Case reference number: CRE-E-24584
Summary of work/background
On 16 December 2010, the OFT issued High Court proceedings against Incentive Leisure Group Limited ('ILG') and Personal Travel Group Limited ('PTG'), Geo Demographic Market Research Limited ('GDMR') and seven individuals, for their involvement in activities which the OFT considers breached consumer protection law. The OFT issued proceedings to stop these companies and individuals using sales and marketing practices that the OFT considered to be misleading or otherwise unlawful. These practices were being used when selling and marketing holiday club memberships and other holiday based products.
The OFT was concerned that holders of timeshare products were invited to attend presentations on the promise of being able to dispose of their timeshares, with their maintenance charges, when in fact they were subjected to lengthy and high pressure sales pitches to be sold expensive holiday club memberships costing large sums, in some cases up to £12,000. Sales staff told these holders they could get back up to 95 per cent of these sums under a 'reclaim' scheme but did not explain the restrictions that applied, and often played on the holders' fears that their children would otherwise be liable for timeshare maintenance fees. Many consumers subsequently wished to cancel their holiday club memberships but were not allowed to do so when they tried.
Basis of court action
ILG and PTG sold and marketed holiday club memberships and other holiday based products to consumers. GDMR placed adverts in national and local newspapers and in-flight magazines on behalf of ILG.
Keith Barker was a director of ILG, and is a director of GDMR and PTG. Kimberley Bambroffe was a director of ILG and is a director of PTG. Martin White was a director of ILG.
Jonathan Daniels, Mark Gales, Robert Knight and Lily Alderson were involved in the sale of ILG and/or PTG products.
As a result of its investigation, the OFT considered that the adverts placed by GDMR failed to disclose the identity of ILG and gave the misleading impression that consumers would be able to dispose of their timeshares and as a result no longer have to pay maintenance charges for them.
Instead, consumers who responded to the adverts were invited to attend presentations where they were subjected to lengthy and high pressure sales pitches which resulted in their being sold expensive holiday club memberships or their agreeing to join what appeared to be a pyramid scheme on payment of a significant fee.
Consumers were often told that this was their only chance to dispose of their timeshares, failing which their children would be responsible for ever increasing maintenance fees after their death.
Also as a result of its investigation, the OFT considered that consumers were promised a one off right to sign up to a 'reclaim scheme', under which they were promised up to 95 per cent of the value of their timeshare back. The OFT believes that this scheme may have been subject to terms and conditions which were not properly explained. As a result, it was unlikely that any sum as high as 95 per cent would be repaid.
The OFT also considered that many consumers subsequently wished to cancel their holiday club membership, but were told they did not have the right to do so. This is despite the rights given under the Cancellation of Contracts made in a Consumer's Home or Place of work etc Regulations 2008, which allow such contracts to be cancelled within seven days of when they have been made (subject to longer or shorter time periods in exceptional circumstances).
OFT issued High Court proceedings, in order to prevent these activities from continuing.
In April 2011, interim enforcement orders were obtained against PTG, GDMR and two individuals who are directors of PTG and were directors of ILG. At the same time, final enforcement orders were obtained against Martin White, Jonathan Daniels, Mark Gales, Robert Knight and Lily Alderson.
On 22 March 2012, a final enforcement order was obtained against GDMR, Keith Barker and Kimberley Bambroffe (the two directors of PTG). No order was obtained against ILG, because it went into creditors' voluntary liquidation in Gibraltar on 21January 2011 and was dissolved on 16 January 2012.
PTG went into creditors' voluntary liquidation in Gibraltar on 14 December 2011 but a final enforcement order was obtained with the agreement of PTG's liquidator, on 23 March 2012.
The content of all the final enforcement orders was agreed by GDMR, the liquidator for PTG, the individuals and the OFT, and was approved by the High Court.
Summary of Final Enforcement Orders
Amongst other things, the orders prohibit the companies and the individuals from engaging in misleading sales practices when dealing with people who want to dispose of their timeshares, and the orders require consumers to be given cancellation rights in certain circumstances.
In particular, the orders prevent the companies and individuals from:
- making statements giving the impression that in meeting them, a consumer would be dealing with a person interested in buying the consumer's timeshare
- making statements giving the impression that in or that through meeting with them, a consumer would have the opportunity to dispose of an existing timeshare or interest in a timeshare and would benefit financially
- making statements giving the impression that consumers would be given a financial reward for attending presentations
- making statements giving the impression that as a result of meeting them, a consumer would not have to part with any money in order to dispose of his timeshare
- making statements giving the impression that ILG, PTG or any other person are members of the Association of British Travel Agents ('ABTA') and other regulatory bodies or trades associations, when they are not members
- making statements giving the impression that they have helped consumers reclaim significant sums in disposing of their timeshares
- failing to inform consumers of cancellation rights they are entitled to under the Cancellation of Contracts made in a Consumer's Home or Place of work etc Regulations 2008.
The orders have the effect that if in the future, PTG, GDMR and/or any of the seven individuals involved in the proceedings breach the terms of the orders, they risk being sent to prison.
- Final Enforcement Order against Martin White, Jonathan Daniels, Mark Gales, Robert Knight and Lily Alderson sealed by the High Court of Justice on 19 April 2011 (pdf 264kb)
- Final Enforcement Order against GDMR, Keith Barker and Kimberley Bambroffe, sealed by the High Court of Justice on 26 April 2012 (pdf 1.5Mb)
- Final Enforcement Order against PTG, sealed by the High Court of Justice on 26 April 2012 (pdf 1.3Mb)
- Press release OFT secures enforcement orders against holiday club companies (6 May 2011)
- Press release OFT launches court action against three companies marketing or selling holiday clubs, and associated schemes (20 December 2010)