Should banks be working with disreputable timeshare companies?
Financial institutions coming under fire for supporting high pressure timeshare operations. Customers claim their lives were ruined after being lured into huge financial commitments by holiday ownership sales staff
A bad business
Timeshare has had a terrible reputation for most of its history. In the 80s and 90s it was known for ruthless marketing. Popular Spanish beachwalks were saturated with armies of relentless touts, haranguing every step of tourists from the moment they ventured out of their hotel.
Ruthless, high pressure, commission only sales people signed up new members to dubious holiday clubs.
High profile UK gangsters laundered proceeds of crime through timeshare operations and it was impossible to open a tabloid newspaper without reading about new consumer horror stories.
Fearing for their tourism revenue Spanish authorities banned touts altogether, and enacted strict laws to protect consumers from high pressure sales.
One of the laws was to prohibit resorts from taking any kind of payment until the end of the Cooling Off period (currently this is 14 days).
Timeshare is an emotional sale. Clients were traditionally steered into a ‘feel good’ purchase on the day of the presentation. They were then induced to commit to the purchase by paying a non-refundable deposit. Without any deposit payment at risk, customers were free to change their mind when analysing their purchase later Many timeshare industry insiders believed the Cooling Off period could be the end of the road.
Timeshare companies largely ignored the new laws for decades, leading to many of them being sued to such a degree that they now face insolvency.
New tactics, and finance
Timeshare tactics had to change. The days of ex double glazing salespeople and fast talking second hand car traders finding a new lease of life in world of Spanish holiday ownership were over. Driving prospects into signing on the day, by hook or by crook no longer held water because people could simply walk away from the deal after reflecting on it in the cold light of day.
‘Relationship sales’ became the new buzz phrase. New, in depth sales psychology techniques taught by slick American sales coaches helped persuade people to stay on board with the purchase during the Cooling Off period. But the real breakthrough was when finance companies joined the party.
Companies like Hitachi Finance, Shawbrook and GE Money started working together with sometimes quite disreputable timeshare companies to lend money to prospective buyers, and to approve those loans on the day.
“People still had 14 days to cancel,” explains Daniel Keating, Information Officer for the Timeshare Consumer Association (TCA). “But they signed the agreement on the day and gave over their financial details. So the agreement automatically went live on the 15th day unless the prospect actively got in contact to cancel. This is an important distinction. Instead of the client having to get back in touch and make a payment, the payment was already there waiting to automatically process. If the prospect did nothing, the payment would go through, and the customer was legally bound to sometimes decades of a payment plan.
With the payments now being contracted to a finance house, it became much tougher to walk away later. “Before these loans, a customer signing a deal with a timeshare company in Spain could in practice wash their hands of the deal,” says Daniel. “They would lose any payments they had made so far, but nobody would come after them for outstanding payments. Their membership would be cancelled, but that would be the end of it.
“Things are different when it’s credit from a bank or licensed finance provider. Once a contract is signed, then there is no longer the possibility to walk away. These entities have powerful machinery to chase payments through the British court system. They don’t care that you no longer want the timeshare.
“People were now facing debt collectors and CCJs when they tried to leave the membership.”
Credibility of the banks
Big names like Clydesdale and Barclays soon got in on the action. “This was promoted by the salespeople involved as those impressive financial names having approved the company and the memberships offered,” says Keating.
“In the case of disgraced Maltese timeshare company, Azure, customers reported to us at TCA that the sales reps would play heavily on the fact Barclays Partner Finance were providing the loan. ‘Barclays would not be supporting us unless they had evaluated us, and the membership thoroughly’ customers reported being told.
The ‘involvement’ of a blue chip giant like Barclays convinced huge amounts of customers sign up to Azure, who filed for bankruptcy in 2020.
“These were sub-prime loans in the sense that there was no collateral,” explains Daniel Keating. “Timeshare memberships have no resale value at all, so the loan interest was horrendous. We have many examples of Azure victims who paid more than double the loan amount back over ten years or more. The APR was often up to 28%.
In the Azure case, loans were handled by commission only timeshare salespeople who were neither qualified nor licensed to process the finance applications. “We had reports of the sales people telling the clients how to ‘manipulate’ their answers on the loan application document to ensure success,” says Daniel. “Many people told us it was the quickest they had ever had a loan approved. No thinking time, just a timeshare presentation and a few hours later they had a loan approved for tens of thousands of pounds.”
In a widely reported 2020 case, tenacious timeshare lawyer Adriana Stoyanova (AKA the Erin Brockovich of timeshare) led a huge claim against Barclays Partner Finance. Stoyanova secured a victory for over 1400 victims, with compensation totalling around £48 million.
“This is the tip of the iceberg,” says Keating. “Thanks to the credibility of these financial institutions, huge numbers of ordinary people were lured into signing up for life changing financial commitments, for memberships they very quickly realised were dated, constricting and had running costs often more expensive than traditional holidays in exactly the same locations.”
Stoyanova’s impressive win was hailed as a meaningful step in the right direction, but most experts feel it doesn’t go nearly far enough. There are calls for all financial institutions who supported disreputable or high pressure timeshare operations to be censured.
“The banks and finance houses have a moral obligation to repay the money that people were pressured into spending at these timeshare resorts,” Daniel Keating believes. “There should be far stronger safeguards in place, perhaps even a total ban on people buying timeshare products on credit.
“One possible solution could be if the resort offered a buyback option that the client could redeem at any time based on how much they have actually used the membership. They would then be able to at least settle the outstanding loan amount by cancelling their membership.”
TCA’s position is that banks and finance houses have no business being involved with timeshare operations. “It is not a respectable business,” states Keating. “In the long run it can only damage a bank’s reputation to finance purchase of something that is so damaging to the client. TCA has been operating since 1997, and in that 25 years the evidence of our helpdesk enquiries’ testimony is overwhelming.
“The vast majority of people who signed up for finance to buy a timeshare sincerely regretted the decision.”
For advice on any timeshare related subject, get in touch with the team at Timeshare Consumer Association
- TCA contact page
- Tenacious timeshare lawyer Adriana Stoyanova compared to “Erin Brockovich” following Barclays win
- Huge win for consumers ‘mis-sold’ Barclays Partner Finance loans by disgraced timeshare company
- Financial Times story June 18th 2021. Barclays Partner Finance admits defeat after campaign by timeshare lawyer supported by European Consumer Claims
- Timeshare manipulation tactics. How people are influenced to buy on the day
- Why claiming timeshare compensation is the right thing to do
- £120,000 timeshare victims. Brit couple facing retirement with crippling debts
- A guide to the timeshare claims process
- History of Timeshare
- Why timeshare doesn’t work
- How to survive and profit from the dreaded timeshare presentation
- Timeshare Consumer Association reviews
Timeshare Consumer Association. Contact us on: T: 01908881058 (ask for Daniel), E: firstname.lastname@example.org (Address to Daniel).
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TCA provides a central resource of consumer information on timeshare matters for the media and other organisations — We work towards encouraging responsible, honest, timeshare operators. We also publicly expose negative consumer practices and organisations which operate in a manner detrimental to timeshare buyers and owners.
An important part of our mission is to lobby UK and European Governments and regulatory bodies for improved consumer protection in the timeshare environment and collect information on frauds and mis-selling, for action by enforcement authorities.
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First published on MyNewsDesk March 2022