Timeshare Exit Scheme ordered to Pay $140 Million by FTC

$140 million judgment

A federal court has imposed a $140 million judgment against Christopher Carroll, one of the principal figures behind a timeshare exit operation accused of deceiving consumers, primarily older adults, out of more than $90 million.

The ruling follows an investigation by the Federal Trade Commission and grants summary judgment in favour of the U.S. Department of Justice and the State of Wisconsin. Carroll was the final remaining defendant in the case. Under the court's order, he must pay $95 million in consumer redress, while an additional $45 million civil penalty will be paid to the U.S. Treasury.

Four year journey

The lawsuit was originally filed in November 2022 by the Department of Justice, acting on behalf of the FTC, together with Wisconsin authorities. It targeted a network of businesses operating under the name Consumer Law Protection, along with several related entities and their owners and operators, including George Reed, Louann Reed, Scott Jackson, Eduardo Balderas and Carroll.

According to the complaint, Carroll served as president and chief executive officer of Square One Development Group, one of several companies allegedly used to carry out the scheme. Other businesses named in the case included Premier Reservations Group, Resort Transfer Group and Timeshare Help Source.

Deceptive practices

Authorities alleged that the operation relied on direct-mail campaigns and face-to-face sales presentations to persuade consumers to purchase costly timeshare exit services. Consumers were allegedly misled through a range of deceptive practices, including false claims of affiliation with timeshare companies and assertions that owners could not exit their timeshare obligations without paying substantial fees to the defendants.

The complaint also alleged that promised refunds were frequently not provided and that consumers were pressured into signing contracts they were told could not be cancelled. Regulators said this violated the FTC's Cooling-Off Rule, which gives consumers three business days to cancel certain door-to-door sales contracts.

Permanent bans

Beyond the financial penalties, the court has permanently prohibited Carroll from advertising, promoting, marketing or selling timeshare exit services. The order also bars him from engaging in deceptive door-to-door sales practices and from participating in other misleading conduct outlined in the complaint.

Expert comment

“We commend the FTC for this lengthy, but ultimately successful operation,” says Sharon Johnson, spokesperson for American Consumer Claims (ACC) the company at the forefront of the fight against timeshare consumer malpractice and fraudulent exit firms.

“It is common knowledge that there are plenty of bad actors in the timeshare sector. It is arguably even more insidious when companies to whom people turn to for help let them down as well.

“For anyone who has had a negative experience with a timeshare company, or an exit company, do not despair. Help is out there, but you should research the firm you are thinking of retaining before going ahead with them.”