Supplementary memorandum by Citizens Advice
1. INTRODUCTION
1.1 Citizens Advice was asked by the Committee
to provide follow-up evidence in the following areas:
— Coherence of consumer protection
legislation.
— Problems with exchange agreements.
2. COHERENCE
OF CONSUMER
PROTECTION LEGISLATION
2.1 The proposed new Directive presents
an opportunity to look at how various Directives could work together
more effectively to achieve more coherent consumer protection
legislation. In our initial written evidence we cited distance
selling, doorstep selling and package holidays as areas which
are relevant to the Timeshare Directive. This section looks at
these areas in more detail.
2.2 Citizens Advice Bureaux often report
cases where the telephone, normally associated with distance selling,
has been the conduit for engaging consumers in timeshare-like
sales and resales. To sell holiday club deals the initial call
claims that the consumer has "won a holiday" but the
objective is to ensure that a presentation is attended during
this "holiday"and it is often necessary for flights
to be bought.
A 70 year old CAB client from Somerset living
alone and suffering from depression and paranoia received a telephone
call telling her she had won a holiday. There were people cheering
in the background. She thought they said she needed to pay £7
booking fee so gave her credit card details. £584 was taken
from her account. Her doctor telephoned the company to explain
the position but they would not speak to him. The paperwork received
also shows the accommodation is timeshare, flights, meals and
transfers are not included. The paperwork also says the offer
is only available to people in paid employment.
A CAB client from Devon sought advice on behalf
of her brother-in-law who is mentally disadvantaged and receives
Incapacity Benefit and Disability Living Allowance. He received
an unsolicited phone call from a company in Florida, offering
a Florida holiday for four for £700, and he paid over the
phone by credit card. It later transpired that the offer was only
for accommodation and did not include flight tickets. It was actually
from a timeshare company. Repeated phone calls and correspondence
have failed to produce a refund of the £700, despite the
website offer of this in the event of cancellation within 30 days.
Based in part on the client's complaint, the Florida Department
of Agriculture and Consumer Services have filed an action against
this business, illustrating the global practices in this market.
2.3 The cross-over between timeshare and
doorstep selling has meant that doorstep selling law applies in
cases where consumers are taken to a venue off business premises,
such as a local hotel, for presentation of products that successfully
evade the timeshare legislation.
A CAB client from Somerset who was HIV+ was given
a scratch card whilst on holiday in Malta. He was told he had
won and told: "just come and hear about our holiday club".
At the presentation he was persuaded to sign up to a 20 year deal
for £11,600. He wanted to cancel and expects that his health
would not allow him to use the holiday club. The credit company
is based in the UK but the agreement says it is governed by the
laws of the British Virgin Islands. He was not covered by timeshare
law and the credit company has refused his request to cancel.
But the bureau advised that he should have received cancellation
rights under the Doorstep Selling Directive.
2.4 The cross-over between timeshare and
package holidays has long been a concern for Citizens Advice,
and was highlighted in the 2003 report Paradise Lost which looked
at CAB clients' experiences in the timeshare and timeshare-like
market. This report noted that the products sold in some holiday
club agreements included the very elements that package holiday
regulations was designed to protect—those offering both
travel and accommodation.
CAB clients from East London sought advice about
the lack of consumer protection covering their experience of pressure
selling of a holiday club product. While they were in Tenerife,
they had been approached by someone who offered them a Club Class
Holiday scratch card free of charge, offering 40% discount on
hotels and 50% off flights. They scratched the card and we told
that they had won a prize. The person then took the clients about
150 yards from where he met them, into the office of the supplier.
Because the accommodation and flights are often supplied by different
businesses it is not clear that the Package Holiday Directive
would cover this contract, despite them being sold to the consumer
as linked elements.
3. PROBLEMS WITH
EXCHANGE AGREEMENTS
3.1 Consumers often pay annual fees in order
to enter into exchange arrangements to use accommodation at other
resorts. This section looks at CAB evidence where the alternative
accommodation has failed to meet the consumer's expectations,
highlighting the difference between what has been described and
what is delivered.
A CAB client from the Lake District was sold
a holiday club membership in Spain, which did not live up to expectations.
There was poor availability and the accommodation was substandard,
leaving the client £10,000 out of pocket, having had only
one holiday in three years.
A CAB client from the West Midlands was sold
a holiday club that promised five star hotel accommodation at
three star prices. He had specified that holidays had to be taken
during school breaks, as his wife is a teacher. He confirmed all
holiday dates in writing. When he tried to book he was told by
the Spanish agency that arranging bookings that the company have
no access to these five star hotels and he had never succeeded
in making a booking. The holidays have proved a source of frustration
and delivered nothing, he thinks it is a scam.
A Northumberland family sought advice about ending
their 39 year holiday club agreement, which should have enabled
them to go on holiday to any chosen hotel, anywhere in the world
and get a free week with an automatic upgrade to luxury status.
They were very unhappy and upset with the standard of the hotel
accommodation on the one holiday they took using the "points"
system. The client signed the deal for over £7,000 and then
had to pay £77 per month admin charges. They paid a deposit
and put the rest of the money on the credit agreement. The bureau
calculated the overall cost as £12,000. The company has already
gone into liquidation and been taken over twice. The credit was
arranged there in the hotel for them so the contract appears to
have been made off trade premises, which should have attracted
doorstep selling rights.
14 November 2007
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