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How to Avoid Travel Scams

SmarterTravel

Many travelers have been victims (or intended victims) of street scams, whether it be three-card monte on top of a cardboard box, or more sophisticated cons involving credit cards, ATM’s and more. But as with other kinds of crime, many scams have moved from the busy sidewalk or the resort bar to the Internet, where every manner of scam ever perpetrated has been given new digital life. Some scams have swarmed inboxes. By now, most folks have seen the e-mail from a friend who is stranded overseas after being robbed, and needs you to wire him a few thousand dollars.

Travel writer Chris Elliott mentions a couple of street scams in Don’t get scammed! 4 cons that target travelers — and how to spot them, including the “mustard scam,” in which one member of a scammer team spills something on you, and another member of the team plays the good Samaritan role to help you clean up, while cleaning you out. Or the “gold ring” scam, in which someone who “found” a gold ring offers to sell it to you at a very low price — although not as low as the actual value of the ring, which is usually worthless.

It sounds unbelievable, but salespeople can be slick — and innocent travelers get duped more often than you’d think. Elliott mentions a timeshare scam in which a friendly barfly invites a traveler to a sales presentation. The traveler, who was just taking a vacation that had nothing to do with time shares, ended up writing a check for $34K for a bogus timeshare. He went home and found out he bought, well, nothing, essentially.

Travel scams have migrated to the Internet as well, where the “vacation club” and timeshare scams are a particularly virulent and widespread strain. Some perpetrators spring up and disappear in almost no time, while others seem intent on making a living and career out of dishonest (or in any case exaggerated) discount offers.

Not every timeshare is a scam, so it’s important to know how to tell a scam from a legit offer. And some of the offers aren’t scams per se — a sales pitch that is exaggerated or skips the fine print clearly isn’t quite the same as outright stealing. One thing is for sure: The bogus offers can look pretty darn attractive — a few hundred dollars per week for some of the best properties at superb destinations, for years on end, locked in — thus their irresistible appeal for some. But with each passing day, the price can climb, and as the years roll on, your costs can balloon inexorably.

A reader sent us the following price analysis a few years ago; I have removed the specific company from this article so to have a more generic feel, and to illustrate just how carefully you will want to look at all the moving parts when checking out timeshare and club offers.

“There are various packages but initially they offer you 30 vacations (basically one per year for 30 years) for $15,000, $12,000 if you purchase that day only. Financing is available at approximately a 16.7% interest rate. Although financing is for 84 months (7 years) the contract is a 30-year commitment. The spiel is that 30 weekly vacations, at $12,000, is equal to $400 per vacation, but let’s do the math:

“Initial down payment of $2,400 = $2,400
$195 per month for 84 months (financing the $9,600 balance) = $16,380
$339 annual membership fee x 30 years = $10,170
$99 per week reservation fee x 30 weeks = $2,970
$30 per night peak travel time upgrade
$30 per night x 7 nights = $210 per week (39 of the 52 yearly weeks are peak travel time)
$210 per week peak travel time x 30 weeks = $6,300

“That’s a total of $38,220 for 30 vacations or $1,274 per week and they are one-bedroom accommodations because two bedrooms require another $210 per week upgrade. That would then equal $1,484 per week and that does not include meals, air fare, transfers to and from the airport, local taxes, on-site amenities, maid service, gratuities, etc.

“All of the above ancillary fees are detailed in the contract. The minimum $1,274 per week is more than three times the $400 per week that they suggest. In addition, with the exception of the initial purchase price, all the ancillary fees (yearly maintenance fees, weekly reservation fees, peak travel time upgrades, local taxes, etc.) are subject to increase as detailed in the contract. Also in the contract are very specific and burdensome requirements for booking vacations.”

For someone contemplating such an offer, that is some incriminating math, no question. To help you slice through the fine print, or, better yet, keep you from even wasting your time reading it, I got in touch with Lisa Ann Schreier, Director at TimeshareInsights.com, who, I’ve learned, is considered a “true expert in the field.” Schreier’s thoughts and general guidelines on assessing and even taking the plunge on these kinds of offers follow.

1. What are the most common timeshare and vacation club scams you have come across? How can folks distinguish these from reputable offers and companies? Are there any must-avoid companies?

Schreier: The scam and borderline scam companies are not only growing in number, but seem as if they are constantly changing names, so it can be difficult for even savvy consumers to keep up to date. While I don’t use the word “scam” as a general rule, unless or until the company in question is actually engaged in illegal activity, I can say with certainty that consumers would be wise to stay far away from any company or organization that contacts them out of the blue with a supposed “offer” to buy their timeshare, or something similar. There are reputable companies out there who can assist consumers with selling their timeshares, but these reputable companies don’t engage in cold calling or mass mailings.

2. What can you tell folks about “vacation clubs” that offer repeat vacations for an upfront fee, or often on a financed basis? I have seen analyses that show these aren’t such bargains after all in the long run. Is this true?

Schreier: Vacation clubs are a gray area, simply because of the sheer number of them that seem to spring up overnight. Some clubs may in fact offer consumers good deals on vacations. It truly requires consumers to do some upfront homework in terms of vacations and finances, just as they should do when looking at a timeshare purchase. The bigger question about these vacation clubs is “where is all the resort inventory coming from?” Most of the inventory is at timeshare resorts. So what happens to the “inventory” when the resort is being used by timeshare owners, either as the home resort or as an exchange? Many times, consumers can get a better deal on a timeshare, albeit on the legitimate secondary market, than vacation clubs.

3. What about offers with a number of “if available” variables built in (e.g., pick three dates at three different locations) — do folks often face no availability on their chosen dates at preferred properties?

Schreier: Absolutely, especially if the preferred dates are “peak” times such as holidays or seasonal activities (i.e. Race Week in Daytona). Consumers must also remember that holidays and peak times vary from region to region and country to country. If a consumer wants to “lock in” a specific timeframe year after year, they really should be looking at a fixed-week timeshare, rather than a vacation club or even a floating week or point-based timeshare. Vacation clubs and floating/point timeshares really serve people who are a bit more flexible in terms of where and when they vacation. Again, it’s imperative that consumers do their homework and understand the variables, and also are flexible when the variables affect your choice and timing.

4. What are your guidelines for evaluating a good timeshare? How about vacation clubs?

Schreier: Neither timeshares nor vacation clubs should be entered into on a whim. Forgetting the finances for a moment, there are a lot of questions that consumers need to get answers to. I cover many of these questions in my second book, “Timeshare Vacations For Dummies,” and there will be a checklist of questions in my new book, “Timeshare By The Numbers — A Guide For Consumers,” which will be out later this year. Here are some guidelines and tips:

  1. Don’t believe everything you hear, good or bad.
  2. If it is not in writing, it doesn’t exist.
  3. If it sounds too good to be true (e.g., you can buy here in Mississippi for only $3,000 and trade to Hawaii every year for only $169), it is too good to be true.
  4. For a timeshare, ask about the HOA (Home Owners Association), and don’t buy into a resort where owners have NO say in what goes on.
  5. For a vacation club, ask about the length of the contract, how many vacations you can take, what the cap is on the amount and how often the club can raise the prices of the vacations.
  6. Four words to avoid at all costs: FREE, PERFECT, ALWAYS and NEVER. Free and perfect don’t exist, and always and never are exceedingly long periods of time.

(Ed’s note: Of the cost analysis near the top of this column, Schreier said, “The numbers seem right. VERY costly, not much of a savings at all over a timeshare and much more than the cost of a good quality timeshare on the secondary market, even if you factor in the annual maintenance fees. And again, as I mentioned previously, where is the inventory coming from? If it is, as most people suspect, unused timeshare inventory, what happens when that inventory is used by the rightful owner, i.e. the timeshare owner?”)

All of the above notwithstanding, I personally know a number of people who are very happy with their timeshares. However, whether you are accompanying someone to an ATM, throwing $20 down on a cardboard box or about to sign a check, you’ll want to have your eyes wide open, gullibility in check and emptor in caveat mode, with full recognition that a “deal of a lifetime” could result in a lifetime of dealing out payments — or, at least, a wallet a few bucks lighter.

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