At FTCs Request, Court Stops Fraudsters Who Took Advantage of Consumers Trying to Resell Timeshares
At the Federal Trade Commission’s request, a federal district court has put a stop to a deceptive telemarketing operation that allegedly scammed millions of dollars from property owners hoping to sell their timeshares. The FTC charged that the ring, operating out of South Florida, conned consumers by promising that they had buyers lined up and waiting. Only after making a hefty up-front payment did the consumers learn that there were no buyers, and that it was nearly impossible to get their money back from the defendants, many of whom have long criminal histories.
“When cash-strapped consumers are trying to sell their property, the last thing they need is to lose thousands of dollars to scam artists who promise a quick sale, but then provide no services at all,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection.
The case is part of an ongoing FTC effort to crack down on con artists who use fraud and deception to take advantage of consumers hit hard by the recent economic downturn. Many of the defrauded consumers needed to sell their timeshares to help pay their living expenses. According to the FTC, the number of complaints related to fraudulent timeshare resales has more than tripled over the past three years, as more consumers have attempted to sell their timeshares.
In this case, the defendants allegedly defrauded consumers nationwide out of millions of dollars before being shuttered by the court. They also are well known to the South Florida Better Business Bureau (BBB) which, together with the FTC and the Florida Attorney General’s Office, has received hundreds of complaints from consumers about their conduct. The BBB has given the firm, Timeshare Mega Media and Marketing Group, an F rating, the lowest rating it can give a business.
According to the FTC’s complaint, Timeshare Mega Media, two related companies, and six individuals used a telemarketing boiler room in Ft. Lauderdale, Florida. They told timeshare owners who were attempting to sell their units that a buyer was lined up and a deal had been negotiated on their behalf, but that before the sale could be completed, consumers would have to pay an up-front fee, usually $1,996, by credit card.
The FTC’s complaint charges that Timeshare Mega Media’s representatives typically claimed the fee was for sale-related costs, such as realtor fees, closing costs, title searches, or document processing. They also told consumers that this fee would be refunded at closing. In some cases, if a consumer owned an expensive timeshare, the fee could be more than $1,996, ranging up to 10 percent of the asking price. Consumers also were told that their timeshare sales would close quickly, often in as few as 30 days.
The FTC alleges that, after the consumers paid the fee, they were told to expect a contract from Timeshare Mega Media. What they received turned out to be a contract to market and advertise their timeshare, and not a sales contract. According to the FTC’s complaint, many consumers signed and returned the contract thinking it was a sales contract. Those who questioned its validity were given the run-around by the company and falsely told that a sales contract would follow. In fact, according to the agency, the company never had any timeshare buyers lined up. When consumers discovered this and demanded their money back, they found it nearly impossible to get a refund, or even get a call back.
The FTC’s complaint was filed against Timeshare Mega Media and Marketing Group, Inc., also doing business as (d/b/a) Timeshare Market Pro, Inc.; Timeshare Market Pro, Inc.; Tapia Consulting, Inc.; Joseph Crapella, also known as Joseph John Philbin; Pasquale Pappalardo; Lisa Tumminia Pappalardo; Pasqualino Agovino; Louis Tobias Duany; and Patricia A. Walker.
The Commission vote approving the complaint was 5-0. It was filed on October 19, 2010, in the U.S. District Court for the Southern District of Florida in Ft. Lauderdale. The court entered a temporary restraining order against the defendants on October 20, 2010.
In filing the complaint, the FTC is seeking to permanently stop the defendants’ allegedly illegal conduct and to provide money back to consumers who were harmed by their violations of the FTC Act and Telemarketing Sales Rule. The FTC would like to thank the Florida Attorney General’s Office and the Florida Department of Agriculture and Consumer Services for their assistance in this case.
The FTC recently released a new publication on how to avoid pitfalls when selling a timeshare unit. Copies of the publication, “Selling a Timeshare Through a Reseller: Contract Caveats,” can be found on the agency’s website and as a link to this press release.
NOTE: The Commission issues a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the respondent has violated the law.
Copies of the complaint can be found on the Commission’s website and as a link to this press release. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.
(FTC File No. 102-3168; Civ. No. 0:10-cv-62000-WJZ )
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