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Wednesday, 1 May, 2002, 17:32 GMT 18:32 UK
Holiday club scams under investigation
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New powers could mean the OFT blocks scams based in Spain
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By Sarah Toyne
BBC News Online consumer affairs reporter
line

The Office of Fair Trading (OFT) has launched an investigation into 'holiday club' scams, BBC News Online has learned.

The UK's trading regulator has issued warnings about holiday club scams in the past, but it is now investigating amid rising numbers of complaints about rogue traders.

A wide range of schemes will be looked at in the review, including companies which offer enticements such as "free holidays" or those offering accommodation and flight deals which have been "split" from packaged deals.

  Click here to read people's comments

While consumer protection from timeshare fraud has been increased in recent years, some holiday clubs have been devised to circumvent these rules, say critics.

The OFT stressed that "not all were scams", but industry experts are worried about their prevalence, and the way they are sold - increasingly through telesales within the UK.

It is inviting people to contact its European Enforcement Team with information (see below).

Scratchcard selling

In Spain, one of the most common methods to attract people to a scheme is through enticing them with a "scratch card".

Once they have "won" a prize, they are convinced by the tout to attend a lengthy presentation - and then sign up handing over a deposit or sometimes the whole cost of the membership.

The scheme either fails to materialise and they lose their money, or the promises which were made when they were sold fail to live up to expectations.


The OFT invites all those who feel they have been misled or denied their rights to contact the European Enforcement Team

OFT email

Sometimes these touts use the label of "holiday club" to distinguish how much better the schemes are from timeshares.

In reality, they are less secure and are being promoted to avoid timeshare regulations.

Circumventing law

More worrying, say critics, is the growth of holiday club scams sold in the UK.

One of the most common ploys is a phone call to an unsuspecting consumer saying that they have won a free prize draw.

To obtain the holiday they are then invited to a free presentation, but often with charges to cover tax, insurance or booking fees.

At the meeting they are then shown a range of holiday or resort brochures. Then, they are approached about purchasing access to a website which offers cheap holidays.

The access is sold on a yearly basis, with promises of cheap holidays to tempt people into the scheme.

Clauses in the terms and conditions, however, mean that the "free" holiday will have to be taken within a ridiculous time frame, for example, 18 months and at any amount of notice.

Growing concern

Sandy Grey, chairman of the Timeshare Consumers' Association, said: "Over the last two years we have seen an escalation of complaints against holiday clubs."

The OFT could use new powers gained under new European consumer legislation to enforce decisions it makes from the inquiry.

Through cross-border legislation, it can take a company operating overseas to court in that country.

In practice, this could mean the OFT taking court action against rogue holiday club operators in Spain and the Canary Islands.

Reader comments:

My wife and I were caught in Costa del Sol last year. It cost 7000 but I was able to get it back through my credit card company. Beware of all scratch card games! They will not be what they seem - always be suspicious because you are told that you have won! but every card is a winner. Its all a con.

John Cantle, Chester
john cantle, England

Having been promised a free holiday we parted with 50 to cover administration fees, only to find that flights have to be booked through the company and the prices are ridiculous. There is no re-claim for a refund if you don't accept the price offered.
Dorothea Morgan, United Kingdom

This is an ideal report as only last Thursday I had a company offering a 'free' holiday for a week in various parts of Europe. I've already notified them that we're not attending a presentation.
MG Handley, UK

The OFT invites all those who feel they have been misled or denied their rights to contact the European Enforcement Team. The OFT cannot gain redress for consumers but may be able to act to prevent recurrence of infringements. Further information can be sent to the Office of Fair Trading, European Enforcement Team (1/W), Fleetbank House, 2-6 Salisbury Square, London EC4Y 8JX. Alternatively you can email us at euroteam@oft.gsi.gov.uk
European Enforcement Team, UK

Both my parents, and my parents in law have joined different holiday clubs, and while both have taken holidays using their clubs, which seem bona fide, the cost of joining and the price of the flights, when amortized across the number of trips they have made is still more than if they just booked a last minute deal. What you have to remember about these holiday destinations is that the real cost of the accommodation is minimal, and you are in fact buying two thirds of very little.
Paul, UK

Whilst on holiday in Lanzarote in January we were stopped by a girl who said she worked for a holiday company who gave us scratch cards and said that I had won a bottle of champagne but my husband had won either a video camera a free holiday or 20,000 pesetas, she said that the company wanted us to take part in a holiday survey. She insisted that she was not selling a Timeshare and we were taken in a taxi to an office where other couples were waiting. We were then told that the meeting would take 90 minutes and that we would not be obliged to sign anything. The minute "Holiday club" was mentioned my husband realised what was going on and we left. Other people in our hotel were caught by it and spent 3 hours in the "90 minute" meeting. The company wanted you to pay 4,000 for a two week holiday each year for 3 years, but if you signed up for 8,000 then you got "free" holidays for 10 years. It is selling the holiday rather than the timeshare to get round the law.
Carole Giffen, UK

i've been looking on some auction websites for a cheap break, and have noticed a large number of these 'free' holidays in the form of coach trips. Unsurprisingly they are short on details and small print, but they again seem to be scratchcard prizes with ludicrous terms and conditions such as enforced tours, meals and administration fees, and no doubt mandatory insurance etc through the company offering these breaks. they are using the clever marketing ploy of emphasising the freebie element and hiding the true costs until it is too late. it's incredible that consumers are not protected already from this type of scam.
Anne Hurst, uk

It seems these scams are the same the world over. I now live in the US, and on a regular basis (at least once a month), I receive a voicemail informing me I've won a trip for two to Vegas or New York. However you have to sit through a long presentation, and the offer is only open to 'couples' and both partners must be present.
MP, USA

I am professional buyer & trained negotiator so regognise the tactics. To the non professional it is very easy to fall for the sell & regret it later Beware !!!
Alan Johnson, UK

It is not just problem in Europe.
John M Blinstrub, USA

I am afraid I have been a victim twice, after viewing two separate time share conferences and been given so called "free" holidays. After parting with over 100, I have had no correspondence with either company. One called from Spain, which the connection and accent made the conversation impossible The other I have contacted on several occasions and been promised a return call, but am still waiting over six months later.
Mrs J Morrison, ENGLAND

I was approached by a rep in town the other month (UK) and asked some general holiday survey questions. Low and behold a free days later I had won a free holiday if my wife and I came and collected it. As the presentation was local we went along only to be sweated down for almost 3 hours. The reps got quite rude towards the end when they realised I wasn't going to play ball. I would warn everyone to be very careful with these companies and offers. For my part I am quite naive and gullible. Fortunately I am also the tightest person I know!


Dave, UK

My husband joined one of these scams in Lanzarote 2 years ago, spending over 3000 (and paying with his credit card). The whole thing seemed very plausible. However, the holiday company never produced a holiday - after many requests - and the people 'investing' his money have never seen it. The holiday company blame the marketeers and say our problems are not due to them. the marketeers blame the investment company. They are all linked but have themselves covered. Finally, the credit card company say he cannot claim on his card for the money back.
Kerry Bullion, UK

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See also:

20 Jul 01 | Business
Holiday rip-offs 'on the rise'
08 Jan 02 | Business
Timeshare tricksters still rampant
29 Apr 02 | Business
UK blocks Dutch-based scam
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