The technique used to obtain money from Sharon and Danny Balloo is becoming common among timeshare companies and could leave banks nursing large losses if victims are unable or unwilling to pay off their debts.
Mr and Mrs Balloo, both nurses, own a one-week timeshare at the Marina del Sol development near Malaga in Spain. In April, they arranged through an exchange agreement to stay for a week at another timeshare, this one in Tenerife.
On the day after they arrived in Tenerife, they were approached by sales representatives promoting a timeshare development called Castle View Club at Aldea Blanca, San Miguel de Abona. They were invited to the sales office to discuss the properties.
There they recall speaking with two sales people called Kim Childs and Chris Penn. The Balloos explained they had just finished paying for their share of the Marina del Sol property and did not want to buy another week's timeshare. But the sales people said they could sell the one they had to pay for a new one at Castle View.
'Chris Penn said he could sell our week in Marina del Sol and make a profit to buy a week at Castle View,' Mrs Balloo said.
She said Mr Penn left the desk and returned to say he had spoken to a Mr Reid at a sales agency called Timeshare World, and that Mr Reid expected to sell the Balloos' week at Marina del Sol for pounds 8,200.
'We only paid pounds 3,500 for it,' says Mrs Balloo. 'We thought we had got a good deal. Once our week was sold for pounds 8,200, Timeshare World would send us the money and within 10 days we would have to pay for the Castle View timeshare.'
The Castle View timeshare was pounds 6,550 plus pounds 400 in management fees. The salesman said the Balloos would have to pay a deposit of pounds 2,500, leaving the balance to be paid out of the proceeds on their timeshare.
Mrs Balloo says Mr Penn suggested they pay the deposit by credit card, but her card had a credit limit of pounds 550 and most of that had been used up at the time they were in Tenerife. She said the salesman then suggested she fill out 29 separate payment slips, each for about pounds 85, and said these could be used to draw the deposit from her account gradually, after the sale of the Marina del Sol timeshare. Alternatively, the couple could pay the pounds 2,500 into the credit card account after the sale and the deposit would be deducted then.
So the Balloos signed an agreement to purchase the Castle View timeshare. The company named on the agreement was Castle View (Sales) Ltd. The credit card slips Mrs Balloo signed were not dated.
'We got home on 25 April and I received my Access statement shortly afterwards. The balance was for over pounds 700 and there was a warning that I was over the limit. The statement included a debit for pounds 141.11 from Castle View.
'I rang Access to ask why they had let these go through. They said that four more had come through by this time and they were being presented at the rate of roughly one a day.'
Mrs Balloo later wrote to Access explaining that Castle View had broken a verbal contract about how the payments would be taken. Access eventually replied that it could not refuse to pay these amounts because they were all for less than the 'floor limit' agreed with the timeshare company and that it was obliged to put them through without special authorisation.
The Balloos have since contacted Harold Reid, proprietor of Timeshare World, who says he never quoted a resale value on the Marina del Sol timeshare. He said the most they could have hoped to get would have been pounds 3,800.
The couple and their solicitor, Keith Baker of Croft Baker & Co, have written to Castle View Club and had a number of replies from different individuals.
A letter dated 23 May said: 'As developer for Castle View Club, I have strived to ensure it is the finest development in the Canary Islands. However, at the end of April 1992, after the introduction of an independent sales adviser, the methods for obtaining sales used by Castle View Sales Ltd were brought to my attention. It seems they used a method, termed 'the buy-sell', to entice people to join Castle View.'
The letter added that Castle View Sales had undertaken to 'rectify' promises it was unable to keep, but the company had vanished from the resort.
A later letter from Castle View Club stated that the Balloos could not have their deposit returned.
The club has also said that the agreement to purchase the Castle View timeshare was cancelled, which appears to absolve the Balloos from paying the pounds 4,450 balance.
The Independent spoke to John Ellis, who described himself as a colleague of the developer of Castle View Club and who reiterated the statements made in the letters to the Balloos.
He said the developer was Michael Halliday, who had hired the sales team. The agreement had been that the sales staff would keep the deposits and Mr Halliday would receive the balances.
Mr Ellis believed Mr Halliday had set up Castle View (Sales) Ltd but he had no direct links with the sales people.
Castle View (Sales) Ltd is an Isle of Man registered company. A director, Simon Ashley Couldridge, said he had only loose connections with the company. 'We act as nominees for them,' he said. He promised to try to find out about the Balloos' problem but later said he had drawn a blank.
The Balloos' final debt on their Midland Bank Access card comes to pounds 2,800, pounds 300 more than the amount agreed with Castle View. Mrs Balloo protested to the card operator but on 20 July received a letter from Midland Card Services stating it could not help. 'This is an agreement between yourself and the retailer.'
Their solicitor said: 'There is a strong legal case for saying they have no legal liability - and morally there is no case whatsoever. We have a letter from the developers admitting broken promises by the sales team. We believe the credit card company could have a liability under the Consumer Credit Act, but the section is untested in this context.'
After being contacted by the Independent, Midland offered to negotiate with the couple and said it would raise the matter with the Mastercard organisation in the hope of preventing further problems.
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