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Better Rights For Prospective Holiday Club Members

SOURCE: The Office of Fair Trading
March 31, 2005
LONDON -- Prospective members of a leading supplier of holiday clubs have clearer and better consumer rights following action by the OFT.

Designer Way Vacation Club SA (DWVC) a Spanish company forming part of the Timelinx Group, and all its European based authorised marketing agents, have agreed undertakings with the OFT that require use of clearer contracts including the introduction of a seven day cooling-off period during which prospective members may cancel the contract. DWVC has 25,000 members and eight authorised marketing agents operating from 15 'sales decks' mainly in the Spanish Costas, the Canary Islands and the UK.

The OFT sought undertakings from DWVC after it found that the company's contracts contained a number of unclear or potentially unfair terms, such as a clause disclaiming liability for verbal sales representations and a clause cancelling the consumers' life time membership rights altogether upon failure to pay an additional annual £75 fee ( which could result in the loss of upfront membership payments of several thousand pounds.

The contractual relations between the consumer and DWVC are now made clear and the companies have agreed to recognise the consumer's right to a seven day cooling-off period under the legislation on contracts concluded away from business premises.

DWVC has undertaken to:

• use best endeavours to ensure that all its authorised marketers use only DWVC standard forms of contract which now give the consumer a right to cancel any contract for DWVC membership club services within seven days
• circulate revised forms of contract documentation including cancellation notices to all authorised marketers within one month of signing the undertakings
• require all authorised marketers to abide by a revised code of conduct which includes obligations not to make any misleading or inaccurate representations about the benefits of DWVC membership services; to use only up to date standard contractual documents issued by DWVC; and to explain to consumers that they have a right to cancel the contract
• accept written cancellation within seven days of the consumer receiving notice of their right to cancel, whether it is given to them or to the marketer, whether or not the standard notice of cancellation is used.

Each independent marketing company has undertaken to:

• use only DWVC standard forms of contract which give the consumer a right to cancel any contract for membership services within 7 days
• abide by the revised code of conduct for sales of Timelinx products and services provided by DWVC
• not to make any misleading or inaccurate representations about the benefits of DWVC membership.
• If any of the companies breaches the undertakings the OFT could seek an injunction to enforce compliance with the relevant legislation

The independent marketing agents are:

• Incentive Leisure Group - Fuengirola, Tenerife, Gran Canaria, Fuerteventura, Lanzarote, Madeira, Milton Keynes
• European Coast and Sun Holidays - Tenerife
• Worldwide Travel - Mallorca
• World Travel Program - Costa Blanca
• Bonus Select Vacations - Benidorm
• Holiday VIPs - Halifax, Slough
• Die Schweiz - Germany
• Whitebay International - Mijas Costa, Malaga

Welcoming the undertakings, Sir John Vickers, OFT Chairman, said:

'The OFT receives a large number of complaints about the holiday club sector. Prospective members of one of the largest holiday clubs will now benefit from clearer contracts, and recognition of their rights to cancel.'

NOTES

1. Under UK law, the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) superseding the UTCCRs 1994, apply to standard contract terms used with consumers. The UTCCRs protect consumers against unfair standard terms in contracts they make with traders. A term is likely to be considered unfair if it causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of consumers. The regulations say that a consumer is not bound by a standard term in a contract with a trader if that term is unfair. Ultimately, only a court can decide whether a term is unfair. The UK Regulations derive from EC Directive 93/13/EEC of 5th April 1993 on unfair terms in consumer contracts which requires governments in all EC member states to implement the same minimum level of consumer protection. That protection is secured in Spain by Law No:26/1984 of 19th July 1984 for the Defence of Consumers and Users and Article 10 of Law No:7/1998 of 14th April 1998 on General Terms of Contracts.

2. The UK Control of Misleading Advertisements Regulations (CMARs) 1988 (as amended) aim to protect the interests of consumers and businesses from misleading advertisements and advertisements that make prohibited comparisons.

An advertisement is misleading under the Regulations if in any way, including its presentation, it deceives or is likely to deceive the person to whom it is addressed or whom it reaches and if by reason of its deceptive nature, it is likely to affect their economic behaviour, or for those reasons injures or is likely to injure a competitor of the person whose interests the advertisement seeks to promote. 'Advertisement' for the purposes of the Regulations means any form of representation (including oral) which is made in connection with a trade, business, craft or profession, in order to promote the supply or transfer of goods or services, immovable property, rights or obligations.

The UK Regulations implement EC Directive 84/450/EEC of 10th September 1984 relating to the approximation of the laws regulations and administrative provisions of the Member States concerning misleading advertising which requires governments in all EC member states to implement the same minimum level of protection. In Spain that protection is secured by Law No/34/1988, of 11th November 1998 on General Publicity.

3. In the UK the Consumer Protection (Cancellation of Contracts Concluded Away From Business Premises) Regulations 1987 – known as the Doorstep Selling Regulations – require traders and the marketing agents acting for them to give a seven day cooling-off period when contracts involving consumer payments over £35 are concluded during an unsolicited visit to the consumer's home or place of work, or during an excursion away from the traders business premises.

At the time such contracts are made businesses are required to give consumers written notice of their right to cancel and how to exercise it, and to provide a cancellation form (although consumers do not have to use this and a cancellation will still be valid if sent in an ordinary letter). If the business does not provide the notice and cancellation form the contract cannot be enforced, Under English law, the business is also committing a criminal offence.

These rights derive from EC Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises, which requires governments in all EC member states to implement the same minimum level of protection. In Spain that protection is secured Law No. 26/1991, 21 November 1991, Contracts Entered into outside Commercial Premises.

Source: Office of Fair Trading