Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC Brings Charges Against Timeshare Resale Operations, Announces Multinational Campaign Against Timeshare Scams, (Jun 7, 2013)

By Tobias J. Gillett, J.D., LL.M.

The FTC has brought enforcement actions against three timeshare resellers, alleging violations of the FTC Act and its Telemarketing Sales Rule (TSR), the agency has announced. The cases form part of a broader campaign against fraudulent timeshare resale and travel prize operations that has so far involved 191 actions by local, state, federal, and international law enforcement authorities, including 83 civil actions brought by 28 states and 25 actions brought by law enforcement agencies in 10 other countries.

According to the FTC, time share resale scams typically operate by convincing consumers to pay up-front fees while claiming to have interested buyers ready to purchase their timeshare properties. However, the buyers never materialize. Travel prize scams persuade consumers to pay for discounted or “free” vacation packages purportedly worth far more than the initial cost, but then do not provide anything of value, or require consumers to attend high-pressure timeshare sales presentations. The scams contact consumers through unsolicited e-mail, mailed travel vouchers, and radio, television, and online advertising.

“Con artists take advantage of timeshare owners who have been in tough financial straits and are desperate to sell their timeshares,” said Charles A. Harwood, Acting Director of the FTC’s Bureau of Consumer Protection. “They persuade owners to pay fat up-front fees by saying they have someone ready to buy the property, but that’s a lie. Our message to timeshare owners is simple: never pay for a promise, get everything in writing first, and pay only after your unit is sold. Our message to timeshare resale scammers is simple, too: law enforcement agencies at every level of government are working together to put an end to this problem.”

Resolution Trust, Inc. The FTC’s complaint against Resolution Trust, Inc. and two of its principals, filed in the federal district court in Tampa, alleges that the operation would advertise timeshare resale services through unsolicited telemarketing calls to consumers who own timeshare properties. The operation would claim to have a buyer ready to purchase the consumer’s property. Once a consumer expressed interest in selling a property, the operation would inform the consumer that he or she had to pay an upfront fee, and that the sale would close within a period ranging from a few days to 90 days. After payment was received, the operation would send a contract to the consumer that would only provide that the operation would advertise the timeshare. When consumers would complain, the operation would claim that the contract was a mere formality. However, the operation would never sell a consumer’s property, and would refuse to make refunds.

The complaint charges the operation with violations of the FTC Act and the TSR, including misrepresentations and violations of the Do Not Call Registry. On May 20, 2013, the court entered a temporary restraining order prohibiting the operation from making future misrepresentations or violating the FTC Act or TSR, freezing the defendants’ assets, prohibiting disclosure of consumer information, appointing a temporary receiver, and ordering the defendants to show cause why a preliminary injunction should not issue, among other things.

Resort Property Depot, Inc. According to the FTC’s complaint against Resort Property Depot, Inc. and its principal, filed in the federal district court in Tampa, the timeshare resale operation would place unsolicited telemarketing calls to consumers who own timeshare properties. The operation would claim to be able to sell the consumers’ properties quickly, or even that it already had a buyer for their properties. After a consumer expressed interest in selling a property, the operation would inform the consumer that he or she had to pay an upfront fee, and that the property would be sold in 30 days to six months. Following receipt of the fee, the operation would send an unclear and ambiguous contract, and would not sell the property even after the consumer signed and returned the contracts. The operation would refuse to refund any of the consumer’s money.

The complaint charges the operation with violations of the FTC Act and the TSR. On May 21, 2013, the court entered a temporary restraining order prohibiting the operation from making future misrepresentations or violating the FTC Act or TSR, freezing the defendants’ assets, prohibiting disclosure of consumer information, appointing a temporary receiver, and ordering the defendants to show cause why a preliminary injunction should not issue, among other things.

Vacation Communications Group LLC. The FTC brought its action against Vacation Communications Group LLC, Gardner Cline L.L.C., and three associated individuals in collaboration with the Florida Office of the Attorney General. According to the agencies’ joint complaint, filed in the federal district court in Orlando, the timeshare resale operation used various addresses, including ones in Oregon and New York, that were merely mailboxes, while the operation was actually located in Florida and the Dominican Republic.

The operation would allegedly place unsolicited telemarketing calls to consumers who own timeshare properties claiming to have buyers ready to purchase their properties. When a consumer would express interest in selling a timeshare, the operation would inform the consumer that the consumer had to pay an up-front fee for the sale to proceed. After the consumer paid the fee, the operation would send the consumer a contract, telling the consumer to sign and return it immediately. However, the contract would only provide that the operation would advertise the property. When consumers would raise objections, the operation would attempt to stall them, and would dispute chargebacks and refuse to make refunds .

The complaint charges the operation with violations of the FTC Act, the TSR (including misrepresentations and violations of the Do Not Call Registry), the Florida Deceptive and Unfair Trade Practices Act, and the Florida Timeshare Resale Accountability Act. On May 20, 2013, the court entered a temporary restraining order prohibiting the operation from making future misrepresentations, prohibiting disclosure of consumer information, freezing the operation’s assets, appointing a temporary receiver, and ordering the defendants to show cause why the court should not enter a preliminary injunction, among other things.

According to the FTC, the three operations took more than $18 million from consumers seeking to sell their timeshare properties.

Companies: Vacation Communications Group, LLC; Gardner Cline L.L.C.; Resort Property Depot, Inc.; Resort Solution Trust, Inc.

News: ConsumerProtection FederalTradeCommissionNews