How Timeshare 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 timeshare owners not knowing that resorts often let owners of timeshares 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 timeshare to the company,” Baker says. “Then the exit company simply calls the resort and says, ‘I’ve got this timeshare, 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 timeshare contract, and then just keep the money and not do anything. In some instances, Baker says, they even convince timeshare owners to stop paying their mortgages and maintenance fees and divert the payments to them instead, in exchange for scammers’ false promise that they’ll file a suit against the resort to end the timeshare, according to Baker.

Timeshare 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 timeshare 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 timeshare 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 timeshare 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 timeshare.

How authorities are fighting back

The FTC and attorney general offices in numerous states are starting to crack down on timeshare 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 stolen money from.

In November 2022, for example, the FTC and the Wisconsin attorney general filed suit against a group of companies accused of using scare tactics and high-pressure sales pitches to coerce consumers — mostly older adults — into paying more than $90 million for timeshare exit services that the companies didn’t deliver. The complaint alleges that the defendants used direct mail campaigns to lure timeshare owners to high-pressure sales presentations at local hotels and restaurants, where they were told that they had to act immediately to avoid being stuck with their timeshares forever and saddling their children and grandchildren with maintenance fees.

In another case in 2021, Washington state filed a lawsuit against a timeshare exit company that allegedly collected fees ranging from $3,000 to the tens of thousands of dollars to clients — many of whom were still waiting for an exit from their timeshare, years after signing contracts. While denying the accusations, the company agreed to pay a $2.61 million settlement to provide restitution.

How to avoid fraud if you’re trying to exit a timeshare

Look for red flags. You should be extremely wary of anyone who approaches you about exiting a timeshare or claims that they have a buyer for you — especially if they ask for an upfront fee, according to BBB. Another red flag is an invitation to an in-person group presentation or seminar on timeshare exits that offers a free meal. You’re likely to be subjected to high-pressure sales tactics, says Connor. There is no such thing as a free lunch, he notes.

Understand the alternatives. Instead of using a timeshare exit company, look into less expensive and less risky ways to get out of a timeshare agreement. One of them is to contact the resort developer yourself, instead of paying a company to do it for you, and see if the developer will take back the timeshare. Many developers now have programs for that purpose, explains Jason Gamel, president and CEO of the American Resort Development Association, a trade group for the timeshare industry. He recommends going to Responsibleexit.com, a website that provides information on exit programs offered by the major timeshare resort companies.

If you want to sell your timeshare, Gamel suggests looking for a real estate broker who works on commission. You can also advertise a timeshare for sale online by yourself, using a platform such as Craigslist or eBay, where you won't have to pay a fee to a broker.

More resources

If you think you’ve been the victim of a timeshare resale scam, report it to the FTC online or by calling 877-382-4357.

The Resort Owners’ Coalition, a program of industry group the American Resort Development Association, has an online resource center for timeshare resales with step-by-step advice for consumers. You can also call the coalition's consumer support line at 855-939-1515.