If you are a tourist strolling downtown in Playas de Coco, Guanacaste, you might be approached by people selling tours, and if you fit the right criteria, generally couples between the ages of 30 and 60 with a credit card, they might promise you a free dinner or discounted tours just for attending a “short” presentation on what they refer to as “fractional ownership.” Once in the sales room, they will offer you a deal too good to pass up and before you know it, you’ll find yourself signing a contract to buy a few weeks at a vacation resort. But be careful, because you could be falling for a scam that will be hard to get out of.
Complaints of fraud have been posted on internet sites like ripoffreport.com, insidethegate.com and tripadvisor.com, and five couples who attended sales presentations for vacation ownership programs during 2013 and 2014 in Playas del Coco personally shared their experiences with The Voice of Guanacaste.
In December, 2013, Peggy Watson and her husband, who are in their 60s and live in Lake Havasu City, Arizona, purchased 52 weeks at Coco Bay Estates for $60,000. With 52 weeks, they thought they could stay there for six months and rent six months out for some income.
“We were told that we could book any six months we wanted with no extra fees. We traded two timeshares that we owned. Most all the extras were verbal promises. They even took us out for lobster dinner to celebrate our new condo purchase. When we returned home in January, my husband was diagnosed with lung cancer and started chemotherapy and so I did not book our 2014 weeks.”
Toward the end of 2014, when Watson tried to book time at Coco Bay Estates, she was told via email that they could only get one week there and that the other weeks would have to be used somewhere else. Surprised, she said, “I asked what in the world do we own 52 weeks of? I have not heard a word since.”
These couples were offered “fractional ownership” or right-to-use vacation memberships at Coco Bay Estates or Bahia Turquesa Residences in Playas del Coco. The offer included access to hot deals at 5-star resorts for as little as $199 and an annuity that would mature in 25 years. This was all part of the contract offered by Four Palms Marketing S.A.
The Third-Party Marketing Company Scam
To sweeten the deal, the sales representatives, who are generally independent contractors working on a commission basis, told the five couples interviewed by The Voice that, if they couldn’t or didn’t want to use all of their weeks at the resort, they could pay a one-time fee to another marketing company that would rent some of their weeks for them at a rate of $2600 per week, guaranteed to be disbursed to them within 300 days.
Some of the couples signed contracts with Vacation Liquidation Management (VLM), others with Mercury Property Management or Timely Travel, but the offer was the same. However, the couples interviewed say they have never received the promised money for their weeks and question the legitimacy of these marketing companies as well as the annuity company, Amerashare.
In April of 2014, Chris and Emily Groszczyk, from Illinois, signed a contract for the Residence Club at Coco Bay Estates and membership in Luxury Leisure Alliance (LLA). The sales representative promised that a marketing company called Timely Travel would rent four of the five weeks they bought for $2600 per week. “I would have never signed with them had the Timely Travel offer not been there,” Mr. Groszczyk said. “This was the biggest mistake of my adult life, going to visit this place,” he affirmed.
According to Fernando May, one of four owners of Four Palms Marketing, these companies that supposedly will rent vacation weeks for potential buyers have never been part of his company’s contract. May blames unethical sales reps “with bad habits” for these false offers.
“We know it happens,” he said. In Playas del Coco, where his business has been operating for seven years, he said they have had suspicions of such false offers by sales representatives but haven’t had proof. However, May said they have “separated” from suspicious sales reps three times in those seven years, and one of these cases was the sales manager just a few months ago.
The Voice of Guanacaste saw the contracts, which indicate that buyers understand that renting or reselling vacation weeks is not the responsibility of Four Palms Marketing (May’s company), that no employee of that company or affiliated companies can rent weeks for the buyers and that they do not recommend any third party companies to provide such services.
For the five couples interviewed, however, these disclaimers in the contract did not set off red flags.
Brenda and Bob Bickerton, from Winnipeg, Canada, signed a contract at Coco Bay in January, 2014. They didn’t think the third-party disclaimers applied in this case because the purchase contracts and the marketing contracts were negotiated together at Coco Bay. “None of either contract has been lived up to,” Bickerton asserted. They asked for their money back but were denied and have been working with their credit card company to see if they can get the charges reversed as fraud, so far, with no success.
Communication Roadblocks and Runarounds
All of the couples interviewed expressed frustration in attempting to communicate with the third-party marketing companies, the annuity company and in trying to make reservations through LLA.
Patricia Hurtado and her husband signed a contract at Bahia Turquesa Residences in Playas del Coco in July, 2013, along with a contract with Mercury Property Management for rental services and to transfer ownership of their other timeshare. “I have constantly been communicating with them by email . . . and they continue to prolong the process with various excuses,” she related.
The Voice contacted the receptionists of Coco Bay Estates and Timely Travel by phone, requesting to interview their managers, but we didn’t receive answers. We also sent them emails with questions but received no reply. We called Vacation Liquidation Management and Amerasahre to speak with them directly but always got answering machines. We left messaged but no one ever called back.
Most of these companies introduced during the sales presentations have virtual offices, casting doubt on their legitimacy.
Amerashare has a virtual office in Hong Kong. The Voice received a response by email from Amerashare representative Richard Johnson, who wrote, “Coco Bay Estates and LLA is a Vacation club in Costa Rica that we used to contract with to present our annuities.” He explained that their annuities are based on 6% of the purchase price at the resort and are designed to assure resort developers around the world that each new client will make their payments and keep up with maintenance fees as outlined in the contract. At the same time, the client benefits because as long as they follow the terms and conditions, in 25 years the 6% deferred to their annuity would mature to the value of the purchase price, essentially paying them back what they invested.
When The Voice requested additional information about the company from Johnson, he did not reply.
A person who works at Coco Bay Estates but wished to remain anonymous informed The Voice that he and his coworkers witnessed when the LLA sales team set up shop and quickly opened a restaurant there, and wondered at the speed of it. “Anything that fast, there’s got to be something wrong,” he reasoned. He also noted that within a couple of weeks of when a critical article was posted on insidethegate.com, the restaurant was closed up and the LLA sales team moved out, raising more doubts.
May told The Voice that the LLA sales program has been closed but any client who signed with LLA continues to receive services. He said that they only had 15 units to sell at Coco Bay Estates and that he closed the restaurant because of the time involved in operating it. Now Four Palms Marketing is focused on selling vacation programs at Bahia Turquesa Residences.
While many timeshares and vacation clubs are legitimate, timeshare-related scams occur all over the world, and Costa Rica is not the exception. The lesson learned from all of this is to take the time to read carefully and fully understand all clauses in the contract before signing because in timeshare sales, the promises that are in writing, not those made orally, are the ones that count.
Oral Versus Written Agreements
This type of business is regulated in Costa Rica by the Ministry of Economy, Industry and Commerce (MEIC- Ministerio de Economía Industria y Comercio). The Voice consulted MEIC and was told that the company is registered with them as Coco Sunset Sharing and does not have any sanctions against it.
Evelyn Arroyo Santamaria, from the MEIC public relations and press department, explained, “Verbal promises not included in the written contract that was freely signed by the consumer constitute extra-contractual offers and therefore cannot be utilized to file complaints of unfulfilled contracts through this channel, since the principle that operates here is that the contract is the law between the parties.” This limits the legal recourses available to those who have been scammed by sales representatives’ oral promises.
Photo by Arianna McKinney - View from Bahia Turquesa Residences.