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What are the effects of the new Timeshare Directive on Consumers

Posted on February 17, 2016

What are the effects of the new Timeshare Directive on Consumers

What are the effects of the new Timeshare Directive on Consumers

If you haven’t taken the time to read the new Timeshare Directive 2008/122/EC, let us attempt to fill you in;

The aim of the new Directive is to create a simplified and coherent framework for the regulation of timeshare and long-term holiday products, as well as exchange and resale. The new Directive extends the scope of the current rules to cover:

  • long term holiday products (i.e. holiday clubs)
  • shorter term contracts – all purchases for a period of one year or more including tacit renewal of shorter periods
  • all forms of holiday accommodation (including boats and other moveable property such as caravans or cruise ships) European Commission, Review of the Timeshare Directive (94/47/EC), June 2006 http://europa.eu/rapid/press-release_IP-06-709_en.htm?locale=en
  • re-sale of timeshare or holiday club membership by consumers
  • exchange services (i.e. some timeshare owners pay an additional fee to join an exchange club, where they can swap their week in, say, the Canaries for a week in another location)

The new Directive applies to contracts where a consumer pays for a service:

  • concluded in an EU state, or
  • relating to any accommodation in an EU state, or
  • entered into by a trader who conducts business in an EU state (for the purposes of the Directive, a trader is taken to mean any one acting ‘in the course of a business’)

The new Directive will require prospective purchasers to be given accurate and sufficient information about what they are buying in good time, before they are bound by any contract or offer. It is also worth noting that the Directive requires the European Commission to encourage the development of Codes of Conduct.
The full text of the Directive is available at: http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:033:0010:0030:EN:PDF
In the UK, the Directive has been implemented by the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010.

New UK Regulations
Types of contract covered by the Regulations

In a nutshell, the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 mirror the provisions of new Directive 2008/122/EC in that they cover the marketing and sale of four types of contract:

  • Timeshare contract, defined as a contract lasting more than one year under which the consumer buys the right to use one or more overnight accommodation for more than one period of occupation. In addition to stay in apartments or rooms this also includes, for example, timeshare in boats and caravans.
  • Long-term holiday product contract (also often known as “holiday clubs”), is a contract lasting more than one year under which the main effect is that the consumer buys the right to obtain discounts or other benefits in respect of accommodation in isolation or together with travel or other services.
  • Resale contract, a contract under which a trader, for consideration, assists a consumer to sell or buy a timeshare or long-term holiday product contract to or from a third party.
  • Exchange contract, defined as a contract between a trader and a consumer where the consumer becomes a member of a timeshare exchange system. A timeshare exchange system is a system that allows a consumer to access overnight accommodation or other services in exchange for giving other persons access to the benefits of the consumer’s timeshare.

Safeguards for Consumers
The Regulations provide useful safeguards for consumers when buying any of the above contracts from a UK based company or any company selling in the UK. Specifically, the Regulations:

  • make provisions relating to the form and content of the regulated contract;
  • make provisions relating to the language of the regulated contract and the pre-contractual information;
  • provide a consumer with a right to withdraw from a regulated contract within a standard 14 day withdrawal period (i.e. a 14 day cooling off period);
  • ban any payment in advance of the completion of the withdrawal period of the regulated contract (in effect, the seller may not ask for or accept any payment from the consumer, or ask them to pay a third party, during the cooling off period);
  • provide key information about the products and contracts in the consumer’s preferred language on a standardised form, to be provided in good time before any contract is agreed (this information automatically becomes part of the contract);
  • ensure a notice of the right to cancel the contract and a cancellation form is provided on the standardised form; and
  • provide for the automatic cancellation of a related credit agreement and other ancillary contracts

Some other key features of the Regulations include:

  • payment for a long-term holiday product contract must be set out by way of equal annual installments, with the consumer being given the right to terminate the contract as each installment becomes due;
  • payment for a resale contract is not due until the sale of the consumer’s timeshare or long-term holiday product is completed, or the contract is terminated for other, agreed reasons;
  • when any of the products covered by the regulations are advertised, the advertisement must make it clear how the key pre-contractual information can be obtained;
  • an invitation to any sales or promotional event for any of the contracts covered must make the commercial purpose and nature of the event clear

The impact of the new Regulations on business
For a business, the regulations are intended to provide a range of benefits, including:

  • A simplification of the UK legislative regime – the new single set of regulations will replace the Timeshare Act 1992 and a series of subsequent regulations which amended the Act. As a consequence, those affected will have a simpler regime to understand with a standardised way of providing key information.
  • A level playing field for business – since the adoption of the old regime new products (often referred to as “holiday clubs”) which offer a similar promise to that of timeshare, but which are not covered by law, have been developed. These products will now be subject to substantially the same regime as timeshare.
  • Improved consumer confidence – consumers should be provided with key information in good time before they enter any agreements and will have new rights in respect of those areas which have emerged as being most damaging to consumers – namely, holiday club sales and timeshare resale services.
  • Rogue traders will be dealt with by a combination of offences contained in the new Regulations and offences contained in the Consumer Protection from Unfair Trading Regulations 2008, which will apply where provisions of the new Regulations are not met.

Enforcement
The new Regulations are enforced by the Office of Fair Trading (OFT) and local authority trading standards officers. The Regulations include sanctions and, where appropriate, criminal offences for non-compliance. The Regulations also provide for contractual remedies for consumers. In addition, the Regulations set the penalty for offences to a fine not exceeding the statutory maximum.

Conclusion
A re Seller must not charge you money in advance. They must not charge you marketing fees and listing fees in advance and are barred from any form of payment until such time as they have concluded the sale.

If you have paid fees then you are entitle to a full recovery plus interest.

The evaluation study on the Application of the Timeshare Directive (which we must stress is heavily influenced by the industry) they suggest that;

  • In the UK, complaints in relation to new ‘timeshare’ purchases have declined substantially in the last few years.
  • It seems that the Directive has actually put an end to the long-term holiday product market thanks to its provisions on annual installments as regards payments.
  • In terms of the number of consumer complaints, they have been steady if not rising in relation to issues around legacy. The RDO, however, has said that complaints against its members have decreased considerably. In relation to resale, very few complaints about bona fide companies have been recorded.
  • However, complaints in relation to bogus companies have risen substantially. Bogus resale companies often obtain illegally the contact details of timeshare owners.
  • Measures should be taken at EU level to prevent this kind of practice. For instance, an EU network of data protection commissioners could be created to tackle the illegal cross-border exchange of personal data between fraudulent timeshare businesses and resale businesses.

For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk

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