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.



TVA Inspector General Resigns To Be U.S. Attorney For Southern District Of Alabama

The TVA Inspector General, Richard W. Moore, was confirmed by the United States Senate on Sept. 14, as the new U.S. Attorney for the Southern District of Alabama after having been nominated by President Donald J. Trump in June of this year. Mr. Moore submitted his resignation letter as Inspector General to President Trump effective the date of his appointment as the ... (click for more)

Chattanooga Chamber Calendar For Sept. 25-29

Here is the calendar for the Chattanooga Chamber of Commerce for Sept. 25-29: Tuesday, Sept. 26, Government Contracting: Managing the Maze to Get the Contract 9-11:30 a.m. BrightBridge Women’s Business Center: 535 Chestnut St., Ste. 161 Are you ready for government contracting? How to sell your products and services to federal, state and/or local governments. How to register ... (click for more)

Witness Says Morse Told Him "His Emotions Got The Best Of Him" At Triple Killing In Lookout Valley

A witness told a Criminal Court jury on Friday that Derek Morse told him "his emotions got the best of him" at a triple killing in Lookout Valley. Michael Shavers also said Morse told him in detail about the slayings of John "Jake" Lang, Jon Morris and Caleb Boozer and the shooting of Matthew Callan at the Rolling Hills Trailer Park on April 9, 2014. Morse is standing trial ... (click for more)

Prosecutor Calls For "Meaningful Punishment" For Dyer, Brennan In $4.9 Million Swindle

Federal prosecutor James Brooks is calling for a "meaningful sentence" for Doug Dyer and James Brennan, who are charged in a $4.9 million swindle. He rejected arguments that they should receive leniency due to their age and health problems. They are set to be sentenced next Friday at 9 a.m. by Judge Travis McDonough. Prosecutor Brooks said concerning Dyer, "As this Court ... (click for more)

Fix Obamacare, Don't Repeal It - And Response (2)

John McCain recently said, "I cannot in good conscience vote for the Graham-Cassidy proposal. I believe we could do better working together, Republicans and Democrats, and have not yet really tried. Nor could I support it without knowing how much it will cost, how it will affect insurance premiums, and how many people will be helped or hurt by it. Without a full (Congressional Budget ... (click for more)

Roy Exum: J.B. And The Saturday Funnies

As thousands of his friends prepare to celebrate the 100th birthday of Chattanooga newspaper icon, J.B. Collins, tomorrow, it is only fitting that I publicly salute a great reporter who helped develop me as a writer in the 38 years we spent together at the Chattanooga News-Free Press. He was a genius of a writer back in the day and a great photographer as well. I have adored him ... (click for more)