Congrats – you’ve won an all-expense paid vacation to the Bahamas! It’s a dream come true! Or is it? Unfortunately, if you receive notification that you’ve landed a free luxury vacation, you’ve likely been targeted by a scam. Here’s what you need to know about free vacation scams and how to protect yourself from falling victim.

How the scams play out

In a free vacation scam, a target will receive a letter, email or text message informing them that they’ve just won a sweepstakes for a free luxury vacation. They’ll be asked to pay a small fee or tax to help process the prize. Alternatively, they may be asked to share their credit card information before they can claim the prize. Sadly, after paying the fee, they’ll never hear from the sweepstakes company again.

In another variation of this scam, the target is asked to attend a “short” meeting before they can claim their prize. This turns out to be a prolonged and overt sales pitch for a time-share purchase or travel-club membership. There may be vouchers for the promised vacation at the end of the class, but they can only be used for specific dates that may not work for the target, and require all sorts of additional fees before the “free” vacation can be redeemed. Also, if the victim signs up for what the scammer is selling, they’ll be charged hefty membership fees with few and/or hard-to-access benefits. When they try to cancel this nightmare membership, they’ll find a tangle of rules and regulations, and may find themselves stuck paying a monthly fee for a full year or more.

Red flags

Look out for these red flags to help you spot a possible free vacation scam:

• You’re told you’ve won a sweepstakes you know you’ve never entered.
• You’re asked to pay a fee or tax before a prize you won can be processed.
• You’re highly pressured to sign up for a time-share purchase or travel club membership.
• You’re told a free vacation offer with a club membership purchase is a one-time-only deal and that you must act quickly to avoid missing out.
• You’re asked to share your credit card information to claim a free vacation you’ve allegedly won.

Protect yourself

Follow these tips to keep yourself safe from free vacation scams:

• Never share personal information with an unverified contact.
• Never agree to pay a “processing fee” or “tax” to claim a prize.
• If a caller insists on payment via gift card or wire transfer, hang up.
• Always read the fine print and do careful research before you sign up for a time-share or club membership. Look up online reviews, ask to speak to current clients or members and be sure to have a clear understanding of the cancellation policy before you join.
• Be wary of club memberships that promise a lot of benefits for very little money. 

If you’re targeted

If you believe you’ve been targeted by a vacation scam, there are steps you can take to mitigate the damage. 

First, if you’ve paid the “processing fee” or “tax” with a credit card, be sure to dispute the charge as soon as possible. If you’ve shared your credit card information, cancel the card and consider placing a credit freeze on your name. Finally, let the FTC know about the scam so they can do their part in catching the scammers. If you’ve been targeted by a travel company, you can also alert the BBB so they can update their ratings and take appropriate action.

Responsible behavior never goes on vacation. Follow the tips outlined here to keep safe from a free vacation scam.

Your Turn: Have you been targeted by a free vacation scam? Tell us about it in the comments.