Thursday, April 17, 2014
The Maine Attorney General’s Office has filed suit against a Nevada company with more than 1,000 customers in Maine, accusing it of unfair and deceptive practices for its points-based “vacation club” package.
The state began serving notice of the lawsuit to Festiva Hospitality Group and its associated businesses last month before filing a 10-count complaint Wednesday in Kennebec County Superior Court.
Festiva sold Maine customers points for membership in a vacation club at “high-pressure sales presentations” held at Rangeley Lake Resort and its sales office on Riverside Drive in Portland, Attorney General Janet T. Mills said in a news release.
“Festiva created a false sense of urgency that consumers must buy a Club membership at the sales presentation by telling them that the deal offered will not be available after they leave,” the 16-page complaint states. “Consumers who agree to buy are then presented with multiple, and often complex, closing documents to sign, including a contract that obligates consumers to pay maintenance fees, together with any special assessments, for a period of 40 years.”
Buyers were falsely led to believe that they could use the points at resorts around the country. Existing shareholders in the Rangeley Lake Resort were falsely told that converting their shares into club membership would reduce their maintenance fees, according to the complaint.
Maine joins several other states taking legal action against Festiva, including Tennessee, Louisiana and Mississippi. The lawsuit names eight different corporate entities under the Festiva umbrella – including Festiva Development Group – and its two founders, Donald Clayton and Herbert Patrick Jr., both of North Carolina.
“I know there are over 1,000 Maine members. Over 100 people could be affected” by the lawsuit, Assistant Attorney General Linda Conti said Tuesday. “All the corporations have been served. I’m now working with the North Carolina sheriffs to serve the individuals.”
Conti said the Attorney General’s Office had received numerous complaints about Festiva’s practices before deciding to pursue legal action.
“Festiva pressures Maine consumers into buying an expensive but basically worthless product using misleading tactics,” said Mills’ statement. “Festiva tells them membership in its vacation club is a convenient and inexpensive way to vacation, but the reality is exactly the opposite. Consumers end up paying too much money for too long a time for a something that never materializes.”
Attorney Eric Wycoff, who represents Festiva’s interests in Maine, said it would be “inappropriate” for him or his clients to comment on the merits of the case.
“My clients intend to contest the allegations made against them,” Wycoff said in an email.
Wycoff went on to say that Festiva Development Group LLC and other “entities named in the case, through the Festiva Adventure Club, have an established record of providing quality vacations” to more than 20,000 club members every year.
He said Festiva Development Group “is also committed to ensuring that its sales processes comply with all applicable laws and provide potential members with an accurate picture of the benefits and obligations of a Club membership. Given that the Club has thousands of satisfied members, Festiva is proud of the job it has done in this regard.”
The complaint requests civil penalties, reimbursement to consumers and an injunction against the deceptive practices.
Scott Dolan can be contacted at 791-6304 or at: