Timeshare resale scams in Minnesota have ripped off consumers for quite some time, but never like this.
In the past six months, the Better Business Bureau of Minnesota and North Dakota has seen 31 complaints about supposedly local businesses that have persuaded timeshare owners to hand over thousands of dollars for fees related to selling their properties. The owners invariably find themselves stuck with the timeshare and the money gone who knows where.
“We don’t really know why our area has been ground zero of late when it comes to these schemes,” said BBB spokesman Dan Hendrickson. “But I can tell you I’ve never seen a ‘blip’ like this (and I’ve been here 11 years) — at least not locally.”
Last week, the Minnesota Department of Commerce issued cease-and-desist orders to 11 companies that either solicited business from Minnesota consumers or falsely claimed they were located in the state.
While Commerce Commissioner Mike Rothman said the department “took quick and decisive action” in issuing the orders, these slippery operators may be well out of the reach of state authorities.
In April, Whistleblower reported how one of the companies, Platinum Resort Services, charged a Michigan man a $927 upfront fee but failed to provide any services.
As of Friday, the company’s website still shows a fake Minneapolis address, its e-mail address still accepts mail and an employee, Sherry, who was reached by phone but refused to give her last name, said “there will be no comment” on the state’s order.
The first problem regulators face is tracking down the individuals behind the scams.
Seven of the 12 timeshare businesses told to cease and desist since November claimed addresses in Minneapolis or St. Paul, two of them within six blocks of the Commerce Department.
State inspectors found by doing old-fashioned legwork — talking with security guards, postal workers and tenants — that the companies had phony addresses.
In the end, the state was unable to make contact with any of the companies.
With the exception of Platinum Resort Services, Whistleblower also had no luck, though she did talk to a shoe-store owner who had acquired one of the company’s toll-free numbers. He said he keeps getting calls from people demanding their escrow money back.
The address for Integrated Escrow Services, which bilked the Michigan owner of a Costa Rica timeshare out of $22,925, according to the state, belongs to a large Minneapolis law firm.
One phone number associated with another business, Twin Cities Property Advisors, actually rings up a Wal-Mart store in Vadnais Heights.
The registrant contact information for one website leads to a city park in Charleston, S.C.
The scammers often find potential victims by searching online for people advertising their timeshares for sale. They then conduct most of their business over the phone and tell victims to wire funds to cover fees related to the transfer of ownership.
Another problem turns out to be jurisdictional. At least 11 of the 12 companies instructed consumers to wire money to Mexico, where many of the websites are registered.
“These types of timeshare scams are most often international in scope, and therefore outside of the [Minnesota attorney general’s] jurisdiction. To the extent that criminal action would be brought against individuals, the investigation and prosecution would need to be handled by federal authorities,” according to Commerce spokeswoman Anne O’Connor.
If the companies fail to comply with the orders, “the Department can take the next step to file in [federal] court and set up contempt proceedings. If the Department can locate the individuals behind the companies, the violation could lead to a theft by swindle criminal referral.”
Staying one step ahead
There’s little incentive to keep using a name associated with a state enforcement action. The bogus timeshare businesses have no loyal customers who may lose track of the business if the name changes.
“Once the scammer has his company listed on the BBB or Internet searches as being a scam, he just names it something else and moves on,” according to Brian Rogers, owner of the online forum Timeshare Users Group.
In fact, two companies ordered by the state to cease, World Transfer Title and Concord International Title, had nearly identical websites. Minnesota, their supposed headquarters, is misspelled in several places on each. Each boasted the company had managed more than £3.3 billion in property assets, worked with more than 380 resorts and developers, and provided services to more than 810,000 consumers.
Some operators re-invent themselves as contrite associates of their former selves. “[They] will get the lists of previous victims, call [them] up and claim they are ex-employees of the company that scammed [them] and they founded a NEW company to help the victims get their money back because they felt so sick that they were ‘unintentionally’ ripping people off,” Rogers said. “They of course require another upfront fee to ‘get your money back’ and thus you are scammed again.”
Absent any real chance to deal with these companies administratively or judicially, the best solution may rest with consumers.
“Getting to owners and ensuring they never pay upfront fees will be the only way to stop it,” Rogers said. “There aren’t any legitimate businesses in the timeshare industry that charge an upfront fee.”