Watch out for this 'holiday club' con

6 August 2010

Holiday scams have been around for years, but their ever-changing nature means people are still being caught out. Most recently, timeshare owners have been targeted with the bait of a fictitious timeshare resale.

Mary Parkinson, a 53-year-old teacher from the South West, received a cold-call that failed to set the alarm bells ringing.

She says: "It was from a company that seemed to know I had a timeshare and told me it had a client who wanted to buy it off me for more than I'd originally paid." Mary was asked to pay an administration fee, which she handed over.

Soon after, she received another call explaining that the deal had fallen through, but that the company had found another potential buyer. She only had to attend a meeting.

This turned out to be a four-hour sales pitch, where she was offered the chance to part-exchange her timeshare and pay an extra £2,600 to join an 'exclusive holiday club'.

Some clubs operate in good faith, but many take an up-front fee of several thousand pounds and an annual subscription. In return, they claim to offer incredible bargain holidays, with discounts worth more than 70%.

Mary says: "It was very slick and impressive. It showed me the discounts I could get in return for an annual subscription, and the accommodation was lovely. It sounded like a great deal." So she signed up.

Mary has been a 'member' of her 'club' for two years now and still hasn't managed to go on holiday through it. The reality is that the small print of these timeshare resale contracts includes no guarantee of the bargains their reps promise and no promise of any destinations or dates.

Most people are either told they cannot holiday where or when they want, or are offered the same prices they could find on the high street.

Because these clubs are not timeshare schemes and therefore not tied by the strict timeshare rules, there are no automatic cancellation rights and there is no cooling-off period – so if you read the small print only after you've signed up, you're stuck with the deal.

Look for the tell-tale signs

Mary is just one of thousands affected. In 2008, for example, the Timeshare Association helpline received more than 6,000 phone calls. Some 40% were complaints, and the majority of those related to dubious resale practices or scams based on holiday clubs.

Most victims are aged between 35 and 64, and the average loss is £3,030. But Paul Gardner-Bougaard, chief executive of the timeshare trade body Resort Development Organisation, says the figure is probably higher, as most victims simply write off the loss.

Fortunately, there is a positive development on the horizon. Gardner-Bougaard says: "The new Timeshare Directive, due to come into force in February 2011, will make life difficult for these operators, as they will no longer be allowed to take all the money upfront."

In the meantime, the Office of Fair Trading warns timeshare owners to be cautious if they're approached by someone trying to pressurise them into making a decision on the spot, or asking them to go abroad to complete a sale.

Gardner-Bougaard warns that this scam is still evolving. "The current scam from one of the major holiday clubs is to persuade the owners that they may have a claim against the developer or exchange company and should attend a meeting," he says.

"At the meeting they are persuaded to join a so-called 'class action' (that never goes anywhere) and to buy into the holiday club."

If you're approached or subjected to a high-pressure sales pitch at the meeting, you have every right to leave. No one can force you to stay, although if you've accepted a holiday in return for attending the pitch, you'll need to stay to the end or they may charge for the holiday.

But even if you stay, you don't have to sign anything – despite the fact they'll try to persuade you otherwise.

If you are interested in their offer, however, make sure you check the small print, including your cancellation rights. Check that the promises match exactly what the contract is offering.

If you don't get the chance to discuss things properly with whoever you came with, take notes or take the contract away to read at home. Don't feel pressured by offers that are only available on the day.

If you've already signed a contract, however, your only recourse will be legal action – although there may be little wiggle room. You should also report the firm to the OFT, which works to close down firms operating with shady practices.

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