I remember a few years back walking on the beach with my dad and some similar time share scam people asked us if we wanted to enter a competition. We were handed two scratch cards with various prizes; cash, a holiday or the grand prize of a car.
Obviously all the scratch cards were winners for the holiday.
My dad scratched his card and said "Oh great, I won the car!"
The scam guys eyes opened wide and he had a confused look on his face and asked my dad to show him the scratch card. Obviously it was actually for a holiday, but it was great seeing the confusion in the guys face since he knew there was no car.
> The scam guys eyes opened wide and he had a confused look on his face and asked my dad to show him the scratch card. Obviously it was actually for a holiday, but it was great seeing the confusion in the guys face since he knew there was no car.
As a lark, it would've been super funny to create a realistic winning "ticket" for the car and substitute that in place to see the reaction.
Obviously it would require some prep work... but for kicks it would appeal to some. ;)
Roping the unsuspecting into an incredibly expensive time-share using hard-sell boiler-room tactics without ever being up-front about the true costs.
I sat through one of these once, curious about how it was going to go, and with the intent going in of not ever buying anything anyway. They present the timeshare as if it costs only pennies a day, and never admit to the true cost unless pressed very hard (and even then they never quote a final figure). What they are really selling is a loan package for the purchase of the timeshare (where the timeshare company is themselves loan originator) with an attached interest rate of something like 12 or 13% APR (bank mortgages at the time I sat through the one I sat through were running about 3.5-4% APR). The timeshare, if you can squeeze a dollar figure out of them comes out to be about $40,000 for which they finance it for you at their 12-13% APR (so a gold mine for them, but bad for you).
I ended up getting the double-team effort (two trying to convince me to jump in) to try to sell me on the value of the scam before I had finally had enough and cut off the sales pitch. Meanwhile, all around me (they did the pitch in a large room with small tables where everyone was in view of everyone else) I was watching the gullible filling out their "loan applications" and setting themselves up for $500/month for the next ten to twenty years before they could pay off the 'loan'.
The cost, plus the interest, was setup such that one would be hard put to actually be able to go on enough vacations at the timeshare to actually make the timeshare profitable for the new owner. If one went on the number of vacations that are typical, one was setting oneself up for each vacation ultimately costing $25K+ (for what should have cost only about $2-3K). This, of course, was the intent of the group running the timeshare, hide the true cost enough that the gullible don't realize they are paying $25K for what should have cost them $3K, and pocket the difference as pure profit.
I went to one to satisfy the same sort of morbid fascination as well. I really have to hand it to the sales people, it was one of the most incredible sales pitches I've ever seen.
They shuttled us to one of their premier properties where they took us to a sales room and served us breakfast. After a few moments they had everybody gather around a large presentation screen and a salesman who spent the next hour not just going over all the "benefits" of buying a timeshare, but tying that to a scripted and intensely acted "deeply personal", tear jerking story that ranged through decades of his life. The delivery was world class small stage acting -- it was that impressive. After that they paired us all off with a secondary sales guy who took us to a model room and start on the normal high pressure sales tactics.
Our only escape was that we simply lied about our income and looked to be too poor to ever afford anything they had on offer and told them we were only interested in vacationing to places they didn't have a presence. It was quite an intense experience. We left, got our free tickets to a show and were shuttled back to where it all started about 3 hours earlier.
It was absolutely bizarre and I kind of can't believe the entire operation is legal.
I did one of these also, and I absolutely don't regret it. I think I learned more about (ruthless) sales tactics in two hours than I ever have from books or classes.
It was a timeshare tied to a big-name hotel chain, and as far as I could tell they were selling some hotel rooms as timeshare units to finance construction and maintenance. So the deal wasn't good, but it was substantially less of a scam than the stereotype because they had a non-scam business to protect. That, or the guy was so sharp that he really did persuade me quite effectively, and I was only saved by having a a prior of "this is the worst deal imaginable". (Well, that and the Odysseus bit - I decided in advance to refuse no matter how good the offer looked.)
The funniest part of the slightly-less-bad scam was that it enabled them to spend a while talking about how it's "not your parent's timeshare" and "not like those shady offers from the 80s". Which was true I guess, you got nice rooms in many places instead of one rundown house - they were just charging rates that were steep even before the multi-thousand-dollar "maintenance fees" kicked it.
Oh well, the free travel and event tickets were actually a great dollars-per-hour value - as long as you said no.
It's always intriguing to see these things, and how some prey on basic math skills.
My girlfriend's mother dragged us to see a presentation associated with one of the "Flipping" TV shows.
They, of course, wanted to invite you into their program. It was "hugely successful". How successful?
"We've funded $100MM of house purchases for our members! We have nearly 8,000 members across the country!"
Well, $100MM in support sounds awesome for most things. Then you think about it more. And let's be generous to them, say the average house they buy costs $100K. That's 1,000 homes they've funded.
But hang on, they have 8,000 members. And they boast that some of those members have flipped 20+ homes each! That means, wait, less than 1 in 10 of the people who "joined their ($4,995) program" ever flipped a house through them...
That's not the kind of math they like you breaking down at those seminars for the other members during the meal break...
Maybe a little hyperbolic, but I noticed a couple of people talking with the staff, and I got a dirty look or two from them, and then, apparently (since I'd left), they "wanted to address concerns", and that those people were only suffering "insufficient motivation".
I don't know, selling 8,000 people $5,000 weekend seminars seems a better way to make $40M than trying to flip $100M of houses...
I went to a similar presentation in Hawaii for educational purposes and was able to convince my wife and daughter to come along.
It was less impressive than we hoped it would be, but we had a good time by replying leading questions with undesired answers. (“How much do you pay per night for a hotel?” “$150 for our excellent Airbnb!”)
I almost felt bad (but not really) for the sales woman who was obviously wasting her time.
When her boss joined in to take it to the next level, I simply asked him: “we’re going to France this summer, 6 months from now, in the Nice area. Show me which offers I could book today through your timeshare plan.” There was nothing reasonable. He gave up soon after that and we received our $300 tour tickets for free.
All in all not a bad deal, but we won’t do it again.
This was a big scam on the Gold Coast in Australia in the 80s and 90s, and my parents milked it.
First thing you need to know is that any major contract in Australia had a "72 hour cooling off period" in which you could cancel it with no redress or regress.
Want a cheap holiday? Bring your kids to the Gold Coast, look up the best time share resort, Friday morning,sit through the spiel, sign on the line that is dotted.
Through the weekend you have access to all the resort amenities, kayaks, jet skis, pools, etc. All comped.
Monday morning, when you were about to head to the airport? Drop off a letter at the front desk with the contract, canceling it.
Ethical? Probably no less so than they were, so hard to find sympathy.
My parents did the mini-version, just taking advantage for the day.
We went to several in southern England. We kids could play in the pool or whatever, while our parents sat through a presentation for a couple of hours. Then we spent the rest of the day together, before heading home.
Though more recently, "The EU has ruled that any new timeshares or long-term holiday products with contracts of more than a year must be sold with a 14-day cooling-off period and written information – in the buyer's first language – detailing their right to cancel within this period must be provided.", so your scheme would work especially well now.
I’m unfamiliar with Australian contract law, but damn that would be risky in the US (assuming you could even find a jurisdiction with a 72 hour cooling off period).
I went to one of the Wyndham presentations a couple years back, partially for the free (albeit shitty) breakfast, free tickets to a local attraction (actually somewhat valuable) and to observe the sales pitch. I came away similarly impressed.
They used a lot of tactics like personal vacation stories, highly suspect financial calculations and so forth. But the one I was most impressed by was getting people in the habit of saying "yes!" a lot. They'd ask a bunch of really dumb stuff like "Do you like to go on vacation?!", "Do you like to have FUN?!", "Do you like to SAVE MONEY?!" etc to get people all hyped up. Then they'd ask them if they want a timeshare, and people are primed to say yes. There's some actual psychological studies on that effect. It worked really well.
They also had our credit card info already because we were staying in another Wyndham property, and kept saying that we'd have to sign some form or else they'd charge our card for the tickets. Of course they made it difficult to get that form. You can get it after we tour one of the model units. You can get it after we look at another one. You can have it after we watch this video. Sure, you can have it now, but first let's look at this financial worksheet. Always being super nice to make it hard to be assertive with them. I finally had to basically curse at the sweet young lady to get the form out of them, but they managed to tack on 45 minutes of high pressure sales time over and above the minimum we had to spend.
It's all quite impressive in a "dark patterns" sort of way.
There was a bunch of crap to sign. I suspect there was some agreement, otherwise people would just not show up to the presentation at all. But TBH I didn't read it all or seriously consider doing a chargeback.
> I was watching the gullible filling out their "loan applications" and setting themselves up for $500/month for the next ten to twenty years before they could pay off the 'loan'.
I presume that quite a few of these are actually timeshare employees playing the role of "conspicuously convinced punter"
That is quite possible. I presumed the 'open plan sales room' was exactly to play on 'follow the herd' mentality. These guys were slick enough that they very well may have filled half or more of the room with plants to further fuel 'herd' mentality.
Interesting - the presentation I saw was careful to pitch each family separately and not even walk them past one another. I assume it was partly for the feeling of exclusivity, and partly to avoid letting any awkward questions like "don't those fees turn this into a total ripoff?" pollute multiple buyers.
I wonder which approach works best? (Though I guess if there are enough plants, you could get both effects going at once.)
The real scam is the ongoing, monthly, maintenance fees on your 'timeshare'. Worldmark wanted $100 per month, per week of ownership, in a presentation I saw in Vegas. Which means that 52 weeks x $100 x 12 months = $62,400 per year in 'maintenance' on each unit. So even if you paid cash, they still get $62K per year in addition. This was Worldmark Vegas, buying a 'week' in a townhouse complex of $150,000 units.
I get the sense that the days of "take out a huge loan to be locked into vacationing at a crummy house in Boca" are over, probably because the reputation got too bad. Now it's reasonable prices, flexible travel dates, luxury properties around the world - all yours, for the low price of bank-breaking fees for life.
The maintenance fee is $100 a month for each week of timeshare you own. So if you want to use the time share 4 weeks a year you pay $400 a month. After selling all 52 weeks the company is collecting $62,400 a year.
If the unit has been chopped up such that all 52 weeks of the share have been sold, then a combination of people will be paying $100 per week of ownership, every month. Your share of the monthly maintenance is allocated by the number of weeks you "own".
You aren't just paying maintenance for the week that belongs to you. Original calculation of $62400 is correct. Part of the scam is obfuscating from you the true costs of the deal.
If the 52 week-owners knew each other, and could all afford the costs of the share in the first place, they could conceivably form their own LLC, cut out the timeshare company middleman, pay $10k each up front for week-length shares in a $520000 property, and cut their maintenance fee in half, to $50 per share per month (assuming 5% upkeep/utilities/taxes per year). They could even rent out any unused weeks on AirBnB to cut the maintenance charges, or even pay out distributions.
The timeshare people are making bank on the fact that getting up to 52 people to spontaneously come together in a common cause is extremely unlikely. You need a prime mover organizing the whole thing, who is ideally positioned to profit from information asymmetry.
I'm not up to speed on the mathematics, but a matchmaking algorithm that keeps preference data secret until all participants in a trade web commit to a deal that satisfies at least one of those preferences could drive a lot of middlemen and scam-like businesses out of the market.
For instance, you might find an algorithmic pickle agent in the network, and tell it that you could eat one big jar of crisp dill cucumber pickles every two weeks if it costs less than 8 money units, delivered to your door, or one per week if it costs less than 3 money units, committing some number of money units greater than 8 to back a promise to buy at those prices. A small-time pickle-making farmer might tell the agent that they can ship at most 500 jars a week, as long as they get at least 2 money units per jar, or as many as 800 if they can get 4 per jar (cost of hiring a dedicated packer, perhaps). The pickle agent consults with a commodity shipping agent, calculates a billion different ways to move pickles from suppliers to consumers, and then starts moving money and pickles around. Everyone who promised to buy at a certain price is guaranteed to get the goods at that or a lower price, and everyone who promised to sell at a certain price is guaranteed to ship the goods at that or a higher price. The shippers get their fee for moving a package from point A to point B. The agents take their cut to pay for their computation, and for insurance against failed shipments or bad pickles. The system would also need to include distributor/importer/resellers, because some trades just aren't possible unless you pack a whole pallet of pickles, or a whole truckload/shipping container, and break that out for individual orders closer to the consumers.
That's all technically possible with smart contracts, as far as I know, but it would require a huge amount of programming effort to even get the basics correct. And Wal-Mart already has their supply chain, inventory, and distribution software in place.
I'm not sure if this is a complete "scam." I think it mostly works out as similar to the costs of typical hotels.
- I would assume the timeshare companies often have more supply of rooms than they have paying "owners." For example certain destinations are only desirable during part of the year when the weather is favorable. So they may not be making this full amount in the math above.
- They have regular expenses beyond the room maintenance itself: overall building maintenance, resort amenities, staffing, utilities, cable/tv, etc.
- For comparison: a simple $150 hotel room for example would be $150 x 365 = $54,750. Similar to the timeshare, this one may not be 100% booked, though I don't know what booking/ownership rates are for timeshares vs. hotel rooms. In any case many timeshare units may have one or multiple bedrooms, a kitchen, a living area, etc. whereas the $150 hotel room is probably just a sleeping area. So you are likely getting "more space" with the timeshare.
Admittedly, many timeshares are scams, I won't deny that. But the evidence you provided for this one is not completely indicative of that. It still may not be a "good deal" based on how you prefer to travel, and if it's not certainly don't partake in it.
To me spending $100 x 12 = $1200 per year for your housing on vacation is not completely unreasonable compared to $150 x 7 = $1050, considering the extra amenities and opportunity to save money by cooking in the unit. It doesn't make the timeshare a "steal of a deal" (like some of the presentations make it out to be) but rather more of a "prepaid vacation" which may make sense in some situations. It seems like a "legitimate business" in this case to me, assuming the up-front costs to buy in are not too crazy. Country Clubs have been using a similar structure of "buying in" + recurring fees since before the timeshare industry even existed, and presumably these country clubs are legitimate businesses as well. There are good and bad players in the timeshare industry, like is the case in so many other industries as well.
My parents are Worldmark owners, so I've done some analysis on that one in particular. There is a decent amount of flexibility (destination) and the units have seemed pretty well-equipped. In the math I've done it seems to work out to not necessarily make your vacation "cheaper" but it doesn't make it "more expensive" either. They like it because they get more space and a kitchen to cook some of their own meals, and they use it as encouragement to take vacations to destinations they otherwise would not have thought about (and have very much enjoyed).
The timeshare company in the article though is clearly a major scam though! I trust that most people on HN can take a look at the math to weigh what may be a good deal for their personal situation.
I'm assuming that the figures parent laid out as an example don't include the cost of the timeshare itself. So you're mortgaging the cost of the time share at a high interest rate, then it's $1200/yr./week on top of that for "maintenance".
My wife and I had a lot of trouble having children, and went to Mexico for IVF. Although we were staying in Cancun, we basically had no money. We had planned on just lounging on the beach for a week, but several different groups were offering free little day trips to different destinations if you set through a timeshare presentation.
We ended up doing that three times, and even knowing what I was getting into ahead of time I found their "hard sell" tactics both persuasive and exhausting. I didn't get roped into anything, but I can definitely see how it happens.
> Roping the unsuspecting into an incredibly expensive time-share using hard-sell boiler-room tactics without ever being up-front about the true costs.
The hack is to attend, tell them you go once a year, sometimes twice, to some ethnic ancestral home town, and you'll buy on the spot if they have a timeshare there. Pick out some two-stop-light town in some out of the way country, that doesn't even have AirBnB rooms, and you can see the sales people visibly deflate as they vainly look for a listing in Borat-istan. Put on a show of being all sad, and explain that you can't imagine paying for their fantastic deal for only 15% of your annual travel budget, but to put you down in the wait list as the first to buy when they expand to your home town.
You are in-and-out in the allotted time, with the freebies, usually three hours max. I actually like inspecting the actual buildings to try to spot whether or not they took shortcuts, as how these scams work fascinates me, and some of these places have genuinely good ideas I scrapbook for my homebuilding notes, so I don't mind the lead up to the real sales pitch where I deflate them, but I'm sure you can modify the hack so you open with your counter-pitch and are in and out in minutes. I've seen people report they tell the salespeople up front they only came for the freebies, they're never buying, and if both sides agree to discreetly walk early so the sales manager doesn't notice, they'll rate the sales effort A++++ (there are always surveys afterwards), and are out in minutes.
I'm curious with groups like 419 Eaters why there aren't more organized scambaiters for timeshare scams. The freebies are legit, and if you're planning to be in a particular area anyways, three hours for a 1-2 day stay, especially if you like seeing how others solve various housing-related challenges, is a good trade.
A couple of years ago my wife and I rented a condo in Hawaii, and ended up going to one of those one morning. Coincidentally, it turned out to be at the same complex we were renting from and the example unit we toured was identical to our own. We walked out when I did the math and found that the time share would have actually cost more than just renting the place.
I always thought it would be kinda fun to get a group of people together (maybe a Meetup) who would attend timeshare pitches for fun. The goal would be to pack the room with people who had no intention of buying in.
Time is money, and I suspect the best way to cost them money is to waste their time.
Right, in order for you not to be wasting your time, you'd have to get some value from attending. I think you could argue for any of the following: (a) educational, (b) entertainment, (c) charity work, or (d) none of the above. Depends on the person...
He gave a talk covering the same subject matter too, which is faster to grok if that's your kind of thing.
After reading/watching this stuff, these kind of scams become incredibly transparent. And it's fairly ugh to see fellow humans subsequently get sucked in by them.
Thanks. I'll check it out. I'm quite immune to the tactics myself due to watching my father fall for way too many of them growing up. As a result of seeing that at an early age I've become quite immune to the tactics. But I could easily see how the less immune could readily be drawn in to something they likely could not afford.
I went to one of these many years ago just after finishing my degree. I explained to the guy laying on the sales pitch that I understood how interest rates worked and I had a masters degree in Computer Science. He said "you aren't the kind of person we're interested in, you can leave."
Thanks for the free Vegas trip! I actually won some money that trip, so technically I walked away from the scam with a profit!
you got off easy. My wife and I made it abundantly clear that we we're falling for it (Software engineer and data analyst). They still spent another 2 hours making us feel as horrible as possible.
In exchange for sitting through a timeshare presentation, a friend and I received a free trip to Orlando, FL. Instead of going to Disneyland we went to the Kennedy Space Center and the Air Force Missile Museum.
Lesson: Don't just settle for free tickets for a show, find out if they have any other incentives.
Yeah. I thought we could just go there to listen to it. they didn't say anything about a timeshare, they just said go there to listen to them talk about some apartments. I sounded pretty harmless.
Things started off politely enough. Then about 30 minutes in they get really mean, really fast. this was wyndham by the way - if you check online, looks like they have nothing but 1 star reviews, from those that did sign up.
It starts with manipulation, then insults on your intelligence, then move onto insults on your personality, followed by countless bullying tactics. Then, once that doesn't work, they call over some ruthless thug boss lady, to really intimidate and bully you. These guys are world class jerks. i don't know how they sleep at night.
Once they realize that they can't get you, they'll just keep beating you up, just for kicks.
Hint if you ever attend one: turn to your partner after the introduction and say "I don't know honey, we would have to sell the RV". They know that people with a RV rarely buy so they are much more willing to stop wasting their time.
The other option is go on vacation, send your parents to the presentation, and you take the freebies. This worked for a friend of mine- his parents old/disabled enough that they couldn't enjoy scuba diving and the like anyway, they were mentally competent enough to not sign anything, and they enjoyed the presentation better than the other tourist traps in the area.
I'm not sure how anyone can enjoy the presentation. Our presentation quickly devolved into insinuation, badgering, bullying, intimidation and finally: outright insults.
It doesn't make economic sense, but once they find out your not going to buy it, they spend the rest of the time making you'r experience as horrible and stressful as possible. Perhaps to dissuade others from doing what you just mentioned.
I'm all for capitalism, but I feel like this should be illegal.
Yes, I know, "the consumers shouldn't be so dumb". But there is always the group of a society that will bite. The seller may make a good buck, but these tactics have many downstream effects that just get compounded for the people buying this garbage.
There should be some kind of protection for the consumers in this case.
I know it would be hard to define the line, but in this specific case, it's clear that it shouldn't be allowed.
The biggest problem here is information asymmetry. The market for these time share schemes is very inefficient because the sales people have more information on both the value and cost than the customers. This is why people commenting here who have out of band information about this were unpersuaded despite finding the pitch emotionally compelling / exhausting. Regulations to require earlier and less subtle cost disclosure would help. But this is right in the zone where it's difficult to take political action: most people don't care very much about this so you can't win an election or build a career on fighting this, and the sales companies care a lot, so they'll organize a dedicated opposition to you if you try.
> The biggest problem here is information asymmetry.
This gets to the heart of a question I've always had about unfettered markets, and never seen answered.
It's widely acknowledged that markets don't just satisfy demand, they also transfer information. If you know something other people don't, you can make money, but in doing so you'll gradually disperse your unique knowledge until it's no longer valuable. (Either directly, by selling it, or indirectly, as people see that you're consistently willing to make transactions other people wouldn't.) At best, this is a payout for the productive activity of spreading knowledge (the argument for arbitrage). At worst, it's a short-term scam that's self-negating.
This is all true. Timeshares spread information because people noticed "if this is such a great deal, why do you have to pay people to listen to the pitch?" And so timeshares got a horrible reputation with most people. When I talk to hard libertarians, anarcho-capitalists, and so on, this is their argument - it took some time, but the marked worked even with asymmetric information.
But... new information can be created, at least in economic terms. Timeshare pitches now have segments on why this timeshare isn't a scam like the old ones. There are new names for things that basically amount to timeshares. The focus of the scam has moved from high interest to high fees.
And so the scammers constantly 'make' new information that disadvantages everyone who lacks it, and get money spreading that information to the populace. Is the pure-markets system supposed to not have this problem, maybe by correcting too fast to reward the scam? Or is it just accepted that there will be some large and stable amount of scamming at all times?
Markets are just a tool. Entirely unregulated markets exhibit some undesirable properties. Society, through government, has every right to aim to diminish the ill effects of these undesired properties. But it also behooves society to be careful in how it regulates, in order to avoid diminishing the usefulness of this tool. It's a balance. This is not as sexy or simple in principle as either extreme, but it's the right answer.
This is one of those cases where regulation makes sense. I think regulations aimed at improving information symmetry are some of the best. They are fairly low impact; maybe they stomp on an arbitrage opportunity, but they don't limit the solution space nearly as much as regulations that simply proscribe what you can and can't do, for instance.
Basically: the "hard libertarians and anarcho-capitalists" are just wrong. But if they were to rebut with a take down of state controlled economies, I would definitely agree with them about that. The trick is to strike a good balance.
One of the main reasons I can't buy the "The consumers shouldn't be so dumb" argument is that there's usually a concentrated push back every time the idea of teaching basic financial literacy in high school comes up. I could understand it if people were taught basic personal finance, but most people are not taught these things.
You could start by making it illegal to offer prizes to attend real estate sales seminars — decapitating their primary hook. Next, you could require interest rates to be in gigantic letters, and a whole host of other info to be required. You could also make it illegal for real estate developers to also be loan providers.
Force them to, up front, present a very clear, very basic, and in very legible print the exact terms, and exactly how much this will cost per month, per year, and how much interest will have been paid over that time. Including the addition of all fees.
I have vague memories of Father dragging us along to timeshare presentations each holiday or so, purely so we could get a family ticket to the local water park or whatever.
I don't think I've thought about his for years, so thanks. I think. I didn't recall how cheap Pa was.. :)
These are all through Bali. The scam is that you appear to win something, but really it is just to get you into a high pressure sales environment. So you go back to their office (where everyone is amazed that you won!) and then realise the prize is a tour of some holiday destination they want you to invest in etc.
They do give you stuff for free. I got two free tickets to Disney. I just had to convince them that I was interested in buying a timeshare for 90 minutes. Once I got past that mark, they were obligated to give me the tickets - a fact that I promptly reminded them about. Two aggressive sales people and one super pissed off sales manager later, and I was off to Disney. I would never do it again - it was sheer agony.
Obviously all the scratch cards were winners for the holiday.
My dad scratched his card and said "Oh great, I won the car!"
The scam guys eyes opened wide and he had a confused look on his face and asked my dad to show him the scratch card. Obviously it was actually for a holiday, but it was great seeing the confusion in the guys face since he knew there was no car.