EDITORIAL ADVISORS

William G. Cox
Security Consultant,
Black Mountain, NC

Joseph Damato
Seyfarth, Shaw, Fairweather
and Geraldson,
Washington, DC

Raymond C. Ellis, Jr.
Professor, Conrad N. Hilton
College of Hotel & Restaurant
Management,
University of Houston,
Houston, TX

Joseph Holland
Professor of Hospitality Law,
University of Wisconsin-Stout,
Menomonie, WI

Jerril Krowen
Attorney, Saugus, MA

Patrick Sweeney
Security Consultant,
Minneapolis, MN

"Free gift" tactics backfire on resort club

Membership in resort clubs or time-share condominiums can often give years of enjoyment for the purchasers. But if the package isn't as represented, and if the tactics used to sell memberships or shares are suspect, the resort owners may be the losers.

Massachusetts attorney Jerril Krowen recently reached a settlement with an organization called Outdoor World Corporation. Krowen says his clients, Emilio Leone and Josephine Barreiro, purchased memberships in Outdoor's Resorts USA, Inc. as a result of high-pressure tactics and misrepresentations.

Leone and Barreiro, he says, saw a contest box at a Chinese restaurant in the Boston area. They entered Leone's name and shortly thereafter, sometime in early 1993, Leone received a telephone call informing him that he had been selected for a prize. He was to pick up the prize at a specified late-night appointment and bring two forms of identification, including a major credit card. What was not disclosed, says Krowen, is that in order to claim the prize, Leone had to attend a 90-minute presentation by Outdoor.

"...Hotels have gotten themselves into legal trouble by overdoing the description of the hotel and its setting."

Leone and Barreiro went to the designated spot and sat through the presentation, in which they heard about and saw photos of beautiful resorts featuring luxury accommodations. After the presentation, Krowen says, they were ushered into a small room where the high-pressure tactics intensified.

When Leone and Barreiro said that they could not afford the $12,000 or $15,000 membership cost and were prepared to leave, they were given an offer good "that night only" - a $1,000 down payment on Leone's credit card, and the rest financed at the low, low rate of 18%, with a "honeymoon weekend" at a Cape Cod resort thrown in along with spending money.

The two accepted this offer and signed the necessary paperwork. But when they tried to schedule their honeymoon weekend, they found it difficult to book. Once they finally got to the "resort," which was 60 miles north of Cape Cod, says Krowen, they found only a spot to pitch a tent (the resort's cottage was occupied) and "funny money" good only at the resort commissary.

Even after this disappointing experience, Leone and Barreiro continued to make payments on their contract until, little by little, they began to suspect that they had been conned. Resorts advertised with skiing turned out to be 50 or 60 miles from any ski hill, and the other promises of Outdoor were equally misleading. Leone and Barreiro were put in touch with Krowen through the Massachusetts Bar Association referral service last fall. He told them to stop paying on the contract immediately.

Krowen discovered that Outdoor had been the subject of a number of complaints filed with the Massachusetts Attorney General's Office, and that in 1992, Outdoor had signed a consent decree with that office agreeing to refrain from engaging in approximately 65 prohibited practices. Krowen filed a complaint with the AG's office - and, knowing the volume of cases handled by the consumer protection unit, he also filed a separate civil action in the local court under the Massachusetts consumer protection-deceptive practices statute.

Krowen says the suit was settled in the spring of this year. The contract was rescinded, all of the payments made by Leone and Barreiro - principal, interest, and membership fees - were retured to them, and attorney's fees were paid by Outdoor. The settlement agreement contains no confidentiality clause, and Krowen says his clients have given him explicit permission to discuss the case so that others will not fall victim to similar tactics.

Krowen says that since this case has come to light, he has received numerous calls from other consumers who have similar stories to tell, and that he now has a number of cases pending involving various resort clubs. He says he understands that Outdoor has entered into another consent decree with the AG's office, again agreeing to avoid objectionable practices.

Source: Attorney Jerril J. Krowen, attorney for the plaintiffs in Leone v. Outdoor World Corp., d/b/a Resorts USA, Inc.

HLAW COMMENT

This is an extreme case and pretty outrageous. No reader of Hospitality Law would have trouble recognizing the legal difficulty Outdoor World Corporation is begging for.

The only value of this case to Hospitality Law readers would be as a reminder that hotels have gotten themselves into legal trouble by overdoing the description of the hotel and its setting.

The hotel's brochure should feature the beach in front of the hotel - not someone else's perfect sandy beach; the brochure should show the hotel's lobby - not some other glamorous lobby. By the way, any picture of a beach is going to infer that the hotel has a beach, even if the copy doesn't say that.

To most consumers, a description of the hotel as "lakeside" means it is right on the lake - not several blocks away. That should be explained. Don't advertise an "Olympic size" pool unless you have an "Olympic size" pool, etc.

A hotel may certainly sell its attractive points. But once a court finds that the hotel's advertisements are "overly exaggerated," the hotel could face unwelcome publicity and damage payments.

The article above is published to provide information only and should not be considered "legal advice," which can only be given by a qualified attorney after consideration of the facts in your particular case. If you have questions or comments about this article or about Hospitality Law in general, please contact Attorney Jerril J. Krowen directly.