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How Can You Tell If a ‘Travel Club’ Is a Scam?

SmarterTravel

The idea of a “travel club” covers a wide range of organizations and activities, from scam-like timeshares to legitimate memberships that can save you money. All are certainly not equal.

Many are legitimate low-risk operations, such as AARP, AAA, and other independent travel promoters. The most reliable ones are those you’ll recognize the names of. Some resort chains call themselves “clubs,” like Club Med’s all-inclusive resorts. Membership to these is mostly harmless marketing hype, but can offer real discounts: The more exclusive organizations may be exempt from agreements that prohibit third-party agencies from slashing their rates.

Membership fees, if any, are usually nominal—often under $50 a year—and you can easily opt out if the club doesn’t deliver real value. All you have to lose is the minimal initial fee. The discounts they claim may be no better than you could get through other sources, but they’re usually not worse, either. For well-known travel brands like these ones, the scam risk is minimal.

How to Spot a Travel Club That’s a Scam

Others, however, pose a big financial risk. Some require stiff membership fees up front—usually several hundred up to thousands of dollars—and they may commit you to big annual fees indefinitely. They can certainly be honest in that they deliver what they promise; many travelers are happy with their memberships despite the risks and limitations. Others, however, ask you to pay big up front for some promised future benefit. These may or may not be honest; some are clearly outright scams, and others simply inflate the benefits and disguise the drawbacks.

According to law enforcement officials, oftentimes the promised “discount” and “savings” never materialize: The promoters provide prices that are no better than travelers can buy openly, through a wide range of discount sources, and the promised “dream” vacations never seem to become available. They’re selling pie in the sky, and Marie Callender is better at making pies.

The big-dollar travel clubs are the ones should be subject to your scam scrutiny. Although no approach is foolproof, you can usually find out what you need by asking and fact-checking a few specific questions. Here’s what you need to consider:

The Timeshare-Based Travel Club 

Many large travel “clubs” are nothing more than conventional timeshare operations, operating as clubs to avoid the unsavory reputation of timeshares. What they sell is guaranteed annual occupancy, in multiples of weeks, at a vacation area—typically a beach destination, maybe with rights to vacations in a string of different areas. And the questions you need to ask about them are the same as for a timeshare:

What Do I Actually Get?

Examine the offer in detail to find out exactly what it promises, in specific terms. Does it promise a guaranteed specific interval at a specific location? Does it promise enrollment in a recognized exchange system? Check the fine print on the exchange, especially for limitations on how you can use your exchange “points.”

Is There a Switch to the Bait?

Is the asking price the full price? Does the featured buy-in include everything you have to pay up front, or are you subject to additional fees and charges? Does the promotion say or hint that you’d be better off with a higher-level membership? 

What Is My Ongoing Obligation?

In most property-based clubs, your buy-in is only the start. You’re also on the hook for various monthly/yearly “maintenance” payments and assessments. And the operator typically reserves the right to increase these payments without your approval or right of refusal.

Is There Any Asset Value?

Some very high-end vacation clubs actually own a string of vacation properties; members share in the ownership of these properties, and the club operator agrees to repurchase for a reasonable price. But most mass-market vacation clubs offer no asset value to back up your initial “investment.” At best, you own your “membership” and can sell it or pass it along to your heirs. However, some deals are for the term of your life only and revert to the owner on your death.

Is There an Escape Clause or Resell Limitation?

Club promoters may not accept a return, even for a reduced price, and some timeshare-based clubs may limit your ability to resell. The travel literature is full of horror stories of people who just want to get rid of ongoing payments, even if it means giving the interest back to the promoter with no return.

The “Big-Discount” Travel Club

Other clubs promise they have access to large discounts on airfares, hotels, cruises, rental cars, tours, and just about any other travel service you can name. The ones that charge minimal fees are no more than a nuisance; if they don’t work out, you won’t have to refinance your house. But some ask for big membership fees, and those can be a big risk. As with timeshare clones, you have to ask some questions before you buy into one of them:

What’s My Exposure to Risk?

As with a timeshare, you have to check what you actually get, your future ongoing obligations, and, perhaps most importantly, your cancellation options. Check the fine print to make sure that the discounts are guaranteed. “Subject to availability” doesn’t cut it. 

Are the Claimed Discounts Real?

Challenge—and verify—all claimed “discount” deals. Don’t be gullible: Ask to see a list of currently-available deals, and check them through conventional search systems before you accept any broad claim that it will save you money.

Are the Posted Discount Prices Honest?

One hotel-discount membership organization I recently checked out posted some really attractive original prices. But when I went through to the final buy-it page, I found the initial prices did not include mandatory resort fees, taxes, and fees imposed by the travel club. The all-up total prices were about the same as I could get through Tripadvisor (SmarterTravel’s parent company) search links.

What Do Others Say?

The club’s promotional materials probably highlight gushing testimonials. Don’t take them at face value—promoters can easily satisfy enough travelers to elicit a few genuine rave reviews, which the company will then highlight. Instead, check with review and complaint sites like the Better Business Bureau, Yelp, Google reviews (which usually now appear simply by Googling a business), and any other online review source you like. Also, Google the club to see if it has generated any serious complaints—or, even worse, law enforcement actions.

Scam Rules to Know for Any Kind of Travel Club

Make sure any club you’re considering can pass an easy scam test. Often, you can answer the scam-or-not question before you even see the details of a club promotion. Initial claims often can offer some early scam clues:

Scam Clue 1: The promotion is claiming that you’re getting something “free.” No travel service of real value is ever free. The club promoter is making a profit somewhere along the process. Nothing is free. Repeat this to yourself as often as is necessary.

Scam Clue 2: A promotion claiming you’ve “won” something. If you didn’t knowingly sign up for a sweepstakes run by some outfit that had terms and conditions you agreed to, any out-of-the-blue “winner” notification is almost surely a scam.

Scam Clue 3: A promotion claiming you’ve been “specially selected” for membership. A lot of robocalls are currently making this pitch. The only outcome you’ve been selected for is a fleecing.

Scam Clue 4: A promotion demanding that you “act now” or lose the deal. If a deal is actually honest, it will still be there after you take a day or so to check it.

Scam Clue 5: A promotion that poses as an investment. Some property-based clubs claim, or at least imply, that your membership is an investment. That’s just false for anything that’s not outright property ownership. Fractional ownership such as timeshare may be a good way to vacation to the same place every year—but it’s a lousy overall investment.

I can’t guarantee that following these guidelines can totally shield you from a scam (no one can). But they’re a good start to protecting yourself.

Editor’s note: This story was originally published in 2015. It had been updated to reflect the most current information. Prior reporting by Calvin Hennick contributed to this story.

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Consumer advocate Ed Perkins has been writing about travel for more than three decades. The founding editor of the Consumer Reports Travel Letter, he continues to inform travelers and fight consumer abuse every day at SmarterTravel.

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