Clampdown needed on £1.17bn holiday club scams

Bogus holiday scams worth £1.17 billion a year are affecting 400,000 UK residents, according to Office of Fair Trading research.

Only five or six companies are behind the majority of rip-offs but the problem could be more effectively dealt with through better enforcement and smarter legislation, such as a new Unfair Commercial Practices Directive.

The effect of the so-called Discount Travel Membership Clubs emerged during a roundtable discussion involving the Organisation for Timeshare in Europe, the OFT and the Madrid-based European Consumer Centre.

The three organisations reaffirmed their commitment to working against fraudulent holiday clubs they claim are preying on UK consumers.

The OTE argues that timeshare companies build quality holiday resorts whereas holiday clubs, which do not own or control the accommodation offered, charge a substantial fee for what amounts to little more than a booking service and consumers may find the discounts offered amount to nothing.

The ECC is preparing to take a more significant role in the policing and enforcement of bogus holiday clubs in Spain.

And the OFT has issued a list of the top 15 scams affecting UK consumers – with bogus holiday clubs representing the most significant in terms of individual British loss.

Frank Chapman, chairman of the Timeshare Council, the UK arm of OTE, said: “Bogus holiday clubs are a ticking time bomb that could have a devastating effect on consumers in future years.

“For the first couple of years or so, these companies may be able to deliver what they are promising, but a number of years down the line this may not be the case and it is here the time bomb explodes.

“This will also have a detrimental effect on the timeshare industry unless the media ceases to confuse these with timeshare.”

María Luz Peñacoba, director of the ECC Spain, revealed the extent of the work still to be carried out to bring rogue holiday clubs to justice.

“The policing and the enforcement of these bogus holiday clubs cannot be carried out under the current timeshare regulations as these are not timeshare,” he admitted.

“Timeshare is now a mature and respectable industry, with high consumer satisfaction levels and employing a huge workforce across Spain.

“We must work towards stopping future scams and take action against those who have offended by using legislation such as Distance Selling or Contracts Negotiated Away from Business Premises, all of which require that a seven-day cooling off period is provided to purchasers.”

Mike Haley, head of the ‘Scambusters’ team at the OFT, warned that the process could be a long one.

“We should start to see the fruits of the ECC and the OFT working together on eradicating this problem in 12 months or so,” he said. “The individuals behind the rogue elements of these holiday clubs may not be willing to change their practices voluntarily and will look for every possible way to circumnavigate legislation.”

In the past successful prosecution has been rare, due to the difficulties in taking action against fraudulent operators targeting British consumers on holiday in Spain.

But by strengthening relations between the UK and Spain and creating a focussed cross-border team working to bring a small band of perpetrators to justice, consumers will benefit, the OFT believes.

Report by Phil Davies