When buying into a timeshare, many owners receive more weeks at the property than they could possibly use in their lives. This has created a second industry that focuses on reselling or renting out the properties. But, as the Federal Trade Commission showed this week, not all of these businesses are legitimate, some are just out to line their own pockets.
The FTC announced Thursday that it had received a temporary federal court order to halt a timeshare reselling scheme that allegedly took $15 million from timeshare property owners by imposing hefty up-front fees based on false promises they would sell or rent properties for the consumers.
According to the complaint [PDF], the defendants — including Pro Timeshare Resales of Flagler Beach, Pro Timeshare Resales LLC, Pro Timeshare Resales, and their operators — contact owners of timeshare properties through unsolicited telemarketing calls.
During the calls, the operators falsely claimed that they had a buyer or renter ready and were willing to buy or rent properties for a specific price, alluding that the sale would occur within a few days or months.
Once a customer shows interest in the process, the companies charged them up-front fees ranging from $500 to$2,500. The company then informed customers they would receive a contract for the sale through email that should be signed and immediately returned.
However, the complaint states that the contract had nothing to do with the sale or rental of the property, but simply allows the company to advertise the property for rent or sale.
In order to keep the owners on the hook, the FTC claims that companies continued to make false promises that the sale was imminent, including saying they would send them money from a sale or rental.
In some cases, the companies actually persuaded owners to pay extra for purported closing costs or other fees.
Despite all of this, the FTC claims the businesses failed to actually sell or rent the properties.
When customers requested refunds, they were typically denied or ignored, according to the complaint.
With the court order, the FTC has temporarily halted the operation and froze the defendant’s assets. Now, the agency seeks to permanently stop the companies’ illegal practices and return money to consumers.
by Ashlee Kieler via Consumerist
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