One of the nation's largest time-share developers and marketers has reached a settlement with the state attorney general's office over allegations that the company illegally used deceptive advertising to lure consumers to its sales presentations.
In the settlement announced Tuesday, the company, California Riviera Vacations, agreed to pay $100,000 in civil penalties and costs and will offer consumers who attended its sales meetings a choice of prizes. In doing so, the company admitted no wrongdoing, spokesmen for the attorney general's office and the company said.
"They have been cooperative, and I think they are making an erstwhile attempt to turn things around," Deputy Atty. Gen. Jerry Smilowitz said.
The attorney general alleged in a civil complaint filed in Los Angeles Superior Court that the company's telephone solicitations and follow-up letters misrepresented to consumers the odds of winning an array of prizes offered at the sales presentations.
The company told consumers that by attending the presentations, their chances of winning a car were 1 in 5,280, and 1 in 10,000 for winning a $350 gift certificate and television. But over the past four years, the attorney general said, more than 170,000 people attended the presentations and no one received a gift certificate, 16 people won TV sets and four were awarded a car. The four people who won cars were also purchasers of time-share properties and received the vehicles after the sales presentation rather than during the event.
In addition, the attorney general said the company notified most attendees that they had been selected to receive a computer (with no monitor or hard-disk drive) valued at $700. But to claim the computer, which was valued at only $200, recipients had to order it by mail and pay $140 in fees and handling costs, the attorney general said. Although the fees eventually were discontinued, 16,000 attendees who were promised computers never received them, the attorney general said.
Smilowitz said government investigators had been monitoring California Riviera Vacations for several months before focusing in March on the company's handling of the computer prize offer.
"There were numerous aspects of their marketing plan that were patently deceptive," Smilowitz said. "Their telemarketers would call and say if you come to a presentation you get the following prizes. . . . At no point did they tell people that they were a time-share company."
Since July, the company has been satisfying restitution provisions of its settlement with the government by offering those who attended its previous presentations a choice of a computer or a variety of air-fare and travel accommodation packages.
California Riviera spokesman Neal Bullock admitted that the company had misstated prize-winning odds, saying the company mistakenly based them on the number of letters it sent out, not on the attendance at its presentations.
"We believed we were right in handling the way gifts were supposed to be handed out," Bullock said.
But Bullock said California Riviera considered it "real important" to come to terms with the government to protect its standing in the time-share business, in which groups of investors buy a share in resort or vacation property. Bullock said the company is one of the country's five largest time-share corporations in the nation with annual revenues of more than $40 million and 15,000 time-share owners.