We were contacted recently by a distraught lady who, with her husband, went to a sales presentation at Club La Costa in February 2020. In all honesty her story is not that unusual to hear as there is a clear pattern that emerges from Club La Costa (CLC). You will see below an extract from the correspondence we have received. If you are thinking of purchasing at CLC read and understand carefully what you may be getting yourself into.
After examining the story from our client we will make salient comment as to areas you should be aware of.
- I and my husband stayed at the CLC resort on Malaga, Spain in February 2020 during which we attended a presentation. My husband wasn’t well on the day but we were still asked to attend either way.
- The presentation lasted about 7 hours, with us heading back to our apartment just after 5:00pm on the day after signing several documents.
- During the presentation, we were never told that a 100% loan would be taken out for us to make the payment towards the membership, we were of the impression that it would just be a direct debit from our account for the duration of the contract.
- We were also informed by CLC that we would receive documents from the bank Hitachi (the loan provider) in April, confirming our agreement before payment starts. However, we just recently noticed that the first payment of direct debit was taken from our account some days ago and discovered the loan of £25,000 (with interest) for this membership. The actual amount is £15,000.
The product we purchased is a CLC membership for 10 years. We were informed that after 10 years, we have the option to trade the total amount paid as an investment in a property. To be honest this was the main reason we entered this agreement – but not the misrepresentation that a loan would be taken out in our name for the sum of £25,000.
Our Thoughts
So we can establish from this that despite the husband being under the weather they were still made to attend a presentation, a presentation that lasted 7 hours!
Hitachi Finance – Used by many timeshare companies as a source of finance. By using a finance arrangement, this does not remove consumer protection for cooling off as may be seen from the Hitachi agreement:
“Once signed, you will not have the right to cancel this agreement. You will have the right to withdraw from the agreement, without giving any reason, for a period of 14 days. The 14 day period will begin on the day after the day on which you receive confirmation from us that the agreement has been executed, and will end 14 days after such date. You may exercise your right to withdraw by giving notice to Hitachi verbally or in writing”.
Another very important point is that all applicants should have been given full pre contract information before signing the agreement, see below:
“The amount of each repayment and the total amount you will pay can also be found in the enclosed ‘Pre-Contract Credit Information’ – please consider this information before choosing to sign the agreement”.
The real sting in the tail comes after you have signed the contract and the 14 days has elapsed:
“You do not have the right to cancel this Agreement under the Consumer Credit Act 1974, the Financial Services (Distance Marketing) Regulations 2004 or the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010”.
You should be given enough time to completely read and understand the financial commitment you are about to make, however from comments we receive from our consumers, this is on no occasion the case. Resorts such as CLC never allow you to take a break from the pressure selling to quietly sit in a room to go over the fine print, which of course would allow you time to change your mind. Timeshare resorts always present to couples and are taught in their sales training to “Break the pact” between partners, if you were in a nice comfy room, on your own going over the terms, you are more likely to join forces, realise you are about to make a big mistake and reject the purchase, that’s totally not allowed, isn’t it?
Relating to our enquirers comments above, finance is never free this is why a £15,000 loan turns into £25,000 over 10 years, it’s called interest. The pre-contract terms should make this clear in order for you to be in a position to make an informed decision.
The CLC Contract
Again you should be offered pre-contract terms before signing the purchase contract, it should also be made clear to you that the purpose of the meeting is to sell a long term holiday product, not just a tour round a pretty resort.
We received a copy of the membership agreement from our enquirer and it has some interesting clauses which may well contradict what is sold verbally at the meeting, clause 4 states:
“We understand that CLC World does not and will not run any resale or rental programmes and will not repurchase Vacation Club Points other than as a trade in against future property purchases (see Paragraph 5 below).
So from this it looks like CLC will never take it back, meaning NO EXIT PLAN.
Let’s see what clause 5 says:
“We understand that the purchase of our membership in Vacation Club is for the primary purpose of holidays and is not for the purposes of a real estate interest or an investment in real estate, and that CLC makes no representation as to the future price or value of the Vacation Club Holiday product. We understand that if we consider trading in some of our Points and it is not possible because of circumstances or due to availability of suitable properties, we still hold our points to use on holiday reservations”.
So despite what you may have been told, it’s not an investment after all!
Clause 6 clearly states:
“We have received the Pre-contract Credit Information document (PCCI) and have had adequate time to consider the information contained there on and any questions we have raised arising from this document have been explained to our satisfaction prior to signing and receiving a copy of our finance agreement”.
So you did get the chance of a quiet coffee to mull over the big decision you are about to make, you didn’t that’s strange.
Turning to the Acquisition Agreement another clause of interest is 6.1 which states:
“THE APPLICANT acknowledges and agrees that upon the expiry of the Point Rights referred to in this agreement his membership to the company shall cease.”
So after a significant investment and in our enquirers’ case after 10 years they have nothing to show.
Now our enquirer stated that one of the primary reasons for getting involved was for investment and we quote:
“We were informed that after 10 years, we have the option to trade the total amount paid as an investment in a property”
What does CLC have to say about this? Clause 9 of the purchase agreement makes this quite clear:
“Freehold / whole ownership opportunities:
We understand that if we should wish to buy one of the freehold / whole ownership properties developed and owned by CLC, we will be entitled to trade in our CLC Holiday Owners Club (at the original price we paid to CLC) for a discount on the purchase price of the property (up to a maximum of 10% of the purchase price) subject to:
(a) Specific restrictions on individual properties, availability and to demand for areas and unit types. All applications are subject to contract and will be managed on a “first come first served “principle.
(b) Trade in values do not increase with time or inflation.
(c) Other terms and conditions apply-please see Trade in Policy at http://www.clcworld.com/tradeinpolicy/tradeinpolicy.pdf or request a copy”.
So from this our enquirer would only be able to transfer the total of £10,000 providing that amount represents no more than 10% of the purchase price. So unless CLC have properties for sale at £100,000 or less this clause is useless and even if they did have properties at that price, where is the other £90,000 coming from to complete the purchase? Bearing in mind 10% is the upper limit.
Crunching the numbers
Specific to this enquiry let’s check the value for money, the agreement states that the annual maintenance is €990 (£890 approx.) in the first year, as maintenance only goes up we have assumed a modest 4% annual rise.
Cost of purchase including finance cost £25,000
Cost of maintenance over 10 years £10,709
TOTAL £35,709
So using simple maths’, over the 10 years the total cost is £35,709 which means that each year’s holidays are costing £3,509 Wow! And of course that represents self-catering, no flights or car hire. Add this to the fact that there will be no demonstrable return on investment, we think you will agree that this really doesn’t represent a good value for money deal. A quick search of Booking.com reveals that two adults for 7 days in August at CLC will cost € 855, so where is the financial logic?
In Summary
If you still wish to accept a free holiday offer at CLC or attend a presentation of your own free will be prepared. The moment you enter their sales theatre you must be ready for “psychological warfare” … and they don’t take prisoners. The one overriding message is, and we need to say this loudly… DO NOT – WE REPEAT – DO NOT SIGN UP AT THE PRESENTATION! Their demand for your decision is unscrupulous sales practice, the only reason they use it is because they know if they let you go, you will work the numbers and see that it is not the deal they say it is.
The only way this practice will stop is if the prospective clients vote with their feet, EVERY TIME. If enough people take this approach, CLC’s sales will fall and they will have to revise their approach. In our experience, any company that we have ever come into contact with that employs a dubious sale method and are selling an equally dubious product have overzealous sales teams, remember for the most part theses sales associates have no salary and work purely on commission only so they have a vested interest in making sales, as the Greeks say “No money no honey”
Demand paperwork that properly demonstrates their proposition. Demand time to consider their plan. Demand time to review and ask questions after the presentation. Demand independent verification of their claims on availability, maintenance fee increases and resale values. Demand a proper explanation of your right to cancel.
If you are still inclined to say “Yes”, make it a condition of the sale that you get a photocopy of the salesperson’s notes made during the presentation, in their parlance this is known as the “Pencil Pitch”. Get it signed and dated by the salesperson or better still, their manager. Ask them for this and we’d be willing to bet they would be showing you the door rather than where to sign! Why? Because if they gave it to you, you would have the evidence to prove possible malpractice or miss-selling if (and when) you change your mind.
DON’T sign up immediately, tell them you will consider their plan and make up your mind on your terms, not theirs. If they don’t like it, they are just underlining everything said and are effectively telling you to walk away themselves. If you still say “Yes”, then don’t blame CLC or anyone else if you suffer any financial consequences.
This is a long winded account, but for those who agree to attend such presentations we hope this will furnish you with the knowledge you’ll need to deal with the situation and not be railroaded into making a bad decision.
Remember, if you have signed for a long term finance agreement this has nothing to do with the product purchased. If you break your Samsung OLED £6,000 TV beyond repair and it’s on finance, tough luck you will be paying for that mistake for many years to come. The same applies to long term holiday products, you may be able get rid of your timeshare but not the finance.
If you are reading this and have already found yourself in the same situation as our enquirer please re visit this site on a regular basis or sign up to our newsletter service, why? Because we understand a specialist firm of London Solicitors is working on a test case that will involve a court case in relation to mis sold finance. This is in the early stages but we will of course place any further developments on this site.
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