ASA Adjudication on European Timeshare Owners Organisation (Gibraltar) Ltd

Ad

The voice-over in a TV ad, for the European Timeshare Owners Organisation (ETOO), stated "Looking to sell your timeshare or points? You need to speak to ETOO, the European Timeshare Owners Organisation. ETOO should be your first choice to purchase, sell or exchange your timeshare or points. Call ETOO now ..."

Issue

52 viewers, all of whom had had dealings with ETOO, challenged whether:

1. ETOO sold timeshares or points as claimed;

2. the ad was misleading, because it did not state that consumers would have to sign a 12-month contract;

3. the ad was misleading, because it did not state that consumers would have to pay an upfront non-refundable fee and

4. the ad was misleading, because it did not make clear that consumers might have to attend a presentation abroad at their own expense.

BCAP TV Code

Response

1. ETOO said they had advertised on national television for over 24 months.  They said they received thousands of responses and suggested that, out of those, the number of complaints received was minimal and that they were happy to offer a refund where justified.  They said all complaints were thoroughly investigated and, where they felt there had been clear misrepresentation by any overzealous telemarketing executive, a refund was issued.  They sent a copy of a refund letter issued to a client.  They also sent a statement, from their auditor, that said 4,106 timeshare weeks had been transferred during the period 1 May 2002 to 31 December 2007.     

They sent a copy of an e-mail to Clearcast in which they explained their resale process: when a client contacted ETOO their ownership details were uploaded to the database and made available for resale.  ETOO would then discuss the marketing package that could give the client's property more exposure.  When an offer was made they assisted in the resale process, liaising between the vendor and purchaser and, where required, organised the transfer of funds, for which they used an independent stakeholder.  ETOO added that they were members of ITRA (The International Timeshare Resale Association).

ETOO sent a list of their timeshare disposals during the six-month period from 1 November 2007 to 30 April 2008, and a list of all new registrations for the same period.  They sent data that showed that, for the majority of clients whose timeshare had been sold, the time taken from registration to disposal was three or four months.  ETOO said although timeshare had always been sold as an investment, the reality was that its value had depreciated considerably and in some cases the timeshare resorts refused to take back their clients' unwanted weeks, even for a nominal payment, because the annual maintenance fees were worth more than the value of the timeshare.   ETOO said they were working on that project with ITRA, and it was in reality the only way for those members who had not been able to sell their timeshare to receive compensation.  They asserted that the most important issue to them was that clients had contacted ETOO to dispose of unwanted timeshares, and they had in the past and would continue to explore every possibility of fulfilling their commitments.   

Clearcast said they had first approved advertising by ETOO in March 2005, and had sought an assurance from them that they did sell timeshares or points for customers and that it was possible to purchase, sell or exchange points.  They confirmed that after several negotiations they had approved the present script.  They sent an e-mail from 2005 in which ETOO stated that they acted as an estate agent for timeshare owners and organised the purchase, sale and exchange of timeshare ownership on behalf of their members.  In that e-mail ETOO had also said they had arrangements with wholesale organisations and many timeshare resorts that purchased weeks from them.  The e-mail went on to explain the 'points' system, whereby a member of the public did not purchase a specific week but was allocated points depending on what they paid.  The points could then be used for accommodation and further points could be purchased which would entitle them to a larger or more luxurious apartment or to stay at a different time of year.  They said the advantage with points was that a client would not have to sell their first apartment to purchase a new one; they would merely need to acquire further points.

Clearcast said they had become aware of several customers paying money to ETOO and then not being able to contact them again.  They confirmed that they had received two complaints direct as well as notification of complaints via ITV and Five.

Clearcast said when approached to approve the latest ads in February 2008 they sought more confirmation from ETOO of their business practices and received two newspaper ads, a sample contract, a refund letter and a copy of their 2007 independent audit.

2. ETOO sent a copy of their client contract.  They said there was no obligation whatsoever for the client to sign a 12-month contract.  They explained that clients who wanted to sell their timeshare ownership were offered the opportunity to advertise in a directory listing on ETOO's website, free of charge and without having to sign a contract.  They highlighted the section on their website entitled "Free listing form - List your week free in our online directory."  ETOO said if their clients wished to receive further marketing exposure, they would explain their "Marketing" package to them and, if the customer wished to proceed, the marketing contract was for 12 months.  

3. ETOO said the marketing fee was €1195 and it contributed towards the media budget they spent on advertising clients' weeks, which included TV, newspaper and online advertising for which they spent in excess of £75,000 per month.  They said that included a national press ad, which detailed each client's specific week, and sent an example of such an ad.  They argued again that there was no obligation to sign up to the marketing package; it was an additional option for which a fee was charged.  They said 11.5% of their clients during the period 1 November 2007 to 30 April 2008 had successfully disposed of their timeshare having paid a marketing fee. They said for the same period they had had 3,101 listed clients who had not paid a marketing fee, and whose details had been entered into their website database as a free listing, and that, to date, 13 of those clients had disposed of their timeshare successfully.  They pointed out that the latter proportion, 0.42%, was considerably lower, which was why they believed the "marketing fee" programme was proven to greatly increase the chances of a successful resale.

4. ETOO said there was no obligation for clients to attend a presentation abroad.  They explained that many offers were made by overseas companies who wished to discuss their offers face to face with clients at their offices.  They said in those instances they would assist the clients to plan all travel arrangements and in all cases insisted that the company making the offer contributed by paying for the clients' accommodation.  They explained that buyer companies were often located in the country in which the client owned the timeshare, and that timeshare bought in Spain, Portugal or Tenerife with an Escritura ownership required the owner to attend a notary in that country to formalise the transfer or the ownership documents.  They added that they now had UK companies making offers for their clients' timeshare which they hoped would facilitate the resale process, and that they themselves were opening an office in England to assist the many UK clients who could not travel abroad.

Assessment

1.  Upheld

The ASA noted from the information supplied by ETOO that from 1 November 2007 to 30 April 2008 (April being the month we began our investigation) 3,528 people registered to sell their timeshare or points.  We noted that during the same period 275 people sold a total of 405 timeshares or points.  We also noted ETOO's comment that the average time taken to dispose of a property was three to four months and that there would not therefore be a direct correlation between the two figures.  We estimated, using the data from the whole six-month period, that the proportion of registered clients who achieved a sale would be around 8%.  Even if we counted only those clients who had registered during the first three months and would therefore have had a good chance of disposing of their property, selected the three months out of the six when most sales occurred, and discounted the fact that some people were selling more than one property, the proportion of sales to registrations would be only 15%.  Over a longer timescale, we noted from the auditor's report that 4,106 timeshares were sold in the period May 2002 to December 2007 and that 20,554 new members joined ETOO during that time, a success rate of 20%.  We noted the ad stated "ETOO should be your first choice to purchase, sell or exchange your timeshare or points".  

We considered that viewers would infer from the ad that they had a reasonable chance of selling their timeshare or points with ETOO.  We also considered that, even allowing for the time lag between registration and sale, and for a generous margin of error, the information provided showed that the vast majority of clients were unlikely to be able to sell their timeshare or points as claimed.  We noted, furthermore, the complainants all reported that they had not achieved a sale with ETOO.   In the absence of a clear qualification about the small likelihood of achieving a timeshare or points sale, we concluded that the ad was misleading.

On this point, the ad breached CAP (Broadcast) TV Advertising Standards Code rules 5.1 (Misleading advertising), 5.2.1 (Evidence) and 5.2.2 (Implications)

2. & 3. Upheld

We noted ETOO's argument that the 12-month marketing contract and fee of €1195 were not compulsory.  We also noted members had the option of a free website listing for their property or points which did not involve signing a contract or paying a fee.  We were concerned, however, that the vast majority of complainants reported being put under pressure to pay an upfront fee, variously described as a marketing fee, a retainer or legal and administration fee, usually of £850.  We noted, furthermore, from information provided by ETOO that only 13 out of the 3,101 clients who did not opt for the marketing package were able to sell their timeshare or points, which represented a far lower success rate than the already low success rate for those who had signed the contract and paid the fee.  

We considered that the presence of a marketing package, without which a customer appeared to stand a greatly reduced chance of selling their timeshare, was a significant condition that would affect viewers' decisions to register with ETOO.  In the absence of a clear qualification that customers would need to sign a 12-month contract and pay an upfront fee, typically of £850, to stand the small chance mentioned in Point 1 above of achieving a timeshare or points sale, we concluded that the ad was misleading.

On these points, the ad breached CAP (Broadcast) TV Advertising Standards Code rules 5.1 (Misleading advertising), 5.2.1 (Evidence), 5.2.2 (Implications) and 5.2.3 (Qualifications).

4. Upheld

We noted 37 complainants reported being told by ETOO that a corporate buyer had been found for their property, and 26 of them were encouraged to attend a meeting in Spain, Portugal or Tenerife to meet the buyer and finalise the sale.  We noted ETOO's point that accommodation costs were met, but noted the complainants reported that they had to pay for flights and living expenses.  We noted the marketing contract included the statement "The vendor must be the legal entity authorised to register the ownership as stated and understands that on occasion the vendor may be requested to be present at the point of sale."  We also noted several complainants commented that ETOO had said the buyer would not complete without meeting them because they had had a bad experience with a previous vendor.  

We considered that the fact that the buying process might involve meeting the buyer overseas or attending a presentation overseas, and that the consumer would incur the travel costs, was a significant condition that would affect viewers' decisions to register with ETOO.  In the absence of a clear qualification that customers might have to attend an overseas presentation, incurring travel costs, we concluded that the ad was misleading.

On this point, the ad breached CAP (Broadcast) TV Advertising Standards Code rules 5.1 (Misleading advertising), 5.2.1 (Evidence), 5.2.2 (Implications) and 5.2.3 (Qualifications)

Action

The ad must not be broadcast again in its current form.  Future ads should state the chances of a consumer making a sale and the requirement to sign a 12-month contract and pay a fee, typically of £850.  The ad should also state that consumers might be required to travel overseas to meet the buyer or attend a presentation at their own cost.

Adjudication of the ASA Council (Broadcast)