Why do timeshare claims firms charge fees in advance?

Why do claims firms charge fees upfront instead of on a no win/no fee basis?

A much needed solution

For over a decade, timeshare companies in Spain ignored laws enacted to protect consumers from making life changing financial decisions. Many of these illegally operating companies relied on glacial, daunting Spanish bureaucracy to intimidate potential litigants. It was not considered possible for an individual to navigate the process and resorts felt protected by fortress of legal inefficiency.

Nature abhors a vacuum, and so does a gap in the market. Expert claims firms like European Consumer Claims incorporated, specialising in managing the process from start to finish on behalf of timeshare victims. For a fee, these firms would deal with every inventive scheme dreamed up by timeshare resorts to avoid compensating illegally sold consumers. Unlike individual timeshare owners, claims firms would never give up.

Rogue operators

Sadly, as with any new developments around the business of timeshare, this genuine need for help attracted thieves and scam artists. Criminal gangs bought stolen timeshare data and created fake firms with the sole aim of defrauding people who had already lost money to timeshare sales operations.

These criminals caused difficulties for consumers and genuine claims firms alike. Suddenly, instead of people needing help being able to trust those offering it, a necessary atmosphere of caution and scepticism arose. People still needed the service, but how can they trust the firms offering it to them?

Sensible precautions

There are fortunately many volunteer consumer associations that offer free advice on the subject. They will help you do your own research (warning you about which tell-tale signs of fraudsters to watch out for). These consumer associations also keep white lists of which claims firms are currently trustworthy and capable and will share the information with you (usually by phone as the lists vary slightly over time and depending on the exact circumstances of the enquirer.)

Online reviews give an excellent indication of the subjective experience of their customers. Look for customer reviews on a company's website too. Preferably video reviews so that you can see they are real people talking about real experiences.

A common question

Cautious timeshare victims often baulk at the idea of paying money upfront. An understandable reaction given the amount of con artists fishing for their hard earned money

"Why can't you do it on a no-win-no-fee basis?" is a question asked by canny prospective clients all the time.

The answer

Unfortunately no firms are likely to operate on a contingency basis. Scam firms and genuine firms alike all charge their fees upfront, but for very different reasons.

• Scam firms charge fees upfront because they know that it is the only way to steal your money. As soon as they have it they will disappear and you will never hear from them again.
• Genuine firms charge fees in advance because of the actual outlay they have to make on your behalf, in terms of wages, business overheads, court permissions and other expenses. ECC (for example) has thousands of clients. Each client requires thousands of pounds worth of legal fees to be paid in advance to our law partners. This would mean millions of pounds of capital tied up at any one time if we operated no win/no fee. A situation that would be untenable in our business model.
• Another big giveaway for Scam Firms is that they will ask the money to be sent to a bank account in an individual’s name whereas a genuine company will take the payment into a business account or a lawyers client account.

The good news is that there are subtle differences in the way scam outfits and genuine claims companies do business regarding these upfront fees:

• Honest companies will often allow limited payment terms. Scam companies obviously want everything immediately because they know a conned client will not honour a payment schedule later
• Honest companies will often take part of their payment as a percentage of the compensation award. This is a clear demonstration of their confidence in being able to secure the money. Firms who offer this type of payment split will often be prepared to buy a larger share of the award in return for a smaller initial payment by the client, provided the basic costs of the work are covered.
• A scam firm will only accept payment by bank transfer because this means the victim forgoes the protection of the 1974 Consumer Credit Act they would have had if they used a credit card for the transaction. (Note, genuine firms would often prefer a transfer too because of the extra costs incurred with credit card payments, but they will still accept card payments if required)

For advice on timeshare claims and relinquishments, contact our team for a confidential, no obligation chat.