The timeshare industry has often been the subject of regulatory scrutiny. Now a new EU measure, Timeshare Directive 2008/122/EC, has been signed off. This introduces new, pan European rules requiring the inclusion of prescribed information in timeshare advertising. Frances Vickery shares the new rules.
Who: European Parliament and Council of European Union
When: January 2009
Where: European Union
Law stated as at: February 2009
The European Parliament and Council of European Union have adopted on 14 January 2009, a new Directive aimed at harmonising laws across the EU to protect consumers in respect of timeshares, long-term holiday products and resale and exchange products.
What protection does the new Directive give?
Article 3 of the Directive sets out the advertising obligations imposed on traders of timeshare and long-term holiday products.
It states that these products cannot be advertised as investments. It also states that where such products are to be offered to consumers in person at sales events etc, the trader of the products must make it clear in the advertising material that the event is of a commercial purpose and should set out the nature of the event.
Article 3 also imposes an obligation on traders to ensure that the people to whom the products are advertised know where pre-contractual information can be obtained and to ensure that when holding events to market the products, specified pre-contractual information is readily available at that event.
The pre-contractual information which a trader must supply varies slightly depending on whether the product being sold is a timeshare, long-term holiday product or resale or exchange product and the annexes to the Directive stipulate what information should be provided for each product. Examples of the information that must be given include:
• The identity, place of residence and legal status of the trader;
• For timeshares, a short description of the product and exact nature of the rights associated it, including the period for which it can be used.
• Outline of additional costs such as annual fees and other recurrent fees and local taxes;
• A statement that the consumer has the right to withdraw from the contract without giving any reason within 14 calendar days from the date the contract is made.
• A statement that during the 14 day withdrawal period, any advance payment by the consumer is prohibited, including payment for reservation of money on account.
Why this matters:
The previous Directive to protect holiday products was introduced in 1994 and since then new long-term holiday products have been developed many of which get around the legislation so that the reputation of timeshares has suffered and consumer confidence in the products has been eroded. Particular problems experienced by those consumers investing in timeshares range from high pressure selling tactics, confusing reservation systems and inflated annual fees and hidden costs.
Consumers should be better informed and proteced under the new Directive as Member States shall ensure that there are ‘appropriate penalties’ in the event that a trader does not comply with the national legislation that implemets the Directive.
Member States have until 23 February 2011 to implement the Directive.