How time-share exit scams work — and how to avoid them

Steve Baker, a former Federal Trade Commission (FTC) official who publishes the _Baker Fraud Report_, says that scammers take advantage of time-share owners not knowing that resorts often

let owners of time-shares give them back if they’ve been paid off, allowing them to avoid future maintenance fees. “What some of these exit companies do is get you to pay them several

thousand dollars and transfer the time-share to the company,” Baker says. “Then the exit company simply calls the resort and says, ‘I’ve got this time-share, can you let me out?’ ” The

resort company agrees, and “you just paid somebody a lot of money for something you could have done yourself.” Alternatively, the scammers will collect a fee for getting someone out of a

time-share contract, and then just keep the money and not do anything. In some instances, Baker says, they even convince time-share owners to stop paying their mortgages and maintenance fees

and divert the payments to them instead in exchange for the scammers’ false promise to file a suit against the resort to end the time-share. Time-share owners who follow such advice run the

risk of having the resort foreclose on their mortgage, as well as having their credit damaged and facing possible tax consequences, according to Baker. In other instances, scammers pose as

brokers. The time-share owner “is approached out of the blue — usually because of a public records or deed search — with the promise that the company has a buyer willing to pay $30,000 for a

time-share that cost only $25,000,” Connor says. The scammer then explains that in order for the deal to move forward, all the owner has to do is wire a deposit for tax stamps or some other

fee to secure the closing. But that’s usually just the start. The company keeps fabricating more phony fees, as long as the time-share owner keeps paying them, according to Connor.

Eventually, the owner will have paid much more than he or she was going to make from the sale. And in the end, the target of the scam is still stuck with the time-share.  _The New York

Times_ investigated drug cartels’ involvement in this type of time-share scam. Scammers posed as sales representatives offering to buy owners’ time-shares in Mexico, Jamaica and California.

But first, sellers are asked to pay up-front fees. One older couple, who thought they were selling their California time-share to a Mexican businessman, had $900,000 stolen. They were told

they had to pay government fees and fines and were threatened with extradition if they failed to wire the money to Mexican banks. HOW AUTHORITIES ARE FIGHTING BACK The FTC and attorneys

general in numerous states are starting to crack down on time-share exit scams, filing civil lawsuits against companies and the individuals connected with them in an effort to force them to

stop abusive practices and pay restitution to people they’ve scammed. The U.S. Department of the Treasury’s Office of Foreign Assets Control is working with the Mexican government to stop

scams by sanctioning individuals and companies connected to time-share scams.