Technically, a “timeshare” is merely a legal structure of shared ownership (or lease rights).
As a concept, it can be legitimate; it’s used to sell access to luxuries to consumers who can’t otherwise afford them. For example, you can buy timeshares (aka “fractional ownership”) of a yacht or airplane. But where the concept really took off was in vacation real estate.
As the proliferation of negative cartoons about timeshares suggests, those timeshares have acquired an evil reputation.
They were extremely profitable for developers, and beginning in the 1970s, were heavily advertised and marketed with high-pressure sales tactics (see Wikipedia article here).
Millions of Americans bought them, a hasty move that NewsNation says (here) “many come to regret as fees quickly accumulate, and leaving the contract becomes an almost impossible task.”
This latter fact makes timeshare owners ripe marks for scammers.
The Jalisco New Generation Cartel (profiled here), a Mexican drug cartel known for extreme violence, “figured out how to defraud Americans with timeshares by crafting well-planned ways to persuade elderly Americans to send money to Mexican bank accounts.
The cartel hires call center workers who speak perfect English and teaches them to lure unsuspecting Americans into believing they are steps away from freeing themselves from their timeshares.”
For example, the NewsNation article describes a retired cop and his wife who bought a Lake Tahoe timeshare in 1996 for $8,900. “The couple barely used the property over the years, and fees continued to accumulate, but getting out of the contract was complicated and difficult.”
Then they received an unsolicited call from the cartel’s call center. The caller claimed a “wealthy Mexican” wanted to buy their timeshare, and would offer $22,470. It was too good to be true, but the couple “jumped at the prospect of unloading it.” It turned into escalating demands for money. They were taken for $900,000.
According to the FBI, about 1,400 Americans a year fall for the Mexican scam. Other thieves also operate in the space. Wikipedia says,
“Exiting a timeshare … often requires the assistance of a specialist. … While some timeshare exit specialists are legitimate, the business is plagued by scammers who cold-call owners and solicit payment in advance for nonexistent services. The original buyer of a timeshare generally takes a substantial loss when a timeshare is successfully resold.”
The best advice is never buy a timeshare. If this advice is too late, the standard precautions apply.
First, be realistic and accept that you’re not going to get your money back, and it’ll likely cost you money to escape the timeshare’s financial obligations.
Second, shop for a reputable exit specialist through normal channels. As with other telemarketing come-ons, never respond to unsolicited callers.
I don’t believe in moralizing. You can’t teach people who don’t want to be taught, especially by calling them stupid, or talking down to them in other ways. I don’t think Americans are stupid, but they’re victimized by a consumption culture. “Let the buyer beware” is good, but “don’t buy” is better.
One the best pieces of financial advice I ever heard goes like this: “The average American works at a job he hates, to earn money he doesn’t need, to buy things he doesn’t want, to impress people he doesn’t like.” People working themselves to death this way makes no sense. What is worth striving for is financial independence. Barring inherited wealth, that comes from saving and investing coupled with disciplined spending.
