Timeshare marketing scams on the rise

Written by Producer Laura Strickler and CBS Investigates Intern Ryan Ermey

An increasing number of timeshare owners across the country are being scammed out of millions of dollars according to law enforcement officials. The Florida Attorney General's Office says timeshare fraud tops their list of complaints with over 12,000 last year alone, outnumbering the second most frequent complaint by more than three-to-one.

"I don't think there's an honest person involved in this," says Darrell Bifano, one of approximately 8 million Americans who owns a timeshare.

After he was laid off from his job at a propellant plant in central Washington state, Bifano joined the growing ranks of the American unemployed who are in need of money. So when representatives from timeshare companies called Bifano in the spring of 2010 offering to advertise his timeshare in Oahu, Hawaii for rental, he jumped at the chance. He would soon come to regret it.

"I'll never do anything like this again," says Bifano. Bifano believes he is a victim of timeshare resale fraud, a scam in which telemarketers call people throughout the country offering to sell or rent their timeshares in exchange for a fee. When the victim gives the telemarketer his or her credit card information, the telemarketer charges a fee to the card which can range from a few hundred to a few thousand dollars. In Bifano's case, he says he was approached by four of these "timeshare marketing" companies in quick succession, to which he paid a total of $4,000. As is often the case with these companies, according to law enforcement, his timeshare went unrented, and he hasn't seen or heard from the telemarketers again.

What's more, when "clients" call the telemarketing firms back, the firms are uncommunicative and evasive according to complaints submitted to the Attorney General's office.

When Bifano called Vacation Property Resellers, one of the timeshare marketing companies he dealt with, he says he was told his agent was unavailable because of sleep apnea. The next time he called, he says he was told his agent's mother had been in a car accident. He says the next time he called, he was told her mother had cancer.

The Florida Attorney General's office says they are investigating Vacation Property Resellers and have received 139 complaints about the company in 2011 alone.

Attempts by CBS News to reach the companies who called Bifano were met with disconnected numbers, full voice mail boxes, websites that no longer work and unreturned emails. Bifano's case is only one of thousands that was reported to the Attorney General's office in Florida and officials there say the majority of complaints come from consumers outside of Florida. The Attorney General's Office received 707 complaints in July 2011.

Florida Attorney General Pam Bondi cites America's financial situation as the reason for the high number of complaints. "Look at our economy now," Bondi says. "A timeshare is a luxury, and so many people now can't afford [them], so when they get contacted by these scammers, they're vulnerable."

According to Bondi's office, the telemarketers typically set up shop in boiler rooms, warehouse spaces filled with hundreds of phone lines and desks where employees spend all day cold calling potential victims. Yet how does Darrell Bifano, a 56-year-old man in Moses Lake, Washington end up on a telemarketer's list in Florida?

Bondi explains that there are two ways scammers could have gotten Bifano's name. One is through the purchase of lead lists, available as public record in Florida, which detail real estate information about Florida timeshares. The other she says, "They hire employees that have worked for other telemarketing firms who take the customers lists when they leave the other telemarketing firm. They're basically stealing these customer lists."

Bifano's Hawaii timeshare is with Wyndham, one of the largest timeshare company in the world. Wyndham spokesperson Steve Garrish told CBS News that their company does not sell customer information to third parties.

Bondi says her office is currently conducting 45 active investigations into timeshare resale fraud, many of which, says Bondi, involve hundreds of complaints like Bifano's.

Bondi's primary advice for avoiding timeshare fraud: if it sounds too good to be true, it probably is.

"[People] should be very skeptical of any company claiming that a timeshare resale market in the area where they have their timeshare is "a hot market" now. Because that's just not true." Another common tactic for these companies is to tell clients that there are buyers "waiting in the wings."

"Highly unlikely," says Bondi, "especially in this economic climate."

As for Darrell Bifano, he wants justice, but says he understands it comes at a cost.

"These guys are crooks," he said, "but I don't have the money to prosecute them." Bifano says he has not recovered any of the $4,000 he lost.

As for selling his timeshare, Bifano says he has a new plan, "I'll sell it on E-bay, I'm done with it."

For tips and more information about timeshare resale fraud contact the Federal Trade Commission, the Better Business Bureau, or visit MyFloridaLegal.com.