshares: deeded timeshares and vacation clubs.
A deeded timeshare gives the owner the deed to the property for a specified amount of time. This gives them the right to use the timeshare during this timeframe. Under this arrangement, you own the timeshare until you either sell it, transfer it, or give it away.
Vacation clubs are similar to deeded timeshares, but they only give you the right to use a vacation property. You don’t own anything, but you are still obligated to pay for maintenance of the property.
How the scam works
Typically, people buy timeshares through a direct sales relationship. They go to a timeshare sales seminar, usually lured in by the promise of something free (tickets, gifts, etc.).
While you will often be told that they only need 90 minutes of your time, they will typically do everything in their power to keep you on-site for much longer than that.
Often, timeshare salespeople will flat out lie, telling you things like:
- your maintenance feeds won’t ever increase (they will)
- your interest rate is fair (it won’t be)
- that it is a tax write-off (you must consult your accountant to verify such a claim – timeshare salespeople are NOT accountants and have no idea if you will get a write-off)
- they are easy to get out of (they are not – timeshare cancellation is very difficult in some cases)
Ultimately, it is buyer-beware when it comes to the timeshare industry. Going to timeshare sales seminars is the worst, most high-pressure way to buy. There is a secondary market that provides much more favorable terms to consumers. Many people have no idea how to get rid of a timeshare, so be careful.
Timeshares are not inherently bad, but the timeshare sales industry certainly has a reputation for scamming honest consumers. While not all timeshare salespeople lack ethics, you need to be on guard when attending a timeshare sales presentation.