CRACKDOWN ON TIME SHARE OPERATORS & HOLIDAY CLUBS
(24 November 2003)

A new report published by Citizens Advice today calls on the government to crack down on rogue traders in the holiday club and timeshare market who find ways round the law to fleece unwary holiday makers. Paradise Lost, based on evidence from over 150 Citizens Advice Bureaux shows that the Timeshare Act 1992 is failing to prevent consumers from being ripped off by holiday clubs or timeshare resale scams.

Over 440,000 UK consumers own a timeshare, costing an average of £6,500. Within the UK alone the timeshare market is worth over £108 million per annum and this does not include members of holiday clubs. Citizens Advice Bureaux continue to report serious concerns about the lack of protection for consumers joining holiday clubs, buying timeshare on boats or selling their timeshare.

David Harker, Citizens Advice Chief Executive said: 'The law offers less protection to consumers buying holiday club membership than for timeshare, so many rogue traders are making a fortune by using the old tricks - high pressure selling, false or misleading information and using prizes to get people to attend a sales presentation. With no cooling off period, many people are losing hundreds or even thousands of pounds if they try to cancel a deal.

'Promises of holidays for years to come are failing to deliver. People are ending up with holidays that cost far more than they would on the high street, that's if they can book anything at all.

'We want to see the Timeshare Act 1992 amended so that consumers buying holiday club membership or timeshare on a boat have the same rights as those buying timeshare in a building and for legislation to include contracts of less than 36 months.'

Some of the main problems identified in the report are:

• Companies offer prizes to get people to attend presentations, where pressure-selling techniques are used to push them in to buying holiday club membership. People are assured that it is not timeshare - it isn't and this leaves them with less legal protection.
• The presentation goes on for so long that people are desperate to leave and more likely to sign. 'Special deals' are promised which supposedly won't be available later.
• Timeshare law is too narrowly defined, so it excludes contracts of less than 36 months or timeshare on boats. Holiday club contracts of 35 months are common.
• There is no cooling off period, there is no requirement to provide written information and it is not illegal to take deposits at sales presentations, as long as the product falls outside the legal definition of timeshare.
• There is no protection for timeshare owners who get ripped off by re-sale companies, which take a fee and deliver nothing.
• There is no obligation for holiday clubs to provide written information about how much accommodation there is, when and where it is available and how many other members are competing for it. This makes it impossible for people to assess the likely availability until they try to book.

Citizens Advice says the UK government should amend the Timeshare Act 1992 at the earliest possible opportunity to include holiday clubs and other similar schemes such as vacation clubs, shared membership clubs and timeshare on boats. Contracts of less than 36 months should also be covered. As so many schemes operate across the EU, the EU Timeshare Directive also needs to be reviewed to take account of holiday clubs and similar schemes.

The proposed EU Unfair Commercial Practices Directive will outlaw some unfair and misleading trading practices, but will not give consumers who buy holiday club products the same protection as those buying timeshare. The new Directive is designed to be used with existing consumer protection legislation. Citizens Advice points out that the Unfair Commercial Practices Directive will also need to enable consumers to take civil action against traders who act unfairly. At present it is not at all clear that this will be the case.

The following are recent cases from Citizens Advice Bureaux:

A couple in Dorset went to a CAB for advice after 'winning' a prize on a scratch card during a Spanish holiday. They were subjected to a 5 hour presentation and pressurised into buying a holiday club membership lasting 35 months and costing £1,000. When they got home they were horrified to receive a demand for £12,000 and discovered that the holiday club had also taken a £600 deposit, tricking them into paying twice by putting two credit card slips of £300 together for them to sign. They were unable to get the £600 deposit back, but paid nothing towards the £12,000 demand and have not heard anything from the company since.

A CAB in south London gave advice to a couple who joined a holiday club and wanted to cancel after 24 hours. They had received phone calls and letters from a company saying they had won a 'free' holiday and inviting them to a presentation at a hotel in Croydon. They eventually decided to go, after being assured by the company that it was not about timeshare. They were pushed in to joining for £750 and paying a £100 deposit on the spot. As soon as they got home they wanted to cancel, because of the death of a family member abroad. The holiday club said it was not possible, as they had no cooling off period or cancellation rights.

A CAB in Staffordshire gave advice to a couple who had been persuaded to join a holiday club for 35 months when they were on holiday in Spain. They were told that they needed to pay £1,000 deposit, then a further £1,945 later. This would buy them free accommodation for 35 months, then after 36 months they would get £2,500 cash back, through a 'redemption plan'. They went on holiday to Spain for a week twice in 3 years, getting free accommodation but paying for their flights and other expenses. After 3 years they tried to claim their cash-back. The company said they needed to pay a further £323 to release the money, which they paid. Now the company is claiming that there were tiny errors in the paperwork and is refusing to pay up, so this couple have paid £3,268 for 2 weeks accommodation in Spain.

A CAB in East Sussex reported their 69 year old client, a recently widowed woman, had attended a presentation on the assurance that there would be no pressure to buy and that there was a prize to collect. She had no intention of buying and avoided doing so during the first 90 minutes. When the salesman was replaced by someone more forceful she was persuaded to sign an agreement and paid £1,000, using a credit card. The contract was for one week's use of the boat for 74 years, costing £7,495 plus annual maintenance of £249. This is a very long period for a narrow boat to continue in use. If she used this week for the next 10 years, which seems a more likely scenario, it would cost at least £1,000 a year, making it more expensive than hiring from many canal boat rental companies. Following advice she asked her credit card providers to give her a refund. Her ground for this request was that the purchase had been grossly mis-represented to her following a hard sell and that she had had no opportunity to read the paperwork where she later found hidden charges.

In the year 2002/2003 Citizens Advice Bureaux advised people on 1,063,526 consumer problems including consumer goods, services and debt. Problems with timeshare and holiday clubs are one of the largest sources of complaints for European Consumers Centres. Citizens Advice acts as the European Consumer Centre for the UK. Consumers can go their local CAB for advice about problems with purchases in other EU member states.

Trading standards departments reported over 4,400 complaints about holiday clubs and similar products in 2002. In March 2003 the OFT was investigating around 100 cases, each containing between 20 and 60 complaints against a holiday club operator.

ABOUT CITIZENS ADVICE BUREAUX

The Citizens Advice service is an independent organisation that helps people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, sex, disability, sexuality or nationality. Most Citizens Advice service staff are trained volunteers, working at around 2,000 service outlets across England and Wales

To read the CAB's Top Ten Tips on Holidays Clubs & Time Share click here, www.adviceguide.org.uk.

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