During the last month alone, 3 high-profile timeshare scams have been raided by police in Orlando, Florida. In at least twenty news pieces on these developments, the public has been treated to images of SWAT teams busting down doors, police confiscating computers and printers, and the ubiquitous 'deal board' being dragged from a shady office by regulators. Taken at face value, these images may be reassuring; certainly, scandalous Florida-based timeshare resale companies give the industry a bad name. But, it takes a timeshare industry insider to recognize these stories are not good news - not at all. Behind the headlines are regulatory follies that threaten the very existence of a secondary timeshare market.
Exactly one year ago, this blog warned of a timeshare scam designed to convince owners that their properties were 'already sold.' Of course, to complete the deal required payment of an enormous up-front fee. Despite our best efforts (and those of numerous other legitimate timeshare companies) to warn timeshare owners, some continue to fall for this obvious fraud. The effects of the 'It's Already Sold' scam have been devastating to real timeshare resale companies: forcing them to become apologists for their now-tarnished industry.
Making matters worse for the industry, reporting on timeshare scams rarely draws a distinction between real timeshare resale companies and criminal fronts. A notable exception is Illinois Attorney General Lisa Madigan, who warns of "scammers posing as timeshare resellers," describing them as "fake." All too often, descriptions of timeshare-related crimes are so vague and subjective they border on misleading: The Orlando Sentinel quoted police Sgt. Amy Ameye, stating victims "were told If you send money... we will get the paperwork going, we will get your timeshare sold for you" - a statement that could conceivably apply to any timeshare resale company, legitimate or otherwise.
In a press release from July 2010, the Florida Attorney General describes "actively pursuing timeshare resellers as part of a statewide initiative" - a blanket statement that presumably includes all timeshare resale companies. Given Florida's prejudices, should it really surprise anyone that timeshare scams there have exploded? The State's witch-hunt regulatory environment leaves no room for legitimate timeshare resale companies.
The Florida Department of Agriculture and Consumer Services
The 'It's Already Sold' timeshare scam is clearly a crime that should be prosecuted. Possible Federal and State charges include Grand Theft, Organized Fraud, Intentional False Advertising, Mail Fraud, Wire Fraud, and that's just for starters. So what crimes were the Orlando timeshare scammers charged with? Unlicensed Telemarketing, a third degree felony in Florida.
In Florida, timeshare resellers fall under the authority of the Florida Department of Agriculture and Consumer Services (DOACS), where they are regulated as telemarketing companies. According to DOACS investigator Sasha Velez the problem of timeshare resale scams in Orlando is "huge... We have over 40 to 50 cases unlicensed right now that we are looking into." Of course, no one asked Ms. Velez the obvious questions:
What if these Orlando timeshare scams had telemarketing licenses? Would you have allowed them to continue defrauding consumers across the country? What if they scammed people in person, or via email?
This is the down-side of excessive regulation; the need for regulators. Folks that may be well-meaning, but just don't get it. Solutions put forth by the DOACS, and others in Florida, have sought to criminalize the entire timeshare resale industry. The problem in Florida is not timeshare resale companies, it is criminals. If your State has criminals committing wide-scale fraud, the solution is not issuing telemarketing licenses, it is criminal prosecution.