Prior to 1992, the Timeshare industry was literally like the Wild West!!

The first substantive law brought into the UK was the Timeshare Act 1992 which, with various amendments, in 1997 continued until on 23^rd February 2011, when it was replaced by the Timeshare Holiday Products, Resale and Exchange Contracts Regulations 2010.

Under the 2010 Regulations a timeshare sales representative must not market or sell a proposed timeshare contract or long-term holiday product contract as an investment. However, as many of you will know this is something that 

If this is contravened, it means that the timeshare company have committed an offence.

When someone buy’s a timeshare, they will be signing a binding agreement with the timeshare company that can be hard to escape. So, it is advisable beforehand to do lots of research before signing an agreement. Research the company on line, do some company checks. If in doubt contact Trading Standards. Do not believe everything that you see on-line.

Make sure an independent lawyer reads the contract before you sign it. Always remember that under the Timeshare Regulations you have cancellation rights and you MUST always be given this in writing. The 2010 Regulations is based on an EU Directive, and so If you’re signing in a European Economic Area (EEA) country, you will always have 14 days to change your mind.

At the timeshare presentation it is advisable to try and make a note of everything that the salesman promises. This is vital. Any promises made, or representations made, which induces the consumer to enter into the contract, which later turn out to be false, will be deemed to be misrepresentations, and could lead to a claim being made against the timeshare company.

Under the 2010 Regulations it’s a criminal offence for companies to request or take money from the prospective timeshare purchaser during the 14-day cooling off period. The Regulations actually say, “any financial consideration”. So watch out for this.

The Timeshare Regulations imposes various obligations on the seller of the timeshare. They are as follows:

1. Cancellation obligations
2. Cooling-off period obligations
3. Information obligations

 

Cancellation Obligations

The exact form by which the purchaser can cancel the timeshare agreement without any loss or without giving any reason must be provided to the buyer. This is usually between day one and day fourteen of the agreement with day one being the day that it is signed by both parties.

If this notice is not provided to the consumer then they will be able to cancel the contract at any time.

It is often the case that when a consumer enters into a timeshare agreement they also enter into a credit agreement, which is either provided by the timeshare company, or an independent finance company, that the consumer is introduced to by the timeshare company. In such a case they must also be provided with the option of cancelling the credit agreement if they cancel the timeshare agreement.

The customer must also be provided with a notice stating the rights of cancellation of the credit agreement. Within this notice must be the address to which the cancellation notice must be sent to and a blank cancellation notice which the customer can use to cancel the agreement.  If either of these forms are not provided to the prospective buyer, then they will be able to cancel the contract at any time during the future and will not be required to pay any of the respective cancellation fees.

Cooling-off Period

The buyer of the timeshare must be provided with a cooling-off period of 14 days whereby they will not be required to pay any money, or any advance consideration. If the buyer tries to force the seller to pay any money during this period, then the buyer will be guilty of a criminal offence.

Information Obligations

Under the Timeshare Regulations the seller of the timeshare must provide the buyer with the following information:

• A full description of the accommodation
• A full description on how such things as the maintenance of the complex in which the accommodation is maintained. If the accommodation is not part of a complex the seller will still be required to detail all the information in relation to the buyer’s obligations of maintenance.
• A full description of the services available to the buyer and the conditions of their use

 

With regard to the actual timeshare presentation, these can be very high-pressure situations. Consumers need to be on their guard against being talked into signing up for something that they later regret. Prospective purchasers of timeshare need to watch out especially for the following situations:

• the presentation has lasted so long that you are tempted to sign just because you are desperate to leave. See reference to CPR’s below.
• they have made you a special discounted offer valid for that day only. This is quite common. Again, see reference to CPR’s below.
• You are not left alone to discuss anything with your partner. You may also be kept separate from other couples and even discouraged from taking notes

Remember:

• you can always walk out of the presentation. No one can make you stay, no matter what the salespeople may try and tell you. If anyone tries to make you stay at a presentation they are committing a criminal offence. It is also one of the 31 banned practices under the CPR’s 2008
• however much pressure the sales people put you under, you should never agree to anything on the spot. Refuse to sign anything then and there. Take the documentation home with you and sleep on it. Better still, get an independent solicitor to check it over.
• never take your credit card or debit card with you to timeshare presentations or give them any financial details

Potential Scams

Whilst there are many legitimate companies who run timeshares, unfortunately, there are also lots of dishonest traders operating scams and frauds. We have three lever arch folders full of them.

Our advice to consumers would be to be very wary of letters, phone calls or emails from companies you don’t know offering you business deals out of the blue. Or offering to guarantee to get you out of your existing timeshare. If you keep getting these calls, register with the Telephone Preference Service. This should stop these calls coming through.

The Consumer Protection Regulations 2008 (CPR’s)

The CPR’s which deal with misleading statements and omissions, are also relevant with regard to a timeshare purchase.

The CPR’s 2008 protects consumers from unfair or misleading trading practices and ban misleading omissions and aggressive sales tactics.

There are three main sections in the “Regulations”. These are as follows:

• A general ban on unfair commercial practices
• A ban on misleading and aggressive practices which are assessed in light of the effect they have, or are likely to have, on the average consumer
• A ‘blacklist’ of 31 commercial practices which will always be unfair and so are banned outright

Of the 31 banned practices the ones that would be most applicable to the sale of timeshare would be:

• Bait advertising.  Luring the prospective timeshare purchase with attractive advertising around special prices when the timeshare company knows that they cannot offer that product.
• Explicitly informing a potential customer that if they do not buy the timeshare, that their job or livelihood will be in jeopardy.
• Bait and switch.  Promoting one timeshare product with the intention of selling them something else
•  Claiming in to offer a prize without awarding the prizes described or a reasonable equivalent.
• Creating the impression that the potential timeshare owner cannot leave the premises (“hot room”) until a contract is formed. This is quite common. These can last for several hours.
• Limited offers.   Falsely stating that a timeshare product will only be available for a very limited time, or that it will only be available on particular terms for a very limited time, in order to elicit an immediate decision and deprive the prospective purchaser sufficient opportunity or time to make an informed choice.
• Pressure selling.   Creating the impression that the consumer cannot leave the premises until a timeshare contract has been formed. Classic “hot room” technique, of which we have hundreds of examples from RDO members.

Again, under these Regulations sometimes it’s not what’s said that’s the problem, it’s what’s been left out that’s the issue.

So, in this regard, the Regulations also offer protection against timeshare sales representatives who are economical with the truth or miss out key information that the prospective timeshare purchaser might need in order to make an informed decision, as to whether or not to make the purchase.

The sales representatives must also make sure that the information is provided in a timely manner – and not so late that it’s of no use to them.

So, a timeshare sales representative will be committing an offence under the CPR’s if he/she does any of the following:

• omits material information that the average consumer needs, according to the context, to make an informed decision about a transaction
• hides or provides material information in an unclear, unintelligible, ambiguous or untimely manner

As you will appreciate a timeshare sales person, could sell ice to Eskimo’s. They are well trained. Once again, the CPR’s do offer protection. As sales tactics can greatly influence a consumer’s decision, sales representatives who fail to take no for an answer, or try and keep the prospective timeshare purchaser at the presentation until a contract is signed or use threatening behaviour will be committing an offence under the Regulations. This is one of the 31 banned practices, as mentioned above.

A commercial practice is considered aggressive if, by means of harassment, coercion or undue influence, it significantly impairs (or is likely to significantly impair) the average consumer’s freedom of choice or conduct, which then leads the consumer to take a transactional decision that they would otherwise not have made.

The legislation contains a list of criteria to help determine whether a commercial practice uses harassment, coercion, including physical force, or undue influence.

Undue influence is defined as ‘exploiting a position of power… to apply pressure even without using or threatening to use physical force, in a way which significantly limits the consumer’s ability to make an informed decision.’ This sort of conduct often takes place during the sales process, in the so called “hot room”, where often prospective purchasers are offered alcohol.

Since October 2014, new amendments have been made to the 2008 CPR Regulations which gives the consumer new rights of redress. Prior to this date, it was only Trading Standards who could bring enforcement action under the Regulations. However, there is now thanks to the 2014 amendments, a civil remedy, which a consumer can bring if he/she has been the victim of a misleading action – for example a false statement – or aggressive selling.

Under the 2014 amendment, the consumer now has a right to undo the contract. They will have 90 days to end the contract and get a full refund. The 90-day time limit will start on the latest of when:

• they entered into the contract
• they first received the services

It’s important to note that if the individual took out finance to pay for their timeshare (which is often the case) that was made because of misleading or aggressive selling, that they can also get out of the finance contract and recoup anything that they have paid.

There are also some additional remedies under the 2014 amendment, but the 90-full refund, is the most important.

The above are perhaps the two most important pieces of legislation relating to the sale of timeshare, but other equally important legislation which is used to protect the consumer includes:

The Consumer Credit Act 1974 as amended, also provides an opportunity for consumers who paid by credit card or used a ‘linked’ loan for the purchase, to obtain recompense from the lender, if there has been a misrepresentation, or “irresponsible lending”. We have seen many examples of the latter. Of particular importance is s.56, s.75, S140a and s.140b, the latter two sections deals with “unfair relationships”.

The Unfair Terms in Consumer Contract Contracts Regulations 1999 provides Trading Standards with the power to stop the use of contracts which are unfairly biased against consumers. Replaced by the Consumer Rights Act 2015.

The Distant Selling Regulations 2000, which were recently replaced by the Consumer Rights Act 2015 provide consumers who purchase a product or service ‘at a distance’ (i.e. telephone, internet etc.) to cancel the purchase. However, there are a number of services which are not covered by these regulations.

If you consider the law has been broken

Report the matter to your local Trading Standards. Try and do this as quickly as possible.

If you used a credit card, also notify your credit card company as soon as possible.

Remember, if you don’t want to discuss timeshares over the phone, HANG UP!

Always be suspicious of people or companies who say that they can guarantee to get you out of your timeshare.

Never give confidential personal or financial information to cold callers.

If you already own a timeshare, beware of resale scams. This is where you may be cold called by someone claiming they can market your timeshare for a fixed fee and, if it doesn’t sell, they will buy it from you, or they will offer to buy the timeshare if you agree to buy another one. You could end up losing money by making upfront payments or with a second timeshare that you don’t want. They will then pass your details on, and so the process continues. Report all scams to Action Fraud UK and your local Trading Standards.

Top tips when you’re deciding whether to buy a timeshare:

A timeshare is not a property investment so it’s very unlikely to hold its value. If you are told that a timeshare agreement is an investment they are committing a criminal offence.

Remember you’re unlikely to be able to sell your timeshare for anything like what you paid for it. Some people cannot even give them away.

Always think about whether you will want this type of holiday every year, or for many years

Some timeshare agreements are in perpetuity. This means they last forever. Check how long any agreement lasts before you sign. Anything over 50 years is normally referred to as “in perpetuity”.

With timeshare you will always have to pay your maintenance fees every year for the length of the agreement, and they will always normally go up. Think about whether you will still be able do this if you retire, become very ill or you lose your job.

Depending on where you purchase your timeshare, remember that some countries haven’t put the European regulations that protect timeshare owners into force. If you sign in one of these countries, you’ll have much less protection. In such a case ALWAYS use a credit card, as this will give you protection.

Do lots of research before signing an agreement. Research the company and ask for several references

Make sure an independent solicitor, who is SLA regulated reads the contract before you sign it. Take the contract away. Remember you have a 14-day cooling off period. Make a note of everything you were promised, and make sure it’s in the contract. If it isn’t, refuse to sign.

Always ask about your cancellation rights and get them in writing. If you’re signing in a European Economic Area (EEA) country, remember that timeshare regulations give you 14 days to change your mind.

Remember it’s a criminal offence for companies to request or take money from you during the 14-day cooling off period. The Regulations say, “any advanced consideration”.