The Federal Trade Commission has shut down a Florida telemarketing "boiler room," contending that it was scamming desperate time-share owners out of millions of dollars with promises that it could help them unload their properties. As the FTC put it, the message amounted to: "Psst... Hey Buddy, Wanna Sell a Timeshare?"
After the collapse of the housing bubble and the resulting disaster in the real estate market, the problems of time-share property owners with unsellable contracts have been largely eclipsed. But the FTC is still on the case, and Friday it got a federal judge in Florida to shut down a company called Timeshare Mega Media & Marketing Group, which it says was falsely offering an exit to unhappy owners.
The FTC says the South Florida ring "conned consumers by promising that they had buyers lined up and waiting. Only after making a hefty up-front payment did the consumers learn that there were no buyers, and that it was nearly impossible to get their money back from the defendants, many of whom have long criminal histories."
The FTC says:
“When cash-strapped consumers are trying to sell their property, the last thing they need is to lose thousands of dollars to scam artists who promise a quick sale, but then provide no services at all,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection.
The case is part of an ongoing FTC effort to crack down on con artists who use fraud and deception to take advantage of consumers hit hard by the recent economic downturn. Many of the defrauded consumers needed to sell their timeshares to help pay their living expenses. According to the FTC, the number of complaints related to fraudulent timeshare resales has more than tripled over the past three years, as more consumers have attempted to sell their timeshares.
In this case, the defendants allegedly defrauded consumers nationwide out of millions of dollars before being shuttered by the court. They also are well known to the South Florida Better Business Bureau (BBB) which, together with the FTC and the Florida Attorney General’s Office, has received hundreds of complaints from consumers about their conduct. The BBB has given the firm, Timeshare Mega Media and Marketing Group, an F rating, the lowest rating it can give a business.
According to the FTC’s complaint, Timeshare Mega Media, two related companies, and six individuals used a telemarketing boiler room in Ft. Lauderdale, Florida. They told timeshare owners who were attempting to sell their units that a buyer was lined up and a deal had been negotiated on their behalf, but that before the sale could be completed, consumers would have to pay an up-front fee, usually $1,996, by credit card.
The FTC’s complaint charges that Timeshare Mega Media’s representatives typically claimed the fee was for sale-related costs, such as realtor fees, closing costs, title searches, or document processing. They also told consumers that this fee would be refunded at closing. In some cases, if a consumer owned an expensive timeshare, the fee could be more than $1,996, ranging up to 10 percent of the asking price. Consumers also were told that their timeshare sales would close quickly, often in as few as 30 days.
The FTC alleges that, after the consumers paid the fee, they were told to expect a contract from Timeshare Mega Media. What they received turned out to be a contract to market and advertise their timeshare, and not a sales contract. According to the FTC’s complaint, many consumers signed and returned the contract thinking it was a sales contract. Those who questioned its validity were given the run-around by the company and falsely told that a sales contract would follow. In fact, according to the agency, the company never had any timeshare buyers lined up. When consumers discovered this and demanded their money back, they found it nearly impossible to get a refund, or even get a call back.
Click here to see the FTC's announcement - "Psst... Hey Buddy, Wanna Sell a Timeshare?" - and supporting documents, along with consumer tips on the hazards of selling time-share properties.