CRIMINAL CAPITALI$M

Justice Department files charges in alleged $90 million timeshare fraud scheme

Story by Sylvan Lane • Yesterday 

The Justice Department on Tuesday sued five individuals and 11 firms allegedly behind a timeshare fraud scheme that scored more than $90 million from victims.


Justice Department files charges in alleged $90 million timeshare fraud scheme© Provided by The Hill

The suit, filed on behalf of the Federal Trade Commission (FTC) and Wisconsin attorney general, accuses the defendants of pressuring customers into buying timeshare exit services without delivering on their promises.

The defendants allegedly promised to help customers cancel their timeshare contracts, claimed fake affiliations with major timeshare companies and warned that potential clients could end up in deep debt without their services. The firms, however, typically failed to cancel the contracts and rarely, if ever, issued promised refunds to customers.

“The defendants used scare tactics and high-pressure sales pitches to coerce seniors into forking over thousands of dollars for timeshare exit services they didn’t deliver,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a Tuesday statement.

The suit accuses the 16 defendants of violating the FTC Act’s ban on “unfair or deceptive acts or practices” and Wisconsin state regulations on direct marketing and fraudulent representation in business. The suit, however, was filed in the U.S. District Court for the Eastern District of Missouri, where the alleged scam ring was based.

The defendants allegedly targeted potential customers with timeshare contracts, usually seniors, through mail advertisements for sales seminars. During the seminars, the defendants allegedly claimed that they were one of few “authorized” timeshare cancellation companies and the only way to avoid being stuck with a timeshare forever, according to the complaint.

The defendants then asked the potential customers for steep one-time payments in order to break their timeshare contracts while promising to refund their money if they failed to free them from the timeshare, according to the complaint. But the defendants “typically [did] not succeed” in canceling the timeshares and “seldom [made] good on their promise to refund consumers’ fees,” the complaint read.