IP/06/709

Brussels, 1 June 2006

Commission acts to address gaps in the Timeshare Directive

The Commission is today launching a wide public consultation on the Timeshare Directive (94/47/EC). Timeshare contracts entitle consumers to spend a period of time (at least one week) in a holiday property for at least three years. The Timeshare Directive sets minimum standards for consumer protection throughout the EU, such as ensuring that consumers receive adequate information on the property. The legislation also seeks to prevent “pressure selling” by allowing for a cooling-off period where withdrawal is possible and money deposits are not allowed. However, some operators have introduced new timeshare-like products which take advantage of regulatory loopholes, leading to a number of complaints by consumers. “Consumers should have every confidence that they will not be taken for a ride if they opt for a timeshare formula or similar products” said Health and Consumer Protection Commissioner, Markos Kyprianou. “I want to make sure that unscrupulous traders do not take advantage of potential clients – many of whom sign up to these products after falling in love with a holiday resort.”

Since the Timeshare Directive was adopted in 1994, a number of new products have come onto the market, such as contracts which are similar to timeshare, but where the contract is for 35 months (so-called “timeshare-like products”). Other new products include “travel discount clubs”, whereby consumers pay a membership fee – sometimes as much as €20,000 - to access a booking site promising discounted air tickets and accommodation. However, some consumers are finding that the accommodation does not reach the standards promised. These new products fall outside the scope of the Directive and allow some operators to take advantage of regulatory loopholes.

The 9-week consultation is being launched along with a discussion paper, which explores a series of timeshare-related regulatory problems - identified in close cooperation with key industry and consumer groups. These mainly concern the scope of the timeshare legislation, including issues such as re-sale and exchange of timeshares. Other issues addressed include information requirements, professional and financial requirements of operators, systems of arbitration and redress, and criminal sanctions for infringements.

The Timeshare Directive is one of the eight directives which are encompassed by the review of the consumer acquis, which is currently being undertaken by the Commission. Cross-cutting issues will be examined in a horizontal context. However, some of the problems related to timeshare and certain other holiday products require more urgent action. This is why the Commission has decided to launch a separate consultation on the review of the Timeshare Directive.

On the basis of the outcome of the consultation, the Commission will come forward with proposals to address any existing gaps.

Background

Timeshare, as defined within the Timeshare Directive, is the right to spend a set period of time (e.g. one week) in a holiday property each year for three years or longer. The Timeshare Directive protects consumers by requiring that:

• traders provide certain pre-contractual information (in a prospectus) to prospective purchasers(e.g. descriptions of the property);
• the contract contains certain a required minimum of information to be provided to purchasers (e.g. state of completion of the property);
• the prospectus and the contract are in a language that the consumer is familiar with (i.e. not legal jargon);
• purchasers are given a cooling-off period during which they may withdraw from the contract;
• deposits of money are banned during the cooling-off period

The purpose of this paper is to launch a wide public consultation on the scope and nature of the problem and elicit stakeholders’ views as to possible solutions. Furthermore, the Commission will hold a meeting with stakeholders on July 19. If the findings of the consultation and meeting confirm the need for a revision of the directive the Commission will adopt a legislative proposal updating the directive towards the end of 2006.
The consultation can be found here:

http://ec.europa.eu/consumers/cons_int/safe_shop/timeshare/consultation_paper010606_en.doc
Further information:

http://ec.europa.eu/consumers/cons_int/safe_shop/timeshare/index_en.htm