What Does it Mean to the Consumer?
Today's European Timeshare industry is governed by legislation and codes of ethics designed to protect the consumer. This protection also helps the industry's major players to market their products as people now feel safe and comfortable when they decide to become Timeshare owners.
- Current European legislation
- Further protection
- Existing loopholes
- The new EU directive
- Trade bodies
- Looking to the future
Current European legislation
To protect consumers' interests, a company selling Timeshare in any of the Member States must adhere to the 1994 Timeshare Directive (94/47/EC). This piece of legislation from the European Commission sets out specific legal requirements and consumer rights, among which are the following minimum standards:
- As a consumer you have the right to a 10 day 'cooling-off' period (14 days in the UK) beginning on the day you sign the Timeshare contract. During this time, you can reflect on your decision to purchase and have a right to cancel the contract without giving a reason and with no penalty
- The seller is prohibited from requesting or taking any monies during the cooling-off period, including a deposit - and it is also illegal for a seller to take money on the spot
- You have the right to a prospectus or brochure giving information about the Timeshare property, in your own language
- The contract must be in writing and in the language requested by you
- The contract should include the names and addresses of the parties involved, an accurate description and completion date for the property, and details of the purchase price and other charges such as maintenance fees
- Should you cancel your Timeshare contract, any credit agreement should then be cancelled automatically
These basic rights apply only where the contract is for one or more weeks' accommodation per year, over a period of 36 months or longer. Individual Member States may choose to supplement these rules in their national legislation.
Further protection
As a consumer you are further protected if you purchase your Timeshare using VISA or MasterCard - you have up to ten days to cancel, even in countries where the EU Timeshare directive is not in place.
In the UK there is additional protection by the Consumer Credit Act 1974, which states that the lender of money for a purchase is jointly responsible with the seller for the purchaser receiving the goods or services, or a refund if these are not received.
Existing loopholes
Elements of the 1994 directive have become somewhat outdated - and certain companies try to exploit these loopholes and omissions.
Under the current legislation, a number of 'Timeshare-like' products are not protected. These include floating vessels (e.g. canal boats, narrow boats, pleasure boats and houseboats) as well as cruise ships and caravans. In addition, holiday packs, vacation clubs and trial schemes are not classed as Timeshare and are usually for periods under 36 months - therefore they are not protected under the 1994 Timeshare Directive.
Timeshare resale and exchange are not covered either, so if you purchase of any of the above products from dishonest traders, you don't necessarily have the right to cancel - which can lead to expensive mistakes.
The new EU directive
Over the years, legislation has been modified to reflect changes in the Timeshare market.
The most recent amendment to legislation is the new Timeshare Directive (2008/122/EC) brought into force by the European Parliament on 3rd February 2009, which further standardises the regulations for the sales and marketing of Timeshare, long-term holiday products, resale and exchange.
Due to an increased legal recognition of 'Timeshare-like' products, the latest directive - which will become national law across Europe in 2011 - establishes an all-encompassing definition of Timeshare and stipulates the following main rules:
- The cooling-off period will now extend to 14 days across the EU regardless of the country in which the Timeshare is purchased
- Long-term holiday products under 36 months (known as Holiday Clubs or Discount Travel Membership Clubs) will now be protected by legislation, as will resale and exchange. This will create a level playing field across Europe's Timeshare market and ensure that consumers enjoy the same level of protection across the EU
- Sellers of 'holiday clubs' will also now have to comply with the 14 day cooling-off period rule and fully explain to the consumer what they are actually buying. The consumer will be able to pay the company in equal yearly instalments and have the opportunity to withdraw every year
- Buyers of trial packages will also benefit under the new directive
- Pre-contractual information will be subject to more detailed regulation
- The ban on deposits during the cooling off period will include any advance payment, provision of guarantees and reservation of money on accounts
- Member States will face penalties if traders fail to comply with the new directive
- Timeshare companies can sign up to new industry Codes of Conduct and Alternative Dispute Resolution (ADR) schemes
Trade bodies
There are a number of Timeshare industry trade bodies whose aim is to maintain and enforce legal requirements and provide information and support for consumers, according to legislation. The new directive has received widespread support from trade bodies and government agencies, including:
Europe
In Europe, the two principal trade bodies for Timeshare are the Resort Development Organisation (RDO) and Timeshare Association - Timeshare Owners Committees (TATOC). The RDO's mission statement is to "improve representation for reputable companies in the Timeshare sector and promote fair trading, quality within and growth of the Timeshare industry". It fully supports the new Timeshare directive and says it will work closely with the EU Member States to ensure that each national law adopts the latest regulations.
TATOC states that it "exists to safeguard and enhance the Timeshare holiday experience for existing and prospective users and to be the voice of owners". Like the RDO, TATOC will focus its efforts on ensuring that the new directive is adopted by Member States as quickly as possible and that it is upheld.
USA
Timeshare in the United States is regulated by the American Resort Development Association (ARDA). Its mission is to "foster and promote the growth of the industry and to serve its members through legislative and regulatory advocacy, public relations and communisations, education, membership development and ethics enforcement". Its State Affairs team is currently lobbying issues important to the Timeshare industry and owners.
South Africa
Regulation in South Africa is overseen by the Vacation Ownership Association of South Africa (VOASA). Its aim is to "improve representation for reputable companies within the shared vacation ownership industry and promote fair trading, quality within and growth of the vacation leisure industry". Aspects of its philosophy include self-regulation, education and training, ethical standards, integrity of the industry, professionalism, and adherence to standards and practices.
Alongside VOASA there is also the Time Share Institute (TISA) which is a self-regulating body that applies Timeshare legislation.
Looking to the future
It is unlikely that the proposals in the new Timeshare directive will become law before 2011 - until which time, current national laws still apply and legislative loopholes may still present various difficulties. In the meantime, industry trade bodies continue to do their utmost to protect the consumer as Timeshare evolves in the 21st century.
