Source: Federal Bureau of Investigation FBI Crime News (b)
How Timeshare Fraud Scams Work
To conduct their scams, fraudsters do extensive research on their potential victims. Criminals create fake documents and impersonate individuals from trustworthy institutions to sell their storylines and scare victims into compliance.
“Throughout the process, the fraudsters use a combination of high-pressure sales tactics and cyber-enabled fraud strategies, such as mimicking legitimate entities’ email addresses and forging official documents, to convince victims that each phase of the scam is legitimate,” Roberts explained.
And, Roberts added, this isn’t a one-and-done type of scam. Fraudsters commonly use a mix of schemes to re-victimize timeshare owners over a multi-year period.
These types of scams typically play out in three phases, Roberts explained.
In phase one, he said, fraudsters contact a victim for the first time, by phone or email.
“In these initial communications with victims, the scammers often pretend to be U.S.- or Mexican-based third-party timeshare brokers or sales representatives in the timeshare, real estate, travel, or financial services industry,” Roberts said.
The scammers then urge the victim to take one of three actions:
- Exit their timeshare
- Rent out their timeshare property
- Invest in share certificates for their timeshare
The fraudsters then press victims to pay upfront fees or taxes to secure these deals, Roberts explained.
And, Roberts warned, the scammers do their homework. Before setting out to swindle victims, they tap sources within the timeshare industry to get information about timeshare properties and their owners. They also go to great lengths to sell targets on the authenticity of their schemes by drafting fraudulent contracts, offer letters, and bank account documentation.
“The scammers also leverage a robust network of fake company websites, business names and addresses, and registrations with government officials and trade groups to bolster their credibility,” Roberts said.
And, he added, the fraudsters are seemingly fluent English speakers who’ve memorized answers to frequently asked questions about their fake businesses to further sell the lie that their sales pitches are legitimate.
The scammers then repeatedly demand advanced fees until the victim either runs out of money or becomes savvy to their scheme.
In phase two of the scam, fraudsters reapproach victims after some time has passed. This time around, the scammers pose as law firm employees who want to help victims recoup the money they handed over to scammers in phase one.
“The scammers often claim the initial scammers have been either charged with fraud or held civilly liable in a U.S.- or Mexico-based lawsuit, and that the victims are owed restitution in the settlement,” Roberts explained. “However, in order to access that restitution money, the victims are told they must pay legal or court fees to the law firms. The scammers then defraud the victims of a series of advance fees related to the settlement, again using fake documents to bolster their credibility.”
Phase three of the scam involves government impersonation. Scammers pretend to be officials from OFAC, from the Mexican government’s Financial Intelligence Unit, or from other international entities, such as INTERPOL.
They then take one of two routes:
- Government impersonators claim that they’re contacting victims because they have access to criminal settlements and want to help them recoup their lost money; or
- Impersonators try to scare victims into giving up even more cash. They do this by telling victims that their initial payments to timeshare fraudsters were deemed suspicious.
The scammers then tell victims that the authorities determined their payments to timeshare fraudsters were “linked to money laundering or terrorist operations.” They then threaten to either subpoena victims or send them to prison if they don’t pay additional money to ensure their payments are released and their names are cleared.