Newsroom

Bogus holiday clubs warning by OFT

PN 30/03    28 March 2003

Esther Rantzen is spearheading a campaign by the OFT to warn consumers about the dangers of bogus holiday clubs.

The campaign aims to draw attention to unscrupulous holiday clubs that deliberately deceive consumers and pressurise them into membership.

Holiday clubs are marketed as a flexible alternative to timeshare, promising a lifetime of discounted luxury holidays anywhere in the world. Some are reputable businesses that trade in good faith. But others are promising far more than they deliver. At a cost of thousands of pounds what customers may be buying is access to a booking service such as a website or phone number and the reality does not live up to the promise.

Unscrupulous clubs often only provide last minute, limited availability accommodation that is usually low star rather than luxury.  With the addition of expensive flights, supplements and taxes, it could end up costing more than holidays booked through normal routes. And by the time someone who signs up decides to book a holiday, the holiday club company could be out of business.

Holiday clubs are not covered by timeshare law. This means there are no automatic cancellation rights for those who change their minds.  Bogus holiday club companies exploit this by employing high-pressure sales techniques such as long presentations – lasting as long as six hours – to get customers to sign a binding contract. With promises of a once in a lifetime opportunity, dream holidays for life, special one-day only offers or cashback on the scheme, it can be tempting to sign up. But with no cooling-off period, people should always take the contract away to consider at your leisure before signing.

It is not just holidaymakers who are at risk. Anyone can be approached at home by phone by someone telling them they have won a free holiday – all they have to do is attend an exclusive VIP presentation. But they are then subjected to a long high pressure sales pitch and the free holiday rarely turns out to be free by the time non-refundable administration charges, supplements and taxes are added.

Penny Boys, Deputy Director General of Fair Trading, said:

'Unscrupulous holiday club companies prey on people's aspirations – cheap luxury holidays for life is a very attractive prospect. But they often don't deliver what they promise and consumers are left thousands of pounds out of pocket. It is important that people are not pressurised into signing these contracts before they've had a chance to consider them properly.'

There are reputable holiday club companies but there are also many unscrupulous ones. The OFT has published a consumer leaflet to help prevent people being caught out by the bogus holiday club hard sell.

The OFT advice to consumers is:

• don't go to the presentation
• if you do go to the presentation – don't sign anything there and then. If you can't take the contract away to think about it walk away
• check if the company is offering cancellation rights and that they are written down – if you're not happy with the cancellation terms walk away
• check all verbal claims made in the presentation are included in the contract – if not walk away.

NOTES

1. Download OFT consumer advice leaflet on holiday clubs (pdf file 305 kb). 

2. The OFT cannot intervene in individual cases or get redress for consumers. However it may be able to take action to prevent the company from operating unfair practices in some circumstances under the Control of Misleading Advertisements Regulations 1988, which covers misleading and false advertising including oral statements; the Consumer Protection (Cancellation of Contracts Concluded Away from Business Premises) Regulations 1987, which provides a cooling-off period for contracts concluded away from business premises; and the Unfair Terms in Consumer Contracts 1999.

3. Under the Stop Now Orders (E.C. Directive) Regulations, which transpose the EC Injunctions Directive (98/27/EC), the OFT can apply for a court order against traders who breach or are threatening to breach any of a number of laws harming the collective interests of consumers. It can seek written assurances and undertakings in lieu of court action. The publication of a list of 'qualifying entities', including OFT, in the Official Journal of 2 February 2002, meant that from that date, these powers could be exercised before the courts of all European Economic Area Member States which have transposed the Injunctions Directive.

4. In this press release the functions of the Director General of Fair Trading (DGFT) under the Regulations are for simplicity described as the functions of 'the OFT'. The Enterprise Act proposes to replace the office of the DGFT with the OFT, to which would be transferred the DGFT's functions. The relevant provisions of the Enterprise Act are expected to come into force in April 2003.

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