A federal court recently entered a final judgment against and approved settlement agreements with several telemarketing companies charged by the Federal Trade Commission with operating a timeshare resale scam. The judgment entered by the U.S. District Court for the Middle District of Florida imposes a nearly $6.3 million fine and permanently bans the defendants from the timeshare business.
With fraudulent timeshare resale operations on the rise, the FTC is maintaining ongoing efforts to stop them. In light of this enforcement focus, legitimate timeshare developers and managers need to be vigilant in their compliance with both federal and state consumer protection statutes.
The FTC charged the defendants with violating the FTC Act and the FTC’s Telemarketing Sales Rule by misrepresenting their ability to resell consumers’ timeshare interests. Using mail drop addresses throughout the United States, the defendants operated under a number of timeshare resale identities, including National Solutions LLC, Country Wide Timeshares, Landmark Timeshares, Quicksale Propertys [sic], and VIM Timeshares.
The defendants, claiming they had buyers lined up, would charge timeshare owners up to $3,150 in "earnest money deposits" to be refunded when the sale closed. Consumers were also told that sales would be reviewed and approved by the FTC. Consumers who signed contracts and sent payment to the defendants often were not contacted again. The timeshares were never sold, and refund demands were routinely denied.