Sun, Sea, and Scams: Don’t Fall for the Holiday Club Racket

As winter blues and dark mornings settle in, millions of Britons will begin planning their holidays this month. However, with more than £1 billion lost to holiday scams annually, according to the Office of Fair Trading (OFT), it's crucial for customers to conduct thorough research before making any bookings.

The most prevalent scam today is the "discount holiday club." Hundreds of thousands of holidaymakers fall prey to these fraudulent clubs each year, paying between £3,000 and £12,000 for access to five-star vacations at supposedly unbeatable prices, along with discounted flights valid for life or for five to ten years. Unfortunately, these discounts often prove worthless or are no better than deals available online.

To combat these scams, the OFT is ramping up its efforts to alert the public through a "Scams Awareness" campaign next month. Leaflets are being distributed at airports, with additional warning campaigns planned for later in the year.

Andrew Garrett from the OFT notes that middle-aged and elderly couples seeking luxury vacations at a good price are the primary targets. These individuals are often approached via phone or while on holiday. Spain is a hotspot for sales representatives who hand out scratch cards claiming the recipients have won a free vacation. To claim their prize, victims must endure lengthy presentations at upscale venues, where the supposed benefits of these "exclusive" holiday clubs are pitched. Those contacted by phone are invited to attend presentations in British hotels.

The European Union has proposed amendments to the European Timeshare Directive, which would require holiday clubs to adhere to the same regulations as timeshare companies under the Organisation for Timeshare in Europe (OTE). These regulations include "cooling-off" periods during which customers can change their minds. However, it could take three years for these changes to be implemented.

"If the holiday club is UK-based, we want to hear from individuals who have had negative experiences, though it's unfortunate that they likely won't recover their funds," Garrett says. "For clubs located abroad, we can refer complaints to the appropriate authorities in that country to help gather evidence—Spain has previously taken action against such clubs."

The UK European Consumer Centre, which opened in November last year in Basildon, Essex, can assist consumers with complaints about dubious holidays purchased from European traders and provide linguistic support.

Another holiday scam involves online companies. Last month, four individuals were tried at Southwark Crown Court for their connections to various holiday websites—such as sunmedresorts.com, holidays4under200pounds.com, and unbeatableholidays.com. They are charged with conspiracy to defraud by selling vacations online without any intention of providing them. The companies all collapsed within months.

According to the prosecution, these companies initially used teletext to attract holidaymakers but soon shifted to the internet as their primary sales tool. Thousands paid for trips to destinations like Egypt and Crete, only to find that their flights and accommodations had not been booked, and their included insurance was invalid. While some attempted to reach the companies by phone, their numbers soon went out of service, and the websites disappeared. Holidaywatchdog.com has documented complaints from customers who lost over £1,500 by booking nonexistent holidays through these sites. Unfortunately, even if criminal proceedings occur, there is no guarantee that victims will recover their lost funds.

So, how can you ensure that you’re booking a legitimate holiday? As a general rule, if a deal seems too good to be true, it probably is—so steer clear.

"If it's too late, you might have some recourse if you booked the holiday using a credit card rather than a debit card or cheque," advises David Cresswell of the Financial Ombudsman Service. This gives you more rights compared to paying with a debit card, cash, or cheque. Under Section 75 of the Consumer Credit Act, if you pay for goods valued over £100 partially with a credit card, the card provider is equally liable with the company if issues arise.

However, be wary of unusually high credit card fees that encourage cash payments, cautions Amanda Diamond of Which?. "If you're told that the company does not accept credit cards, choose one that does."

Ensure the travel company has financial protection. Most reputable holiday companies are registered with a compensation or arbitration scheme, such as the Association of British Travel Agents (Abta) or the Association of Independent Tour Operators (Aito), which provides some protection if you lose money due to fraud or if the company goes bankrupt. Look for their logos on the website. "If there are none, it should raise red flags, as companies typically make it clear they are members of these schemes," warns Sean Tipton of Abta. But don’t just take the company’s word for it—confirm their membership with the relevant trade body.

When booking with travel agents, remember they are arranging the holiday on your behalf. "If you're told the holiday is booked, they should tell you who it's with, and you should receive a confirmation invoice from the supplier," Tipton explains. "If you don’t receive this within five working days, it could indicate that they are not reputable."

For assistance, contact Abta at 020 7637 2444 or visit abta.co.uk; Aito at 020 8744 9280 or visit aito.co.uk; the UK European Consumer Centre at 08456 040503 or visit ukecc.net; and Consumer Direct at 08454 040506 or visit consumerdirect.gov.uk.

Once Stung, Twice Shy

Anna Wright, 27, is searching online for a good deal on a skiing holiday, but after losing £600 to an internet holiday scam, she is now cautious about booking online.

Anna used an online travel company to book a week-long stay at a five-star resort in Sharm El Sheikh, Egypt, with her boyfriend. The prices offered were the cheapest she found after comparing various online options.

"It seemed like a great deal at just over £300 each for the week, and it was listed through Thomson," she recalls. "The hotel was featured in the Thomson catalog, but it was a little cheaper through this website by £40. There was nothing to indicate it was a scam. My dad advised me to ensure it was registered with Abta, but as it turned out, [the website's accreditation] wasn't legitimate."

The confirmation documents arrived, and Anna and her boyfriend thought everything was fine. Since she didn't have a credit card, she opted to pay by cheque. It wasn’t until a work colleague mentioned that the company had ceased trading that she realized her mistake. She has yet to receive any refund—those who paid by cheque have little chance of recompense.

"Now, I make sure not to pay by cheque for anything online," she states.