Court Orders Operator of Timeshare Exit Scheme to Pay $140 Million Related to FTC Allegations the Scheme Took Millions from Consumers

Following an investigation by the Federal Trade Commission, a federal court has ordered one of the key operators of a timeshare exit operation to pay $140 million and has permanently banned him from marketing similar services in the future over allegations the scheme defrauded consumers-mostly older adults-out of more than $90 million.

The court granted summary judgmentto the Department of Justice and state of Wisconsin against the last remaining defendant in the case, Christopher Carroll, one of the top operators of the scheme. The court ordered Carroll to pay $95 million in redress to consumers and a $45 million civil penalty, which by law goes to the U.S. Treasury.

In November 2022, the Department of Justice, on behalf of the FTC, and the state of Wisconsin sued a company going by the name "Consumer Law Protection" and related companies, along with Carroll and other owners and operators: George Reed, Louann Reed, Scott Jackson, and Eduardo Balderas. Carroll served as president and CEO of the Square One Group, one of the corporations the defendants used to perpetrate their scheme, along with Consumer Law Protection, Premier Reservations Group, Resort Transfer Group and Timeshare Help Source.

The scheme used direct mail and in-person presentations to make an array of deceptive claims to pressure consumers into paying for timeshare exit services. These included falsely claiming to be associated with timeshare companies; falsely telling consumers that they couldn't exit a timeshare without paying the defendants' exorbitant fees; failing to provide promised refunds; and forcing consumers to sign contracts that they were told they couldn't cancel in violation of the FTC's Cooling-Off Rule, which guarantees consumers the right to cancel a door-to-door sales contract within three business days of the sale.

In addition to the $140 million judgment, the court's order also permanently bans Carroll from advertising, marketing, promoting, or offering for sale any timeshare exit service; from engaging in any deceptive door-to-door sales; and from engaging in other deceptive and misleading conduct detailed in the complaint.