Attorney General Cooper Announces Lawsuit against Festiva for Telemarketing Act Violations and Deceptive Business Practices

  
     
January 21, 2014

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.