Timeshare company settles with the Colorado Attorney General
Last month I wrote about a case brought by the Colorado Attorney General against a Timeshare Sale Operation. I have more information about the case now. It seems that several of the defendants in the case settled with the Attorney General. The settling defendants agreed to pay a total of $325,000 to the State of Colorado. The settling defendants also agreed to a stipulated order that puts certain requirements upon them. They are as follows:
- The settling defendants cannot make any telephone solicitations to telephone numbers on the Colorado no-call list, and they must properly register with Colorado as before making telephone solicitations. (This obviously addresses making unsolicited telephone calls to consumers.)
- The settling defendants cannot distribute any advertising or marketing material that purports to offer any type of gift or award IF such gift or award is subject to the payment of cost or fee. (This addresses the defendants' former practice of offering "free" airline tickets or cruises to consumers in return for attending a sales presentation. As it turned out, the airline tickets and cruises came with additional fees and restrictions. They were not really free.)
- The settling defendants cannot distribute advertising or marketing material that resembles checks. (This addresses the tactic of giving a consumer a supposed "check" to convince them that they have received something of value. It turns out the "checks" were not worth all that much.)
- The settling defendants cannot distribute any advertising or marketing material that provides incentives to attend a sales presentation without clearly disclosing the costs, fees, conditions and limitations on the incentive. (Again, a settlement term that aims to prevent the defendants' former practice of offering practically useless airline and cruise awards as an incentive for consumers to attend sales presentations.)
- Finally, the settling defendants are prohibited from making false or misleading statements of fact concerning the price of goods or services or the existence of any costs or fees in connection with the sale of goods or services. (This addresses the problem where sales representatives make misrepresentations (i.e. bend the truth) regarding the timeshares offered.)
I am not surprised by the results of the case. It is a reasonable result. The main focus of consumer law is to prevent deceptive and unfair acts. In this case, according to the complaint, the deception started with marketing material sent to consumers indicating that they would receive free travel by attending a sales presentation. In reality, it was much more complicated than that. After arriving at the presentation, consumers learned that they had to pay a deposit of $200 for the travel certificates. Consumers could not determine their own destinations and times they could travel. Although the travel certificates were purported to be worth nearly two grand, the defendants actually bought them for only $40.
Another deceptive act described in the complaint is that the consumers were told that they timeshare package offered would increase to $25,000 unless it was purchased that day. In reality, the price never changed and averaged around $7,000.
The settlement addresses these deceptive acts and causes the defendants to give up the profits they obtained through the timeshare sale scheme.