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Timeshare Directive 2010

The European Union Strengthens Timeshare Laws for Consumer Protection

In early June the European Union took a long, hard look at the timeshare industry and decided that the current consumer safeguards simply aren’t enough. The number of complaints filed against European timeshare companies -- and their loophole variants, “holiday clubs” -- has tripled over the last three years, with monetary abuse costing an estimated 1.2 billion euros ($2.4 bn) per year to UK customers alone, according to the Office of Fair Trading. The industry itself has enjoyed steady growth since its mid-80’s boom, and is now a multi-million dollar, international community. Unfortunately, the number of scams in the business continues to climb, and in Europe they seem to have reached a boiling point.

The EU’s Timeshare Directive was initiated in 1994, when the state of consumer rights was similarly vulnerable. After receiving complaint after complaint by vacationers who had been taken in by false promises and high-pressure sales presentations, the laws were altered to provide more protection. Under this directive, customers have the right to specific, written information about their purchase, and a “cooling-off’ period of 10 days during which no payments can be issued and contracts can be terminated at anytime. Since 1994, however, a number of new companies have organized that don’t technically meet the requirements of a timeshare business. “Holiday clubs,” as they’re called in Europe, sell vacation time that isn’t legally linked to a specific property as it is with timeshares, although the nature – and ethics – of their business tell a different story. “I have been fighting the industry for 16 years,” says Willy Winterfalk, who orchestrates a consumer rights campaign in Scandinavia. “The scams are always the same, just the nameplate on the door is different.”

A typical “holiday club” sales presentation isn’t too different from those given around the world by timeshare companies to dim halls crowded with eager consumers. Sometimes interested customers are given a “free” trial vacation before the presentation, sometimes they’re attracted while already enjoying a resort. In any case, once attending the sales pitch the victims are offered an extended membership (25 years being a popular duration) that entitles them to discounted vacation time. After hours of intense descriptions of the joys of the “holiday club” system, the representatives produce a collection of hefty contracts and continue to press the victims until they sign. The deposit amounts – which would be illegal to collect if the present timeshare laws covered these organizations – are often upwards of £25,000.

The European Commission’s new directive, proposed in June, would not only apply existing timeshare regulations to these “holiday clubs” (as well as cruise ownerships and exchange services) but would also further revise the laws on the books. Sales representatives would be forced to offer clear articulations of the contract terms, in the customer’s native language. This would "ensure they get a realistic picture of the offer and they do not end up being disappointed,” says EU Consumer Protection Commissioner Meglena Kuneva. It would also extend the obligatory “cooling off” grace period from 10 to 24 days, and complicate attempts to charge hidden fees such as “administration charges”.

For some victims of timeshare scams, the changes seem a noble, if modest, solution to what is rapidly becoming a global crisis. Mark Miley, a 38-year-old nurse, purchased a holiday club subscription with his girlfriend five years ago when he had a strong client base and steady income. A little over a week after signing the contract, he lost a main account and could no longer afford the luxury vacations; but he had already missed the “cooling off” window. "It's weighing on us a lot,” he says. “We've only managed to pay £60 back so far and the interest has been mounting up. We're at more than £4,000 now. And what makes it worse is that, even though we're still having to pay the sign-up fee, there's no way we can afford to take advantage of the cheap holidays.”

But while extending the grace period and making “holiday clubs” accountable for their sales tactics would have helped someone like Mark Miley, industry experts say the scams will continue unhindered. Peter van der Mark is the secretary-general of the Organisation for Timeshare in Europe, an alliance of businesses that promotes and regulates the European timeshare trade. He criticized the directive for applying the laws to holiday clubs, which “have nothing to do with property timeshare. They should be regulated separately, or under broad laws concerning aggressive sales techniques.” He continued, “Fraudulent companies will [simply] alter the way they operate to escape the regulations, as they have done in the past.”

These addendums to the Timeshare Directive were largely the result of complaints from the UK, which according to recent results is responsible for over one-half of the timeshare trade in Europe and approximately one-third of all timeshare ownership in the world. If approved, the new laws will be effective in 2010.

The directive’s official website.

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