“After we got back to the room, an uneasy feeling came over us”

Timeshare properties can be a reasonably good investment — or a rip-off. For John Morgan and Jill Stephenson, who recently vacationed in Mexico … well, you probably know where this is going. Let’s just say things didn’t turn out well for them.

I normally don’t run reader e-mails in their entirety. But I’m making and exception for Morgan and Stephenson, because I get virtually the same note several times a month. All you have to do is change the names. The circumstances are virtually identical.

Here’s what happened:

We were approached on a public street in Bucerias, Nayarit, Mexico by a young woman named Ivy as we passed a restaurant on the oceanfront. She enticed us to stop with a buy one/get one free margarita. It was a hot day, so we decided to take a break from shopping and cool off with a drink.

As we were enjoying our drink, Ivy sat down with us and said as long as we were there she may as well show us what she does to make her main living. She proceeded to show us information on a timeshare she represented. At that point she began to turn the pressure up and went into full sales mode.

She told us that she only needed one more lead to get her bonus, and we would be doing her a huge favor. She said if we agreed to spend 90 minutes at a presentation the next morning she would pay for our cab fare from our resort to Velas Vallarta, give us three breakfast buffets (my mother was back at the resort and would be with us the next day), and give us $140 (it would have been $250 if we could have proved we lived together). We were going into town the next day anyway to celebrate Jill’s birthday and decided we would take her offer.

When we arrived at Velas Vallarta, we sat at a table and gave them some preliminary info, names and addresses, etc., as we waited for a salesman. After a few minutes we were greeted by our salesman, Jim. Jim gave us a brief rundown of our tour and then took us to the brunch buffet. During brunch he started going into his sales spiel, telling us about the property. After brunch he gave us a tour of the property, which was impressive. After an hour or so we sat down and he began going in-depth into the pros — there were supposedly no cons — of owning a timeshare.

Jim told us that the time shares were an investment, that they gained value yearly. He told us we could “sell” weeks to them, and that because there was a convention center on-site the rental demand was through the roof, that the only time the rental rate wasn’t 100% was after 9/11 and no planes could fly. He told us that with the current rack rates for rentals — $1,400 weekly — that the timeshare would pay for itself and then some.

He told us that our purchase would also have tax advantages, and that we could write trips to the time share off. He said the purchase was a “no-brainer.” He even said we wouldn’t need any of our own money, because by the time a payment was due, the rent checks would be coming in.

In the end, to a couple of naïve Minnesotans, it was too good to be true. That should have been our red flag. Instead, with excited trepidation, we took the plunge. We ended up buying a re-sale studio for $14,299. We put $9,322 down on a new $15,000 line of credit and financed the balance with 12 payments of $752.17. The total, including an astounding $3,989 for “administrative fees” was about $18,000.

During the time we were doing the paperwork they had us acknowledge several times that since we had purchased a re-sale we could not back out of our contract.

After we got back to the room, an uneasy feeling came over us. The more we thought things over and crunched the numbers, the more things didn’t make sense. We talked it over and after reading the contract decided that we were going to use the five-day opt-out clause via a resignation letter which we would present to Jim and the sales office at Velas Vallarta during our follow-up breakfast with Jim the next morning.

When we presented our resignation to Jim the following morning, he said he would not accept it because we bought a re-sale and that by initialing Line 15 in the Understanding and Acknowledgment page of the contract we had waived that right. He said if we cancelled there “would be problems”. Indeed, it did appear that we waived the five-day period and could only cancel via clause 10b, which stated that we could cancel by paying half of the balance. We thought we had no recourse, so we accepted our fate.

It didn’t take long to figure out that all of the pluses to owning their timeshare were falsehoods and outright lies.

The truth is, there is no significant rental demand, and what demand there is, is nowhere near the $1,400 weekly rates he said, but rather would barely cover the $500 maintenance fees. When we tried to sell our timeshare is when we also came to find out that timeshares don’t gain value, they plummet, much like driving a new car off the lot.

Everything Jim had told us about ownership was a lie. That being the case, we still accepted the blame for being impulsive and naïve and planned on paying off the time share. In fact, we had gone to the bank and were going to pay off the balance because Velas Vallarta had offered us several early payoff incentives, including a 5% discount and two weeks at a 5-Star resort, Grand Velas.

It wasn’t until four months after we purchased the timeshare — coincidentally the day we had gone to the bank for the payoff money — that we found out via Web site mexicantimesharefraud.com that we were not alone in being duped into this scam. We also found out that what they did was illegal.

According to Mexican law, you cannot waive your right to cancel within a five-day period. By telling us this, Jim and Velas Vallarta violated Mexican Law. By their sales tactics and the wording of their contracts, they deliberately and illegally violated this grace period, and we feel take advantage of naïve travelers by willful deception. They rely on lies and deception to get you past the five-day period at which point they have you locked in to the contract. In fact, their early payoff incentives are also part of the scam, in that paying off the contract implies acquiescence.

With this knowledge, we have closed our line of credit this timeshare is attached to and have demanded a full refund of all monies paid to Velas Vallarta. We called the property directly to work with them on this situation, only to be told we needed to call back and talk to a man named Johnny Noe. Several attempts to contact Mr. Noe have been in vain, and he will not return our calls. We have started a file disputing all charges and are filing a formal PROFECO (Mexican consumer help dept.) complaint.

We ask for your help to at least help us shed light on these pathetic people and their despicable tactics so that others may be forewarned.

I’ve contacted Velas Vallarta and asked for a response. I’ll post it to this blog if they decide to comment.

Meantime, if someone approaches you on the street in Mexico offering to sell you a timeshare, don’t walk. Run.

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