A decade-long US government investigation says thousands of mainly older Americans have been defrauded in a timeshare resale scam linked to one of the world’s most violent cartels.
Drug lords adopt a new crime strategy
The stomach-churningly brutal drug trafficking organisation Jalisco New Generation Cartel (Cártel Jalisco Nueva Generación – CJNG) is reported to have moved into Mexican timeshare resale fraud around ten years ago, starting in upmarket Puerto Vallarta and later expanding to Cancún. The group is said to run at least 24 call centres focused on targeting US timeshare owners across these locations and other major timeshare hotspots.
“It’s more cash in hand than they make from drugs,” claimed a US official, speaking anonymously to USA Today. “The overhead is really low for this.”
A US government investigation estimated the Mexico-based operation to be generating hundreds of millions of dollars each year.
Because the network is constantly shifting, relatively few of the telemarketing fraudsters have been charged. Shell companies and bank accounts are dropped as soon as they attract attention, and quickly replaced with new ones.
How the CJNG timeshare scam works
Alongside its extreme violence, the CJNG is known for business discipline and an ability to exploit new markets. Millions of Americans own timeshares, and up to 85% are unhappy with the arrangement. Timeshare contracts are often written in ways that make it difficult to exit once owners realise the product doesn’t make financial sense.
“What you therefore have is a huge market of desperate people, trapped paying annual fees for something they don’t want,” says Mark Jobling, communications officer for the Timeshare Advice Centre.
These cartel ‘resale’ operations buy or obtain lists of timeshare owners, then call them offering an attractive price for their membership. Many owners understandably want out and agree in principle. After that, a polished, fluent English-speaking caller begins requesting payments to cover supposed ‘local taxes’, ‘federal taxes’, ‘insurance bonds’ and other ever-changing fees. “They are extremely convincing,” says Jobling. “They’ll keep finding new reasons to ask for money until the victim accepts they’ve been scammed and stops paying.”
An example case
Stephen, a 54-year-old Midwestern financial manager, was approached in this way and offered $65,000 for a two-bedroom Cancún timeshare condo he had paid $47,000 for six years earlier. His children were growing up and the family used it less and less, so he accepted the offer. The catch was that he first needed to pay a ‘Mexican federal tax’ of $3,900, supposedly held in escrow and refunded once the deal completed.
One charge led to another, with a steady stream of bogus demands linked to the supposed sale. Stephen says he ultimately paid a total of close to $1.8 million after being manipulated by this relentless fraud.
“It’s almost like an addiction,” says Stephen. “I kept thinking that the next person was going to help me get out of it.”
The FBI receives an average of 1,400 complaints a year about Mexican timeshare resale fraud, and the number is rising annually.
Need a genuine solution?
Modern communications and the internet make it easier than ever for fraudsters to reach us. But with a little vigilance and common sense, it’s possible to reduce the risk of being drawn into a Puerto Vallarta or Cancún timeshare scam.
Timeshare memberships that were mis-sold, or no longer offer value, are a genuine problem that many owners want to resolve.
Following these simple rules can help you choose a capable, credible firm to handle your relinquishment.
And remember the number one rule when someone offers a deal far beyond your expectations: if it sounds too good to be true, it probably is.
For further advice on timeshare-related issues, get in touch with our team at the Timeshare Advice Centre.
