A one-way ticket to nowhere with holiday clubs

Emma Lunn reports on the bogus schemes that talk people into stumping up thousands for a holdiay, and then leave them grounded with no refund

If someone told you you'd won a free holiday, you might at least be tempted to find out how to claim it.

If someone told you you'd won a free holiday, you might at least be tempted to find out how to claim it.

But beware. This is exactly how thousands of unwary tourists at popular resorts around Europe risk being lured into the murky world of holiday clubs this summer.

The clubs are the new timeshare - just with less protection.

Timeshare holidays have attracted a lot of bad publicity over the years and, as a result, legislation has been introduced to give consumers rights - such as a cooling-off period.

But while holiday clubs are marketed as the flexible alternative to timeshare, they do not play by the same rules.

In fact, they sprang up in the 1990s to take advantage of loopholes in timeshare regulation - and the two are quite different.

With a legitimate timeshare company, you buy the right to stay in a property for a set period each year. With a holiday club, you don't have such a stake but are promised a selection of holidays based on unsold timeshare accommodation.

While not all the operations are disreputable, new findings from consumer watchdog Which? show many holiday club members are throwing away thousands of pounds on bogus schemes.

By publicising the stories of one former holiday club tout who worked on the Costa del Sol for four years, the watchdog hopes to lift the lid on the less reputable operators.

Talking candidly about the tricks of the trade, the former tout explains just how so many people end up wasting money on unavailable or non-existent accommodation.

One of the scams, he says, involves approaching couples with a scratchcard for a free holiday - which just so happens to be a winner. But in order to collect the prize, the couple have to attend an often-lengthy presentation. Once there, they are subjected to hard-sell tactics and pressured to sign an agreement before leaving.

"Britons don't like to complain or appear rude - even under pressure," he says. "I've seen couples sit there for six hours. Tired and confused, they end up signing away thousands of pounds just to get the hell out of there."

Members typically have to pay between £5,000 and £6,000 upfront - rising to as much as £15,000. Moreover, the information given out can be misleading. In many cases, people find that once they've left the presentation, the club can't deliver on its promises. Worse, they often find there is no way of getting their cash back.

Unlike with timeshare, there is no law requiring holiday club companies to give customers the chance to cancel if they have second thoughts.

"With timeshare, you have a 10-day cooling off period in Spain, and 14 days in Britain," says Peter van de Mark, secretary general of trade body the Organisation for Timeshare in Europe (OTE).

He recommends that anyone looking to buy a timeshare should ensure the company is a member of the OTE, as all of its members follow a strict code of practice.

By contrast, holiday clubs are not obliged to sign up to any trade organisation or code of practice, and are not governed by any regulation. In short, this means there is little protection if the firm goes bust or fails to deliver.

The Office of Fair Trading (OFT) is currently investigating 40 holiday clubs, after receiving 341 complaints and enquiries in the past year - ranging from mis-selling and misrepresentation to unfair contracts.

In a case last month, the OFT forced former directors of the Intenta holiday club promotion company (now in liquidation) to sign undertakings not to mislead customers in any future business.

This followed complaints about claims made in sales presentations - which, the OFT found, breached consumer-protection legislation on misleading advertisements.

The Timeshare Consumers' Association says it receives more than 1,000 complaints a year from dissatisfied members.

"Holiday club sales-people often make false claims," says chairman Sandy Grey. "They say they can find you five-star accommodation in August or at Christmas in the best places. But this is all lies."

He says it nearly always turns out more expensive to use club membership rather than just booking holidays yourself.

If you are going away this summer, there are a number of steps you can take to protect yourself from falling into the holiday club trap.

The OFT advises you to find out if you can take the contract away and think about it before making a decision.

It also recommends checking whether you have cancellation rights and reminds people not be pressured into signing anything there and then.

The TCA stresses the importance of getting everything in writing - including verbal promises, and full details of the times, places and prices that will be available to you.

It also advises you to ensure there is a 14-day cooling-off period. If in doubt, says the TCA, you should just walk away.

Which? spokesman Malcolm Coles has no time at all for these clubs: his advice is to avoid them altogether.

"Most holiday clubs are a waste of money," he says. "If you're offered a scratchcard on your next holiday, buy a lottery ticket instead. You've got more chance of hitting the jackpot."