We are writing this article for the benefit of our readers because we have uncovered some very important information about how these programs work and how you can get outright scammed without even knowing it. Mexico is one of the top countries in the world for timeshare/vacation club sales so there is plenty opportunities to be offered a presentation. We are always looking out for consumers and tourist so you can make educated decisions on what you purchase and services you pay for so you can take advantage of the beauty of the Rivera Maya and continue to enjoy it for years.
We are not going to mention any names of resorts or management companies. Each person should do their own research before making a purchase and take a decision based on your personal situation. Some of these companies change names often so it is not even worth mentioning because you will not find the new companies name online. We will say that two of the top 20 most complained about timeshare/vacation club membership places in Mexico are in our area and a basic internet search will reveal a lot of information that you might find helpful before making a decision.
Timeshares and vacation clubs-How could this be a scam?
It seems so honest, a simple investment in a share of a beautiful resort that you love. You can imagine coming each year and enjoying all inclusive luxury at that property or one of their partners. So where do all the complaints come from?
Where most people feel the room to complain is the fact of the high pressure tactics and promises of many things that do not pay off. Even people just going to get a free tour or something for free end up buying because of the logic of a sound investment or possible benefits for travel. Smart people fall for some plans that turn our to be a regretful decision. We heard for many people that invested $7000-$30,000 USD and feel like they will never see that money in return based on rental income or in vacation services. The many promises told by sellers were more sales pitches than details in the contract. Even though most of the details are in the contracts people get confused or are misled to believe certain things.
Tricky contracts and changing fees often leave people feeling like they have been scammed out of their money. Also the inability to get out of long term contracts or the ease of selling your timeshare leaves people feeling trapped.
What are the pros and cons of a timeshare/vacation club?
- It is a purchase of a rental unit that can be cheaper for you over the course of many future vacations.
- A locked in space at a resort you like and are implied a guaranteed space for you.
- Something you can share with friends or family.
- You can get extra club benefits and gain points for more upgrades.
- It can be hard to sell or exchange your membership if you want to especially if your circumstances change in the future or desire to keep the share.
- Unexpected fees or maintenance cost increase.
- If you do not go then you can loose your time for the year.
- Promises of return on investment are often just a possible return and are sales tactics to get you to purchase.
- Usually a large upfront cost is involved.
- You are locked into going to the same resort or chain of resorts each year.
- When you circumstances change like a death in family or you are not physically able to go it can be hard to get out of contracts and you continue to pay for something you cannot use.
- Policies can change over time which effect how you can use your time or how much you need to spend.
- Most shares do not appreciate in value unlike real estate (although real estate is not a guarantee of increasing in value, but historical data alludes to it as a better investment).
Common complaints about timeshares
Most of the time when you mention timeshares, people roll their eyes because there has been so many people that have had issues and regrets after a purchase. It is so bad that the name “timeshare” is often dropped and it is now called a “vacation club” or other name. However, changing the name does not make it any less complained about. Here is a list of some complaints we have heard.
- The 5 day period to change your mind and get your money back was never mentioned or difficult to proceed with a refund.
- They had them sign a waiver to take away your rights to the 5 day period, (this is illegal to do).
- Maintenance fees kept increasing and there was no cap on fees.
- Rental income never comes true and it is not the investment they imagined.
- Promises to buy your current timeshare and use it as trade in but often people end up with two timeshares and the sale does not go through of the first one.
- It is hard to contact the resort or property management company.
- Property management companies are changed and your exact benefits are changed under a new contract meaning less benefits and added cost.
- Many things said during a sales presentation are not in writing and often found to be not true.
- Dates for when you want to use the property are not available or the class of service you bought into is also not available.
- The resort property goes downhill overtime and you are stuck with a property that is not the same as when you bought it.
- Unbuilt projects for purchase change from time of conception to delivery. Some of the things promised are not delivered.
Should you blame the salespeople?
The salespeople are often the ones everyone goes after because they feel like they were lied to. These are the ones on the frontline and representing the company. However some of them are only the messenger of the management and don’t even know the correct details of what are the hard facts. This is similar to used car salesmen where the mechanics do not tell the salespeople the truth about the product so they sell with confidence.
Of course timeshare and vacation club salespeople come in all types. Some are only honest in their approach and repeat details learned in training and others become very brazen with lies and deceitful methods in order to get a sale. Some sales people go off script and say things that are not company policy.
We have talked to many timeshare/vacation club sales people that leave the job after a period of time because don’t like doing it morally. It can be hard for some employees to start a new job and realize they do not like it and then have to try to find another job especially if it is hard to find a job that makes the same amount of money.
Remember just because a sales person is from your home country do not get lulled into a sense that they are more honest. Many people look back at things they were told but regret not being more skeptical just because the sales person was nice or from the same country.
Note: Many people that work on 5th Avenue in Playa Del Carmen also get money for directing people to timeshares. Some of these people have no clue on investing or what exactly it is they are selling or sending people to. All they see is a potential to make a days wage in sending someone to a presentation. Some of these people offer tours for sale and it is only a front to get you to a presentation. Some of these people can be very pleasant when you are interested in a tour but after you turn them down for a timeshare presentation, they can be very nasty. This type of behavior is unacceptable and certainly gives a black eye to tourism in the Rivera Maya. These people should be avoided and a simple no should suffice.
Why do people sell timeshares? Some of the people we have talked to do so for several reasons.
- They hear about how much money can be made and it is appealing.
- It is one of the easiest jobs to get for a foreigner because they like having Americans, Europeans and Canadian sales people because people relate more and trust them more. This affords people to live in Mexico and still make money.
- To some it is a good job and people do like the vacation clubs and it is just a sales position and honest job.
Here are some common objections you have to buying a timeshare and the things they say to overcome your objections.
- We don’t have any money. No problem you can put it on a credit card or make payments. Many people do thinking they can cancel or use the credit card as a bank only to have to make payments on the large payoff.
- We don’t want to come on vacation here. You don’t have to go on vacation as all. It can be rented out for you and you can use it as an investment.
- We already own a timeshare. The new place you are looking at can buy your old one because they have an” agreement” with the place where you bought yours and you can do well financially with the trade (often your old one is not sold and you end up with two).
Here are some crazy things that have been said to clients in order to convince them to buy.
- They are going to build condos at the resort and you can use your share as a down payment and actually own a condo in the Rivera Maya! This was told to clients but the truth was there was nothing being built and no such trade in plan existed.
- You can rent our your unit and make enough on the other weeks you own and get a free vacation here every year! The truth is it often is hard to rent units for the amounts of rent they say is possible. If it sounds too good to be true, it usually is!
- Sales people have talked to the children directly and asked “Don’t you think you deserve to come here on vacation and use the pools?” This is a heavy guilt trip on parents and use children as pawns in a sales tactic.
Note: We have talked to former sales people of timeshares who regret what they said and did to get a sale. Some leave the jobs soon after seeing what it is like, some leave after a while when they can get another job.
Remember in the end you are responsible for your decision and even if you have been told things that are not true, it should be in complete detail in a contract. You must do the following as your responsibility to making such a purchase:
- Read the contract thoroughly and understand it.
- Make sure the contract is in your own language and is provided as an official translated document. Even if you are fluent in another language the legal terms can be hard to fully understand or mean slightly different things in another language.
- Make sure the paperwork has a Profeco registration number.
- Your paperwork has the companies complete address and contact information for both the resort and if there is a management company or other subsidiary involved. This is important because people have trouble contacting the resort or management company after the sale.
- Do your own research online and possibly talk to other people that bought in the resort you are interested in. You can call Profeco’s toll free number to get information on possible complaints about the property you are looking at. This is a Mexican 800 number to be called within Mexico. 1-800-468-8722
What you should do if you are not satisfied?
If you have gone to a sales pitch and felt like you are not totally satisfied after signing your name to a paper it is very important you make up your mind in 5 days! Mexican law is on your side. For any timeshare or vacation club you have 5 days to rescind your decision. This however is not as simple of going to the office and telling them to tear up the contract. Sometimes they will have you sign a waiver to waive your rights to the 5 day cancelation. This is illegal to do this! This should be a red flag that the company you are dealing with is not doing things in a forthcoming manner.
Profeco is on your side! Profeco is a Mexican governmental agency that stands up for consumer rights (see our article on Profeco and how they work for you). They work with verifying prices in stores and making sure measurement of gas is correct as just some examples of what they do. They get so many complaints about timeshare purchases they have a whole division just dedicated to that and helping consumers know their rights.
You can visit Profeco’s website in English here: http://www.profeco.gob.mx/english.htm
For making a complaint you can email them here: firstname.lastname@example.org You can also visit your local Mexican Consulate or Mexican Embassy in your home country for help. Of course it is much better to contact them as soon as possible if you think there is something wrong with your contract or need help canceling your contract. The sooner you contact them the more they are able to help you. All services are free from Profeco.
The direct scam you might not even see coming after your purchase!!!!!
This was the most shocking thing we uncovered regarding timeshares and vacation clubs! We have to give you this important warning to protect you. Often this is not related to the resort where you purchased your timeshare/vacation club from but you are targeting because you purchased a membership or timeshare.
We came across a former employee who admitted to working for a “scam company”. We asked him to explain that statement. He said the entire company offered no benefits and no services to customers. The entire object was to scam people out of money!
There are companies or shall we say people that work just to feed off of unhappy timeshare or vacation club owners. We say people more then companies because some of these companies are not legitimate and therefore don’t exist technically.
Here is the scam. List of names are acquired of people that have bought timeshares or vacation club memberships. Then they call you and confirm your information like how many bedrooms are in your unit and what weeks you have. They offer to rent out or buy your timeshare at what sounds like a good deal. After all many people are dissatisfied after purchasing a vacation memebership or timeshare. The caller asks for a credit card payment of $99, $199, $399, $490 or what ever they think they can ask. They tell you that in 90 days to 140 days you will receive the paperwork or payment. They tell you a long timeframe so your card is charged and you cannot do anything about it. By the time you start questioning it they are ready with more excuses or you might just forget about it after this period of time. They have no intention of doing anything past taking you money! There is no rentals and no potential buyer set up. If you are able to get back in touch with them and ask what has happened with a potential buyer or rental income they have a list of what sounds like reasonable excuses. Then they try to get you again! They will say things like the potential buyer backed out or needs more time. Then they will tell you since your original contact has expired you need to pay them another fee. If you were expecting rental income they can ask you if you bought the VIP package or something like that. You might say you never were offered that and this new better package will put your property at the top of the list to be first rented out. This might sound good and you pay again! But again you are charged money that you will never receive a benefit from.
Because these companies or people work in the shadows or are so close to the line of being a legitimate company, they are not stopped. These scam companies use phone routing technology so it can appear they are calling you from anywhere in the world and they have tech support that helps clean the internet of bad press. They go by many names and change them frequently making it hard to track online and do research.
This might make it impossible to decipher if there are actual companies out there that want to purchase your timeshare or rent your unit. The truth is most timeshares do not retain their value and they are very hard to sell. A good resort will have in-house help to rent our the units and have a clear process for doing so.
- It should be noted that even some large resorts use “outside companies” as management or resale companies. Some of these companies turn out to be not reputable and a blame game ensues. The resort apologizes because they have switched to another company because they had complaints about the outside company that they often said was great for you just a few months previously. Then another company with not much history online appears and is who you are supposed to deal with.
- This constant changing of situation with companies can seem like a stalling procedure and a way to constantly questioning what to do next or how things work.
Our recommendation to you:
If you are even thinking of going to a presentation, think carefully about doing so. High pressure sales tactics and “reasonable investment advice” might convince you to part with your money and it might be hard for you to rescind on your purchase. If you do go to a presentation:
- Get everything in writing. Have a lawyer look over the papers. It is amazing how careful people are when they buy real estate and often are afraid of buying in Mexico but when it comes to a timeshare they sign a paper with a couple of hours from hearing about it!
- Don’t make a decision in the meeting, take your time. If it is such an honest offer then they wont mind you taking your time to think about it and doing research.
- Talk to other people that already bought. This might be hard because it means your best chance is to talk to people staying at the resort and you have to ask around. It also might be hard because there can be plants (people that are working for the resort) that tell you all the good stuff you want to hear and how they love it and get a great return.
- Go online and research before and after. We say before and after because there will be information they give you like names of rental companies or property management companies that will work with you. Get these names and do your own research. This might not be as easy as you think for two reasons. One, information online tends to be much more negative because people often don’t go online to brag about how much money they are making off renting their weeks or how much they love being a member (this is the case with a good legitimate timeshare). Two, companies with a bad reputations work hard to protect themselves online. If there is a website with complaints, there will be fake people challenging real complaints. Companies also change names so you can not search “xxxx Resort scams” or “xxxx management company”.
- Think about what you want to do with your time and investments. Are you looking down into the future and thinking about if this club is where you want to spend your future vacations? Is this small investment opportunity the best way for you to get a return on your money?
Please use caution when attending timeshare presentations and thinking about purchasing a timeshare or vacation club membership. In the end it might not be worth the 90 minutes that turn into 5 hours of your time to get a free tour or breakfast. Please also use caution if you have purchased a membership or timeshare and you are contacted about renting it out or offered for someone to buy your timeshare. A red flag should go up if you are being asked to pay a fee upfront.
*Note: There are some happy owners of timeshares who take advantage of the programs for vocational use and it is possible with full knowledge of the details to navigate the process successfully.
Do you have a positive or negative experience about timeshares or vacation clubs in Mexico? You can comment below for the benefit of other readers.
Please do not contact us with legal advice or questions as we are only writing this article as an advisory and we are not legal experts. We refer you to Profeco, the official Mexican consumer agency or a qualified lawyer.
If you are serious about investing in the Riviera Maya you might be interested in reading our articles on real estate in our Living in Playa Del Carmen section. While there is risk in any investment, some people have found this a more secure way to invest in the area and provided for a possible retirement later. This in no way is a promotion of real estate in the area and this article is not to scare people away from one investment into another. This is just a suggestion of an investment that some have felt works for them in a much better way.