Memorandum by Tony Sedgwick
1. In response to the invitation contained
within the published document into an Inquiry into the Replacement
of the EU's Timeshare Directive I humbly make this submission
for your consideration.
MY BACKGROUND
2. For the four years ending 31 May 2006
I was the CEO of the International timeshare Resale Association
(ITRA), a self regulatory body set up by Timeshare Resale Organisations
with the avowed aim of ensuring member companies of ITRA in the
Timeshare Resale Industry, would voluntarily submit to the oversight
by the association and its terms of membership and discipline
codes for the protection of their own clients and the companies
themselves by agreeing to be so regulated and to ensure compliance
with all relevant legislation. The Association was the brainchild
of the owners of ETOO/Club Class Holidays and I was asked by the
owners to research it and run it, and then to develop the website,
which I did.
3. I was made redundant by the owners of
the company employing me (Club Class Holidays (Gibraltar) Ltd
when I uncovered evidence of Criminal activity by the main funding
body of ITRA, the European Timeshare Owners Organisation (ETOO),
who, as such founding member company agreed to be bound by the
same terms as everyone else, however, the company refused to comply
with the regulations to curb the fraudulent nature of their business
activity after I confronted them with it in Late April 2006 and
I was instructed to keep quiet about it under pain of punishment
of dismissal. This placed me in a position that became clearly
untenable and I was forced to accept redundancy a few weeks later,
in May 2006.
4. The level of fraud and deception uncovered
during that period of four years by myself, involving Timeshare
Resale Companies, Holiday Club Companies and Cash Back Scheme
Companies and the blatant public dismissal by those organisations
to comply with any regulations in force led to me setting up my
own website to expose such fraud due to the frustration of having
the legitimate complaints made by myself to the OFT, the DTI,
the Police and our own member companies, refusing to seemingly
take any action to protect consumers against the Fraud or misrepresentation
resulting in the loss of substantial fees being perpetrated by
them. That website is http://www.scambusters.gb.com and is run
in a private capacity with no funding other than my own and no
other organisation influences its nature.
In response to the request for written evidence
the following is my submission.
5. Overview (1) Timeshare Organisations
and the Resale companies in particular along with Holiday Club
Organisations will not comply with regulations that they can find
a way around (the proverbial loophole) and which are not enforceable.
My experience after eight years in the industry (I was the Membership
Manager for Club Class Holidays for the four years prior to my
moving to ITRA) provides me with the broad knowledge that voluntary
compliance within the Timeshare industry is not possible with
the people running these businesses as they want a fast track
to great wealth and they continually look for ways not to comply
with any legislation. In the case of ETOO/Club Class Holidays
(Gibraltar) Ltd, and many others, they continued to deceive the
OFT and make promises, as did Timelinx whose product Designer
Way Vacation Club still today attracts substantial complaints
to the OFT due to their non compliance on a voluntary basis to
the undertakings made by them to the OFT. I found in ITRA, with
the members they had, voluntary regulation at this late stage
within the established timeshare industry, just does not work.
The criminal elements are too firmly entrenched to operate within
the law unless forced to do so, not on promises but on enforceable
legislation.
6. (2) EC Law should be strong
and supportive of National Law, which should be the first point
of contact to redress any such complaint of Fraud, Misrepresentation
or Breach of Contract. EC Law should be the next step with wide
ranging powers to combat such offences, especially for the individual
who cannot afford the enormous legal fees charged by lawyers that
make the cost prohibitive, which happens today and is the reason
why many people fail to take action and has resulted in a seeming
drop in the number of complaints, but in reality they are growing.
Owners are just giving up and writing off their losses because
the route to redress and seek compensation is too arduous and
costly.
7. (3) The existing Directive
is a first starting point and is useful as a point of reference,
however, as the proposals have noted the new products on the market
since that Directive was introduced have negated the effect of
the legislation and a whole new multi million pound industry has
sprung up rivalling normal Timeshare sales to first time buyers
and that is the Resale and Holiday Club Industry along with the
Cash Back Schemes and their promises of huge returns.
8. Its weaknesses lie in the fact that the
Directive has not kept pace with the demands, growth and rapid
changes of the industry and has been left far behind and this
review is most welcome and not too soon in coming.
9. Scope and Definitions (4) The
proposals have focused in on two main areas of contention amongst
Timeshare Owners regarding Resale's and that is the Up Front Fees
and the Withdrawal or cooling off period and the ability to recover
fees on a change of mind. Many companies are arguing that the
up front fee is non refundable because of their own costs. The
evidence I have suggests strongly that, that is not the case.
Most of the money collected by Resale companies is based on the
false and misleading sales pitch to owners by sales and marketing
people that "We have a buyer for your Timeshare". They
then go on to relate that in order to process their sale and collect
and pay them the promised amount, they require an up front fee
in most cases of £850 or more. Tens of thousands of people
have fallen for this lie and handed their credit cards over for
the deduction of the fee, and wait in vain for their money to
appear within the allotted time (6—12 weeks is the usual
promised time scale).
10. In addition, the sales people then go
on to eventually inform owners that the original buyer pulled
out under a number of excuses but that the week(s) would continue
to be marketed. Eventually owners are invited to Spain to meet
a "Corporate Buyer", who turns out to be another arm
of their company and they attempt to force the buyer to exchange
his timeshare for membership to a Holiday Club for more fees which
is clearly a Breach of Contract, the original contract being a
Sales Contract not an exchange contract. Recently contracts have
dropped the word "Sales" from the wording because of
the definition on the word sale to mean "an exchange of anything
for money", and nothing else and use only the word "Marketing"
in their contracts, however the understanding is the same, the
end result expected in return by the owner is money, not an exchange
for another product or service.
11. The original directive started its protective
cover from the 3rd year onwards and many people saw this as a
way of circumventing the law with the use of Holiday Clubs and
introduced a 35 month membership to use empty timeshare apartments
for their members which of course is one month short of the period
when compliance would have been obligatory and it became open
house and still is today.
12. The Committee need to understand the
main problem and how the problem affects owners and the money
involved enabling the necessary legislation to be put into place
to protect those owners and I believe that the proposals appear
to be suggesting that the final result will be better protection
for Timeshare owners.
13. A further study of the problem in relation
to the proposals would need to be undertaken for me to comment
further in the short space made available to me for this submission.
14. Information Submission (5) and (6) They
seem fine and should go a long way in protecting the rights of
the individual as long as the political will to implement those
elements that protect individuals against the various fraudulent
expressions by Timeshare Resale and Holiday Club companies is
present, along with the necessary policing of those companies
with the power to act which I believe the new Enforcement Network
has been set up to do just that. A move I most strongly welcome.
15. (6) There is much that can
be said here. Most of the information available to inform people
is contained on Government Websites and my experience is that
people do not know where to go to find the necessary information
to keep them informed. My own research into the information and
rights available has so far spanned some five years and I am still
learning new things. The ordinary man in the street does not stand
a chance of learning what I have learned and published on my website
and he needs guidance, constantly.
16. My "How to Get Your Money Back
Guide" is one way I keep people informed but it is a long
slow process and has only scratched the surface. Every purchaser
of a Timeshare in any of its forms, should be given a detailed
booklet on their rights in the event of certain things being said
or done, at the point of sale, and before monies are handed over
or contracts signed. The criminal element have too big a foothold
to pussyfoot around and strong measures need to be implemented
to weed out the rogue traders to enable the legitimate companies
to surface, comply with and be fully regulated by a body other
than the OTE, who will only investigate and arbitrate for their
own members and their clients but who refuse admission to membership
of the OTE to hundreds of Timeshare companies and in turn tens
of thousands of their clients, those owners have no one to turn
to for help in the event of a complaint. I appear to be one of
very few people offering such assistance as I have and achieving
the successes I have achieved.
17. ALL Timeshare organisations in whatever
related form, should be fully regulated by an independent body
and no one should be allowed to be excluded membership and of
course licensed and subject to legislation and a discipline code
that can remove their licence and prevent them from trading and
that is the only way to clean up the industry and give purchasers
the protection they should have a right to. Those owners scammed
run into tens of thousands and the amount of money taken by fraudulent
means runs into tens if not hundreds of millions of pounds annually,
it is no small fry.
18. The Right of Withdrawal (7) and (8) The
provisions are of course useful but they do not often provide
the protection needed as most timeshare products are purchased
whilst on holiday and by the time the purchaser returns home and
realises what he has done after checking out the claims and he
changes his mind, it is already too late. The Cooling off Period
should either be extended to 30 days from point of sale if such
sale is made whilst on holiday, or commence for 30 days from the
date the purchaser returns from holiday if that is where he signed
the contract and paid the fee. The proposals cover this point.
19. Advance Payments (9) and (10) There
should an absolute ban on all up front fees during the initial
sales process and the withdrawal period, and, if any payments
are made and the purchaser changes his mind and asks for his money
back, it should be refunded immediately and without question under
pain of enforceable punishment.
20. Almost without exception the complaints
I have received over the past five years have come from this one
area alone and due mainly to the lies told by the marketing people
that they had a buyer for the owner's timeshare and persuaded
the owner to hand over his credit card and the money is gone.
Fortunately for some, current UK legislation allows for the recovery
of much of these fees under the protection afforded by the Consumer
Credit Act 1974 (Section 75) Equal Liability and I have been singularly
successful in using that and other legislation in recovering the
hundreds of thousands of pounds I have for owners over the years.
21. There are variations to that approach
by the scam companies but this submission does not allow space
to go into them, although more detailed information is available
on my website.
22. Redress (11) There appears
to be almost no avenue of redress that satisfies the consumer
against Timeshare Fraud and I have received thousands of complaints
over the years and requests for help because it is unknown to
whom should a person turn to for help outside of the court system
which, in most cases, is not an option that many want to take
up. I have been overwhelmed by requests for help over the years
and if I, acting alone have reached the stage of success I have,
how much more so would an organisation achieve who had the funding
and the staff to assist those owners without having to pay as
much and more than they were trying to recover. As it is I recently
came across a legal gentleman running a website called www.inventorysolutionsuk.co.uk
who claims much success in court.
23. The OFT do not deal with individual
cases although I have sent them many of the complaints made to
me over the years and there is tremendous frustration at the lack
of information and help for the ordinary man in the street, who
bought a timeshare and who wants to sell it now he no longer needs
it for whatever reason, but finds he can not, no matter how many
times he pays a fee on the promises of unscrupulous people who
know the law well enough to continue their fraud and knowing that
at present, they are untouchable.
24. The timeshare owner who has been defrauded
wants one thing and one thing only his money back without too
much hassle or cost.I provide such a service and my fee is just
£30 no matter how long it takes. It does not provide me with
an income to live on and I have given away more than I have charged
but it is a route to go down until something better comes along
for the long suffering and aggrieved owner.
25. Sanctions, Monitoring and Enforcement
(12) Judging by the complaints I have received over the
years, there appears to be legislation in the EU which has no
teeth and I have seen little to impress me that the legislation
is little more than the fulfilment of a requirement and this is
evidenced by the ongoing scams being carried out upon tens of
thousands of timeshare owners where the individuals concerned
are well known, and exposed on hundreds of websites, but very
little is done by any authority to investigate or curb their fraudulent
activities despite the high volume of complaints. All my success
in recovering fees has been through the existing UK legislation
and the evidence and knowledge I have gained.
26. (13) Yes. An aggrieved person
always has the courts as a final resort and the new proposals
extend and go beyond that in proposing greater protection but
it will require a more grass roots availability for those who
cannot afford to prosecute in Spain, for example, if living in
the UK on a pension, unless there is an agency, able to take his
case forward if all else has failed without the additional burden
of cost which prevents most people from going down that route,
which is why they come to me, and those that find my website by
a Google search term which many have told me about "Etoo
Scam", always express their gratitude for the guidance and
support offered either for nothing, or in the case of taking action
to recover fees, paying my small fee.
27. Outstanding Issues (14) A
cold call by a sale and marketing representative and then a hard
sell pitch to convince owners that buyers existed based on a number
of different lies should be made as illegal as spam emails. The
UK Misrepresentation Act and the notes attached to it go a long
way in clarifying that point, but the ordinary man in the street
is unaware of it. Even Trading Standards have contacted me for
guidance regarding complaints they have received and I have guided
them in their endeavours.
28. If a timeshare resale organisation really
did have buyers waiting, then they should write to the owner,
or email them, with an offer and details of the offer and include
removal or unsubscribe information and if the owner decides on
further information before parting with any money he should be
given the opportunity to assess the truthfulness of the offer,
and if he wants his name removing from "The List" it
should be complied with. As it is the Resale Company never give
any details of the offer whether private or corporate stating
all sorts of rules, that are meaningless, but sound genuine to
the layman.
29. The new directive does not, as far as
I can tell, cover that point as experience has shown and there
is an audio transcript on my www.scambusters.gb.com home page
between a sales rep for ETOO and an owner in which the sales rep
stated they work from lists only and conduct no marketing and
that they have buyers lined up whom they contact. If that is the
case there is no need for an up front marketing fee and to take
one is an offence. It is unknown how many other companies employ
the same technique but ETOO and Timelinx are considered to be
the biggest timeshare Resale organisation in Spain and between
them they have in excess of 65,000 to 70,000 members.
Is that true or is it part of the ongoing deceptive
deliberate lies? I suspect, nay, believe the latter and that situation
should be addressed as well.
This document is submitted for your consideration
and is submitted on an individual basis and as the main person
behind the Scambusters Website and as the former head of the International
Timeshare Resale Association. I am 63 years of age and retired
from active full time employment.
23 August 2007
| 
