Timeshare upgrade agreement "forfeiture"

I prepaid for a vacation (stupid mistake) while in the Bahamas that carried an option to upgrade to a timeshare. I was asked if I was interested in upgrading the membership, to which I responded "yes". I was sent documents and noticed fees for contract preparation (ie copying off previously drawn up documents and putting sign here stickers on them) in the amount of $300. I never signed or returned the documents. I was them told bc I didn't sign the documents I would now have to pay this additional fee along with FedEx fees. After speaking with the sales agent I was told I would have more time to think it over and my reservations would he booked for my original trip. After this conversation I then received a letter stating I forfeited my agreement and now all monies paid are held as penalty. They are trying to swindle me out of my prepaid trip because I would not sign on for the timeshare. Is this legal when they have no signed documents?

No, it's not legal since you never signed the agreement for the upgrade.

How much did you pay for your prepaid vacation? Did you sign an agreement/contract for this? If so, you have legal proof that you bought a prepaid vacation and they will have to honor it, period.