How to avoid timeshare rogues

It's an industry tarnished by scams. So can its reputable operators clean up the act? William Raynor reports
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The Independent Online
Later this year or early next, providing complicated cases against them can be steered through the committal stage, several Britons are expected to be tried on charges of fraud in this country relating to the sale of timeshares abroad.

THE trial, if and when it opens, will attract a lot of media coverage: one of the accused is John Palmer, acquitted ten years ago of smelting bullion from the pounds 26 million Brink's-Mat robbery, and since known as "Goldfinger" or "the timeshare king of Tenerife". At an appearance in April at Clerkenwell Magistrates' Court, he was remanded on conditional bail.

He is charged with eight counts of conspiring to commit fraud over timeshare developments.

In Tenerife and the other Canary Islands, meanwhile, the regional government is preparing to extend and tighten Article 46, the law relating to how timeshares are sold - the implication being that in the two years since it was introduced, Article 46 has proved too feeble to stop aggressive or devious selling techniques and failed to protect timeshare users from accompanying contractual abuses.

In other words, for the timeshare industry, the short-term scenario would seem less than ideal, PR-wise, and more a matter of continuing damage- limitation.

In spite of, or perhaps because of, this, the timeshare industry has gone onto a promotional offensive - particularly since the European Union directive on timeshare came into force at the end of April, stipulating a ten-day cooling-off period in which potential buyers could cancel (against 14 days under the UK's own 1992 Act), insisting on own-language contracts and detailed information, and prohibiting initial deposits.

The Timeshare Council, the industry's trade association in the UK, heralded this as a chance to "stamp out any remaining bad practices among timeshare marketeers" and for the "acceptable majority of timeshare companies to emerge from the shadow of bad publicity."

Soon afterwards, as if to reinforce the new, user-hygienic timeshare message, one of the UK's biggest package-tour operators, Airtours, announced that it had started selling timeshares - in 600 apartments at an average price of just under pounds 7,000 - on its pounds 26m Oasis Palms resort near Orlando in Florida. Its chairman was even quoted as proclaiming that timeshare would "prove to be the next big growth area for British tourists ... of enormous appeal".

Cynics, of course, might conclude that for Airtours, the appeal of "locking in" the same holiday-makers - or others swapping with them - year after year could be more enormous by far.

"It's still too early to tell what effect the EU directive will have as far as the UK is concerned," says Neil Cooper, the Timeshare Council's chief executive, "because in a sense it's added very little protection. So it probably won't make much difference to our members selling in the UK. We hope the main effect will be to help regulate the market in Spain and the Canaries."

However, Spain and the Canaries could well be the rocks upon which the brand-new ship of timeshare PR and promotion remain grounded, for rather more than the short-term.

"We cannot do anything concerning the kinds of contracts signed by people buying timeshares," says an official of the Canarian Government. "That would have to be civil law. Because civil law is national we are waiting for the national government, which is about to publish its law, in Madrid. Then we can publish our new law here on the Canary Islands."

What this suggests is that "when" means "soon" - an impression clearly shared by Mr Cooper.

"The Spanish Government has taken the opportunity of its need to implement the directive to look at much wider-reaching legislation which will put timeshare firmly in the real-estate framework, and this now probably won't happen until the autumn," he says.

Until it does, he claims, his members will adhere anyway to the EU directive in their sales operations in Spain and the Canaries, even though - because the EU cannot interfere in the property laws of the member states - it can have no bearing on the legal structure of contracts.

"But," he admits, "they are in the minority. The majority seems to have taken the view that as there is no domestic timeshare law ,there is no cooling-off period either. As we represent the more ethical side of the business, we had hoped the situation would be otherwise. But they are continuing to use scratch-cards and other high-pressure techniques and `invitations to the dance'."

For readers who have not yet experienced it or been forewarned, the scratch- card technique involves punters being pursued by touts along beach or street, being handed the cards and, having scratched them, being persuaded that they have prizes; the prizes have to be collected from a designated place where the true purpose is revealed and marketing half-nelson applied.

One "country club" on the Costa del Sol has staff stationed beneath parasols at local marinas to solicit for prospective "members", who are by offered a free breakfast and tour of the amenities. When they arrive, they find it is not a country club at all, but a timeshare complex. Numerous other lures and scams are apparently still in operation.

"In spite of all the prominence and bad reputation of timeshare," says an official at the Spanish Embassy in London, "how is it people go to Spain on holiday, don't check with the town hall or the consulate, and still fall for it - that I don't understand!"

Presumably, nor do many of the victims - afterwards. "We only know when they come back here and complain to us, when mostly it's too late. The timeshare companies hire a venue in a hotel or marina, stay there for three or four days, then go away," she laments, "and if the company is not registered in Spain, there's nothing our authorities can do."

Except, perhaps, get that law passed in the autumn?

"Ah," she says. "Because Spain has no provision for this type of property, the government has been about to publish this law for almost four years. Now we have a new government, for which this is not a priority.

"I hope this law is about to appear, because without it there is nothing but problems and this is not good for the reputation of Spain. But I have not heard anything more."

According to Keith Baker of John Venn & Sons, a London firm of solicitors, which specialises in timeshare cases, the Spanish civil law on timeshare has been at least eight years in the drafting, is extremely detailed, and so controversial that it could take some years more to reach the statute book - if the lobbying being directed against it doesn't kill it first.

Ironically, in view of the concerns of Mr Cooper and the Timeshare Council, much of this lobbying has been supported by the very interests which he adduces as symbols of the industry's growing respectability - the interests of some of the biggest developers in some 4,000 timeshare resorts worldwide, such as Disney, Marriott and Hyatt.

"The timeshare boys have a big stake in the tourist industry and when it comes to the draft law, they are body and soul committed against it," says Mr Baker.

What the industry favours - as do the notaries and the finance ministry - is a "real estate" approach, subjecting every change of timeshare ownership to property transfer and tax.

What the timeshare owners favour - as, he says, does the Ministry of Tourism - is a "club-trustee" system, which would make timeshares the equivalent of ordinary shares in a limited company and, he says, "would be sensible in consumer terms because the transfer costs would be extremely cheap." The Spanish treasury, and the notaries, would be the losers.

But the longer this tug of war goes on and the thinner the draft law gets stretched, the longer the "rogues" will continue to claim their victims , and Mr Cooper and his "ethical" timeshare operators will be likely to lose PR ground.

Unless, of course, the whole concept has become too tarnished to clean up.