Attorney General Cooper Announces Lawsuit Against Festiva

For Telemarketing Act Violations And Deceptive Business Practices

Tuesday, January 7, 2014

Tennessee has filed a lawsuit against various entities operating a ‘timeshare’ and membership vacation club that allegedly employs deceptive techniques to market their products, Attorney General Bob Cooper and the Tennessee Division of Consumer Affairs of the Tennessee Department of Commerce and Insurance announced Tuesday.  Tennessee’s lawsuit comes after a multi-state investigation of Festiva’s sales and marketing practices.  Maine and Louisiana each filed suit against Festiva during December.

Tennessee’s complaint alleges that Festiva operates a telemarketing and direct mail enterprise that uses fraudulent and deceptive tactics to lure Tennesseans into attending high-pressure sales presentations to buy vacation memberships. According to complaints reviewed by the Tennessee Attorney General’s Office, consumers are misled into believing that they have won or been selected for a valuable prize, but to claim the prize, they must comply with many undisclosed requirements including a lengthy, high-pressure sales presentation. 

The State’s complaint further alleges that Festiva memberships purchased by consumers were different from what was represented to those consumers and that the various Festiva membership programs have confusing rules and terms that make the membership difficult to use. Festiva purportedly capitalizes on this confusion in order to sell more of its products. For example, consumers have reported that the company calls its members to tell them that they are invited to an “owners update” meeting. Instead, consumers report that upon arrival at the meeting, they are confronted with another high-pressure sales presentation where Festiva tries to sell them more vacation products through “upgrades.”  

The State alleges that consumers who purchased Festiva memberships are told that they can use their points to take vacations at various Festiva resorts around the country. In truth, according to consumers, it is nearly impossible to book a vacation because of the lack of available space at Festiva’s resorts, particularly at peak times and locations. Consumers report they were told by Festiva that they could save their points to use for a vacation in another year, but later learn that their points were lost because of Festiva’s limits on using accumulated points. The lawsuit further alleges that consumers are surprised by bills for increasing maintenance fees and special assessments that they are required to pay even if they are unable to schedule a vacation at a Festiva resort. 

“If you are tempted by a travel or vacation company that uses high pressure sales, it’s probably best to take your time and do your homework before you pay thousands of dollars and commit to paying maintenance fees and special assessments,” said General Cooper.

Deputy Commissioner for TDCI and Acting Consumer Affairs Director Steve Majchrzak said, “We encourage anyone with a complaint regarding any of Festiva’s entities to contact the Division of Consumer Affairs online at www.tn.gov/consumer or by calling 800.342-8385 (toll-free in Tennessee) or 615.741-4737.”

A copy of the Attorney General’s Complaint may be found on the Attorney General’s website by going to www.tn.gov/attorneygeneral and clicking on “Filings of Interest.” 

Tennessee’s lawsuit is being filed under the Federal Telemarketing Act and the Tennessee Consumer Protection Act.  The action was filed in federal court in Greeneville, Tennessee.  Named in Tennessee’s suit are the following Festiva associated businesses, affiliates, and principal operators: 

Escapes!, Inc., Escapes Travel Choices, LLC, Etourandtravel, Inc., Festiva Development Group, LLC, d/b/a Festiva Adventure Club, Festiva Real Estate Holdings, LLC, f/k/a Festiva Resorts, LLC, Festiva Resorts Adventure Club Members Association, Inc., Human Capital Solutions, LLC, f/k/a Festiva Resort Services, LLC, Resort Travel & Xchange, LLC, a/k/a RTX, f/k/a Festiva Travel & Xchange, LLC, a/k/a FTX, Patton Hospitality Management, LLC, f/k/a Festiva Management Group, LLC, Zealandia Capital, Inc., f/k/a SETI Marketing, Inc., Zealandia Holding Company, Inc., f/k/a Festiva Hospitality Group. Inc., Donald K. Clayton, Herbert H. Patrick, and Richard Hartnett (d/b/a 811 Development Corporation, Equivest Vacation Club, Escapes! Escapes, Inc., Escapes Travel Club, LLC, Etourandtravel, Inc., Festiva Adventure Club, Financial Information Services, Inc., Festiva Development Group, Festiva Hospitality Group, Inc., Festiva Resorts Services, Inc., Festiva Resorts Adventure Club Members’ Association, Inc., Festiva Resorts, LLC, Festiva Sailing Vacations, Inc., Festiva  Travel & Xchange, FTX, Human Capital Solutions, Inc., Kosmas Group International, Inc., Peppertree Vacation Club, Resort Management Services, Inc., Resort Travel & Xchange, LLC, RTX, SETI Marketing, Inc., Zealandia Capital, Inc., Zealandia Holdings, LLC, and Zealandia Holding Company, Inc.), and relief defendants 811 Development Corporation, Festiva Sailing Vacations, LLC, Financial Information Services, Inc., Kosmas Group International, Inc., Resort Management Services, Inc., Zealandia Holdings, LLC, and Various Clayton and Patrick Family Trusts 1 – 10.


Cabela's To Open Fort Oglethorpe Store May 13

Cabela’s announced Monday plans to celebrate the official grand opening of its new Fort Oglethorpe store on Wednesday, May 13, with a unique ribbon-cutting ceremony followed by a weekend-long celebration featuring giveaways, family activities and more.  The ribbon-cutting ceremony, hosted by Cabela's executives and special guests, will begin at 9:45 a.m. and conclude with ... (click for more)

NRC Schedules Open House To Discuss Sequoyah Nuclear Plant 2014 Performance

The Nuclear Regulatory Commission staff has scheduled an open house and poster session for Tuesday, April 7 to discuss the agency’s assessment of the Sequoyah nuclear plant’s two units during 2014. The plant, operated by the Tennessee Valley Authority, is located near Soddy Daisy. The open house and poster session is scheduled to begin at 6 p.m. at the Sequoyah Training Center, ... (click for more)

Cleveland, Tn., Production Company Owner Charged With Defrauding Church Of God International Of $100,000

The head of a Cleveland, Tn., production company has been charged with defrauding the Cleveland-based Church of God International of $100,000 in connection with his part in setting up the church's world convention in Orlando, Fla., in 2010. Troy Scot Carter was charged by federal authorities with securities fraud. A four-page criminal information says the church hired Carter ... (click for more)

City Set To Commission $200,000 Mural On MLK Boulevard By Famed Muralist Meg Saligman; Foundations To Cover Cost

The city is set to commission a $200,000 mural on the side of the AT&T Building on MLK Boulevard by famed muralist Meg Saligman. Ms. Saligman has created over 50 murals all over the world, including one called  "Fertile Ground" that is 32,500 square feet in Omaha, Neb. Her most famous mural is "Common Threads" on the west wall of the Stevens Administrative Center ... (click for more)

Finley Stadium Needs To Grow Up - And Response

RE:  Finley Stadium Financial Picture Rosy; Beer And Alcohol Sales Approved; AstroTurf Almost Ready and City, County Pitching In $250,000 Each For New Finley Stadium AstroTurf I read a story here five days ago about a rosy future for Finley stadium. It lead me to believe that the stadium was making money and even improvements with donations.  Then we get a short ... (click for more)

Roy Exum: The 15-Year-Old Marine

There are 58,267 names on the Vietnam Veterans Memorial Wall that today sits majestically in the Constitution Gardens of our nation's capital. It has never been lost on me that 33,103 of those who are named were only 18 years old when they died. But what caught my eye during my morning reading is that one of the names carved in the black granite “Dan Bullock“ was only 15 years old ... (click for more)