How not to be caught in a hovel due to time share?



Most people are surprised or start laughing or have these two feelings at the same time when first hearing a term ‘time share’. However, for some Ukrainians, the ‘time share’ is a symbol of fraud that includes considerable amounts of money.

Why did one of the most popular travel services in the world (mostly in the USA and the EU) with the 50-year history and the annual turnover of tens of billions dollars turn into a trick to take people’s money in Ukraine?

Let’s find out what the idea of ‘time share’ is first. Imagine that you, together with ten of your friends, have purchased a common property on the Mediterranean coast or in the same cozy area in your native Odessa region.

As co-owners, you and your friends have agreed on who and when has the right to use this premise. Usually, obligations are established for a long period (for example, for 5 years), and it is assumed that  during the specified period, one person can use this accommodation 1-2 times a year at specified intervals (as a rule, starting from a few days to a month).

This is a classic time share contract. In a more modern context, a time share contract usually means not a full ownership, but the right to long-term use of residential property.

Through a travel company, a time share contract can be concluded with all concerned parties individually and includes the right to exchange your own share, sell it, use related services, etc.

However, in Ukraine, due to a lack of any legislative regulation, the time share became a means of pulling the wool over eyes of trusting potential vacationers.

In Ukraine, frauds related to the time share was particularly relevant in the 90’s and 2000’s.

According to the classic scheme, a client initially responded to several innocent, at first glance, questions of some ” sociological survey” in a supermarket. If it became clear from the answers that this person liked to rest abroad, he would soon be called and got a joyful news about the winning the competition and obtaining a certificate for a long holiday for fun money (although sometimes this amount could be several thousand dollars). The deal is usually completed in the company’s office, where a person who came to take his ‘win’ was forced to sign a ‘time share contract’ with the use of aggressive marketing and psychological pressure that was supposed to be a rock-solid ‘guarantee’ of rights to a hovel in the middle of nowhere. As a rule, you could abandon the contract and get the paid money back just in theory.

However, these fraud schemes were different. Some clients thought believed that they paid for a tourist trip, although, in fact, payments were made as a club contribution, which did not give the right to a tourist trip, under such a contract.

Others were disappointed when they arrived at destination, where there was economy-class apartments offered instead of luxury hotels from the presentation.

That is, one way or another, the amount of money paid for these services one way or another exceeded their real market value a few times. At the same time, timeshare contracts formally met all the legal requirements, which created serious difficulties to bring fraudsters to responsibility.

Judicial statistics confirm that the relevant criminal cases are rare. In one of them, dated 2013, the Shevchenkivsky District Court of Kyiv considered the circumstances of activities of a group of people, who, according to the prosecution materials, seized funds of 131 citizens in the amount of almost 1 million hryvnias by taking ‘ membership fees’ for their participation in ‘tourist club’ during 2001-2006.

However, there were any final decisions taken in this case: court decided to return the criminal case for additional investigation after detecting procedural flaws in the prosecution materials. Most likely, this story ended in nothing, as well as many others that have not been brought to court at all.

Despite the fact that, since the 90’s, the time share have been  largely a manipulation and deception item, this area is still out of the state’s attention. As a result, we have deceived consumers and unprotected honest businesses, which are unable to develop a real time share service in a lawful and customer-friendly environment. Accordingly, business loses potential money and is convinced once again that being honest is not profitable.

However, things may soon change for the better. The BRDO Office, together with the Ministry of Economic Development and Trade of Ukraine, is initiating work on the implementation of Directive 2008/122/EC of the European Parliament and of the Council of January 14, 2009 on consumer protection with regard to certain aspects of contracts for the use, sale and exchange of temporary residence rights (time share) and products related to long-term vacations.

the implementation of the above Directive in the national legislation of Ukraine is stipulated by the Association Agreement between Ukraine and the EU.

One of the examples of civilized regulation of time share contracts provided for in Directive 2008/122/EC is the consumer’s right to withdraw from the contract without any explanation and penalty payments within 14 days of its signing.

Only one such rule would ensure a well-informed choice of consumers and break down schemes, which are usually based on the rapid signing of contracts and the impossibility of further repayments.

We strive to protect an honest business that fully meets the interests of consumers. And every satisfied consumer is a step towards a satisfied Ukraine!

By Vlad Pinchuk, BRDO expert