No-win-no-fee (NWNF) sounds like a tempting way to launch a compensation claim against an errant timeshare company. But is it really the risk free opportunity it is presented as?
Timeshare companies ignored consumer laws for decades and their victims have been successfully suing them for vast sums of money since 2016. The average compensation award is around £20,000 but can be much more. One jubilant ECC client won just under £300,000 for his claim against La Pinta timeshare club in Tenerife.
Naturally there are legal costs involved in holding reluctant timeshare companies to account. These operations fight tooth and nail to avoid their legal responsibilities and it takes considerable legal resources to bring the law to bear on them. The legal fees alone often amount to many thousands of pounds.
European Consumer Claims (ECC) is a leader in the claims management field and has thousands of clients. Each client has several thousands of pounds worth of legal fees that need to be covered.
With each case taking 12 to 18 months (occasionally even more), to operate a no-win-no-fee policy with the claims firm only taking their percentage at the back end would mean tying up millions of pounds of operating capital, for sometimes a year and a half.
Even the most carefully managed modern businesses are unlikely to have margins that allow this volume of cashflow to be inaccessible for those lengths of time. In order to maintain the integrity of the business and honour all financial commitments to both staff and clients, ECC and other legitimate claims businesses have no choice but to charge in advance for their services.
For the cautious potential claimant, the inconvenience and expense of paying the fee upfront are serious barriers to the process. They have to be able to afford the fee, and they have to put their trust in the company they are paying in advance in order to see a return on their money in around 18 months.
With so many fraudulent outfits offering claims and relinquishment services, the prospective client has every reason to be vigilant.
Scam claims firms understand this very well and to attract clients they often dangle the carrot of NWNF.
To the concerned prospect this sounds like the ideal solution to their problem. All of the risk is now assumed by the 'claims firm'. The client can go apparently go ahead and claim their money without having to make any payments until the job is done.
It's the perfect lure.
At a certain point in life most of us understand that if something looks too good to be true, it pretty much always is. The same applies (perhaps unsurprisingly) to timeshare claims firms.
When a claims firm offers to do all the work and cover the costs for you, only charging for their fees in arrears, what they are actually doing is getting your attention, drawing you in and signing you up.
So far, so harmless.
Once you are on board as a client, with contract in place and perhaps after a positive update or two, the inevitable second shoe will gently set itself down.
Out of the blue you will get a call from the company telling you that your case has come to a brief standstill and that you need to pay some small amount of money in order for it to continue. The reason given might be 'court fees' or 'taxes'. Perhaps it is a minor cost to translate a document. This fee will be minimal, sound completely reasonable and be easy to pay. Often the fraudsters will assure you that the money will be paid back to you at some later point.
Once you pay this small amount, you are invested. Another, slightly larger (but just as reasonable sounding) demand for money will follow a few weeks later. You have had time to accept the first fee, and after all you are committed now. If you don't pay, you will have lost the money already given plus you have wasted all the time spent until now. Perhaps your antennae are beginning to twitch in warning, but you pay.
The pattern is set. The demands will become larger and more frequent. The reasons will be different but the result is the same. Because each time you are more heavily committed, you keep paying. At least for a while.
The demands will not stop until you finally accept that you have been scammed and are prepared to abandon all of the money already paid.
The NWNF offer that gave you peace of mind and seemed risk-free has now cost you thousands (sometimes tens of thousands) of pounds. Even worse: your case was never worked on and you are back at square one. You still own your timeshare and have not started to make a compensation claim against your timeshare company.
"We have a huge number of clients who came to us after losing money to scam firms offering no-win-no-fee services," explains Greg Wilson, CEO of European Consumer Claims.
"The lucky ones realised what was going on before they lost more than a couple of hundred pounds," continues Wilson, "but many people lose tens of thousands of pounds before finally admitting to themselves that they were being defrauded. The scammers are extremely convincing and the more money you pay them, the harder it is to give up and abandon the money lost so far.
"if you have signed up with a NWNF firm, be on your guard. The second they ask for any money at all, walk away.
"In our experience, NWNF offers are not real. If you entertain them, you will be very lucky if it's only your time that you lose."
For genuine help with timeshare issues, contact our team at the Timeshare Advice Centre.
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