There have been a couple of similar cases, hence it could be accurate. People in Vegas have been making money out of such scams where they sell fake timeshares or rent you one that is not completely worth it.
I believe so. The reason is that because you rented the property, they have lost that chance for income if they give back the money. Also people would abuse that, and use it as a way of reserving property they may or may not use.
If you signed a contract you might have lost your money. You might want to see a lawyer just in case if you did not you just might get your money back. Before doing anything you should talk to a lawyer in your state if you don't live in Nevada they might have different laws in this.
The contract probably says if you block that time spot you are obligated to pay for it whether you show up and use it or not. Because they would be loosing money because they could have saved that week for someone else.