The “postcard company” (PCC) scam has been making lots of news lately and now there is something new owners of timeshare intervals should look out for. Soon after a timeshare sale has taken place, postcard companies are sending notices asking the new owners to sign and return a Limited Power of Attorney, so they (the PCC) can represent the owner at the next association meeting implying this is a convenience for the owner. Several people who own multiple weeks of time share are concerned that new owners may mistakenly think this is just a part of finalizing their recent transaction and not be aware they are signing over their ownership to an unknown company.
In case you aren’t aware of what a “postcard company” is or what they do, let us explain.
This type of “buy back” offer started years ago in several off shore locations and became wide spread in Mexico. It began when timeshare owners attending a seminar in Mexico or other locations would complete the presentation and say something to the effect of “gee, we’d like to purchase here, but we already own one or two weeks and until we sell one or both of those, we really can’t afford to buy another week of timeshare”.
Now, decades later, timeshare owners are receiving unsolicited calls and/or a postcard sized invitation in the mail offering a “guarantee” that they will be able to trade-in or otherwise get rid of their timeshare by simply attending an “educational seminar” at a well known hotel. They go on to say they will provide 100% satisfaction by leaving you timeshare free forever!
These companies are telling owners either at the presentation or through the phone calls all the reasons why the owner needs to get rid of their timeshare interest by using misinformation and often scare tactics.
The catch is, by the end of the presentation or phone call, the timeshare owner is asked to give them, right now, in advance, $1,000 to $5,000 (or even more in some cases) in order for them to get out of their timeshare ownership. Simply put, the owner is paying the “postcard company” to take their timeshare – not the other way around as implied.
When this scheme first took place, (known as a “table buy-back) the sales rep would make an ‘offer’ to take the interval(s) in on a trade towards the new timeshare plan. They would drop the purchase price of that plan to reflect the alleged ‘trade-in’ value. It wasn’t until the owners returned home that they discovered not only did they still own the interval they thought they had traded in they also were owners of a new timeshare!
It was this scheme, also known as a “trade-in” that ultimately led some very unscrupulous people to realize that timeshare owners would be willing to pay someone else to take their timeshare interval off their hands.
In the late ‘90s when this approach started, companies then charged between $400 – $500 to allegedly eliminate the timeshare owners’ rights, uses, benefits and future financial obligations of their timeshare.
The scheme hasn’t changed much since then. Then, just as today, the timeshare owner paid the fee upfront only to discover later they still owned their time. The general operation for most of the early postcard companies was to collect the fees and then delay the title transfer until/unless they were able to sell the interval. If the companies were not able to sell the interval before the next maintenance fees came due, or if the resort declined to take the interval back by using a quit claim deed, the companies abandoned the interval(s).
Many owners did not find out they still owned the interval until they were billed for the next years maintenance fees, which resulted in past due penalties and taxes, not to mention the considerable fee the owner had already paid to the PCC to get rid of their interval.
The presentation of today usually states (incorrectly) that you can take an IRS loss deduction for the current fee you are paying to have them take the timeshare off your hands PLUS what you paid for the timeshare. The IRS has stated that such a deduction is not allowable except in a very rare case wherein the timeshare was purchased and treated on the books as income property from the inception of the purchase.
The best way to sell your timeshare is to list it with a licensed timeshare resale broker that does not charge an upfront fee and is paid a commission at the time of sale. A licensed broker can also give you the current value of the property and what is currently listed for sale. Pricing is very important to making a sale of a timeshare resale.
The postcard companies of today are charging thousands of dollars, not hundreds, for their “services” and their deceptive practices are currently drawing the attention of many State judicial and regulatory agencies. Even the American Resort Development Association (ARDA) has issued a warning about postcard companies. The BBB has also issued alerts to warn prospective buyers of this unethical practice. OR: The BBB has launched its own investigation into this questionable practice.
Always know who you are doing business with. Find out how long the company has been in business, if they are members of the BBB and make sure the broker knows his market.
Advantage Vacation is a licensed timeshare resale company with over 30 years in the timeshare industry and Accredited Members of The BBB with an A Plus Rating.
