Markets Wired

At the Federal Trade Commission’s request, a federal district court has issued a temporary restraining order against a Florida-based telemarketing scheme that allegedly tricked timeshare owners who sought to sell their timeshare properties.

According to the FTC’s complaint, since at least 2006, Vacation Property Services, Inc., two related companies, and their three principals have made tens of thousands of unsolicited telemarketing calls to timeshare owners claiming that they could quickly find buyers for the owners’ timeshares. The defendants allegedly trick consumers into paying large up-front fees, typically using one of two deceptive sales pitches – that they have buyers lined up and waiting to buy the timeshare properties or that they will find a buyer for the timeshare properties within a short period of time. Regardless of the pitch used, the defendants demand that consumers pay an up-front fee, ranging from $200 to more than $8,000.

The FTC alleged that after making the hefty up-front payment, consumers ultimately learned the defendants had no buyers lined up to purchase their timeshare properties and no such buyers were in the offing. And, when consumers realized they had been duped, the defendants routinely dodged consumers’ phone calls and denied their refund requests.

The FTC’s complaint charges the defendants with violating the FTC Act and the Telemarketing Sales Rule by misrepresenting their refund policies and the existence of potential buyers. The complaint also charges the defendants with calling hundreds of thousands of consumers between November 2009 and November 2010 whose phone numbers are on the FTC’s Do Not Call Registry.

The FTC is seeking to permanently stop the defendants’ allegedly illegal conduct and to provide money back to consumers who were harmed by their violations of the FTC Act and Telemarketing Sales Rule.

The Commission vote authorizing the staff to file the complaint was 5-0. It was filed on March 22, 2011, under seal, in the U.S. District Court for the Middle District of Florida, Tampa Division. In addition to Vacation Property Services, Inc., the complaint names Vacation Property Sellers, Inc., doing business as (d/b/a) Timeshare Experts; Higher Level Marketing, Inc., d/b/a Vacation Property Services; Albert M. Wilson; David S. Taylor; and Frank M. Perry, Jr.

The FTC would like to thank the following organizations for their help in bringing this case: The U.S. Postal Inspection Service, Tampa, Florida, Division; The Office of the Attorney General, Florida; the Florida Department of Agriculture and Consumer Services, the Better Business Bureau of West Florida; and the St. Petersburg, Florida, Police Department.

Consumer Education

This case is part of an ongoing FTC effort to crack down on con artists who use fraud and deception to take advantage of consumers hit by the recent economic downturn. Timeshare resale scams promise enticing rewards for consumers, according to the agency. First, they deceptively offer the return of the consumer’s principal investment in the timeshare property, often with a substantial profit. They also seemingly offer a way out of timeshare loan payments and mandatory maintenance fees, which can range from several hundreds to several thousands of dollars a year. In a time of high unemployment and reduced access to credit, these twin promises can be alluring to consumers caught in difficult economic straits.

The FTC has a new publication on how to avoid pitfalls when selling a timeshare unit, Selling a Timeshare Through a Reseller: Contract Caveats. The FTC also recently filed a similar complaint against another group of defendants known as Timeshare Mega Marketing.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics. “Like” the FTC on Facebook and “follow” us on Twitter.

(FTC File No. 102-3228; Civ. No. 8:11-cv595-t-27 MAP)
(Vacation PS.final)