Timeshares are not for everyone.
Many people appreciate the regularity of knowing they have a block of time reserved to vacation in a specific resort each year. However, preferences change, the ability to utilize the timeshare may not be as initially advertised, and annual resort fees and maintenance costs often increase each year.
Owners often conclude the time has come to divest themselves from their timeshare interest and find themselves stuck in a contract of indefinite length.
For this latter group, an entire commercial industry exists to assist timeshare owners with exiting their contracts. The exiting process typically means selling their timeshare interest to a third-party buyer or negotiating the return of the timeshare interest to the issuing company or resort.
Unfortunately, not every company in the timeshare exit industry acts scrupulously. Some take advantage of timeshare owners, who are frequently elderly and desperate to sell their interests in the face of rising annual costs.
These companies often charge exorbitant up-front fees and promise to divest the owners’ timeshare interest within a specified time. They may advise the owner to cease paying the annual fees and costs. They frequently advertise that owners will receive a full refund in the event the timeshare exit company’s actions are unsuccessful.
In reality, though, the success rate of these companies can be extremely low, and the companies often renege on their rosy promises of a money-back guarantee. Further, owners acting on the advice of the company to cease paying the annual fees are often subjected to collection actions to recover the amounts that remain due under the timeshare contract.
A Victory for the State of Wisconsin
Recently, the State of Wisconsin partnered with the United States Department of Justice to successfully sue one unscrupulous timeshare exit enterprise.
Kevin Trost, U.W. 1998, is the founding member of
Trost, LLC, in Madison, where his practice focuses on real estate, construction, and contractual matters.
In
United States of America and State of Wisconsin v. Consumer Law Protection, LLC, et al., the United States and Wisconsin departments of justice filed suit against a group of interrelated companies that offered to assist timeshare owners in selling their timeshare interests in exchange for an up-front fee. These fees ranged from a few thousand dollars to up to $80,000.
The companies promised to sell owners’ timeshare interests within one to two years or the owners would be refunded the up-front fees. Salespersons advised they were well positioned to assist timeshare owners because they were affiliated with certain large timeshare providers. The owners of these timeshare exit companies also reassured skeptical prospective customers that they could be trusted because their companies were accredited by the Consumers Rights Council, a nonprofit entity.
In reality, the interrelated companies advertising timeshare exit services had no partnership or association with the organizations selling timeshare interests. Further, the reassuring accreditation was provided by a nonprofit established by the timeshare exit companies’ owners.
In less than 20% of cases did the defendant companies actually fulfill their promise to sell or transfer the timeshare interests they were paid significant fees to divest. Moreover, less than 2% of disappointed clients were able to successfully obtain a refund of their up-front fees after their timeshare interests were not sold or transferred.
In April 2026, the United States District Court for the Eastern District of Missouri granted summary judgment in favor of the State of Wisconsin and the United States Department of Justice against the last remaining defendant, Christopher Carroll.
The federal court deemed Carroll to be the mastermind of this timeshare exit scheme that had defrauded over 11,000 consumers. The court enjoined Carroll and the interrelated defendant business entities from selling timeshare exit services. The court also entered a judgment of $95 million for actual damages and $45 million in additional damages as a civil penalty.
Legal Claims
The United States was successful in pursuing claims for violation of the Federal Trade Commission Act.
Specifically, the United States had alleged that multiple promises and statements made to prospective customers were misrepresentations that constituted “unfair or deceptive acts or practices” affecting commerce in violation of 15 U.S.C.§ 45.
It also asserted that the defendants had violated the federal “cooling off” rule applicable to certain sales made in peoples’ homes or in temporary sales venues like hotels. Under 29 C.F.R. § 429, in certain high-pressure sales presentations, salespersons are required to provide both a verbal and written notice of customers’ right to cancel a contract within three business days. Customers must also be provided with a cancellation form. The required notices and forms were regularly missing.
The State of Wisconsin sought relief under the Wisconsin Direct Marketing Rule, Wis. Admin. Code § ATCP chapter 127, and the Wisconsin Fraudulent Representations Rule, Wis. Stat. section 100.18.
Under the Direct Marketing Rule, Wisconsin alleged that the defendants violated Wis. Admin. Code § ATCP 127.32 by not disclosing the actual nature of the sales presentations in its mailings to potential customers. It also alleged the defendants violated Wis. Admin. Code § ATCP 127.46 and 127.74 by failing to provide customers with a state-required notice of a right to cancel and failing to honor such cancellation requests.
Finally, Wisconsin asserted violations of the Fraudulent Representations Statute for advertisements, statements, or representations to one or more members of the public that were “untrue, deceptive, or misleading” resulting in a monetary loss to affected consumers.
The Takeaway
While the above-described scam affected tens of thousands of individuals, the State of Wisconsin may not have the capacity to pursue every company which pressures members of the public into timeshare exit scams.
Nevertheless, citizens have the ability to proceed with legal claims on their own. Both the Wisconsin Direct Marketing Rule, enforced through Wis. Stat. section 100.20, and the Fraudulent Representations Statute allow for private causes of action with the possibility of a fee shifting award.
This article was originally published on the State Bar of Wisconsin’s
Solo/Small Firm & General Practice Blog of the Solo/Small Firm & General Practice Section. Visit the State Bar
sections or the
Solo/Small Firm & General Practice Section web pages to learn more about the benefits of section membership.