Select Committee on European Union Written Evidence


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



 
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