Attorney General's News Release

March 7, 2001

Nixon obtains court order requiring travel club to provide more than $530,000 in refunds and forgiveness of consumer debt

St. Louis, Mo. — Attorney General Jay Nixon announced today that a group of businesses selling memberships in a "travel club" will be required by a court order to pay almost $80,000 in consumer refunds and penalties and costs to the state, and forgive more than $454,000 owed by consumers. The businesses also are required to make fundamental changes in the way they sell their services in the future, Nixon said.

The consent judgment signed today by St. Louis County Circuit Judge Bernhardt C. Drumm Jr. applies to Bailey & Associates Inc., Winner's Circle of Chicago Inc., and National Resorts Inc., all of which Nixon filed a lawsuit against in 1999. The defendants, which often use the business name New Horizons, are headquartered in Litchfield, Ill.

"Those consumers who experienced misrepresentations in the past from New Horizons and its employees are going to be eligible for refunds or having their debts to the defendants forgiven," Nixon said. "New Horizons also will be required to fully and prominently inform future customers of their rights, including their right to cancel an agreement within five days."

The 1999 lawsuit filed by Nixon charged that the defendants had made several misrepresentations to consumers through contests and telephone solicitations to get them to purchase the travel and resort memberships, often at a cost of up to $3,000. New Horizons and its employees often marketed their services through telemarketing calls and through contest boxes advertising "new car giveaways" and placed in high-traffic locations.

Nixon said New Horizons had violated state consumer protection laws by:

• Misrepresenting to consumers that they had entered a contest when they had not and misrepresenting that they had won or would win specific prizes; Nixon said consumers given vehicle keys for the contest giveaway had no reasonable chance to win and that the keys were routinely reissued other consumers.
• Misrepresenting to consumers contacted in telephone solicitations that their names had been "pulled," failing to tell consumers contacted in telephone solicitations that a sales presentation was involved, and concealing that the purpose of the meeting was to offer memberships.
• Falsely promising to consumers that they, as members, could obtain condominiums and other vacation facilities in desirable locations at desirable times of the year, when such was not the case.
• Misrepresenting important information such as the prices and terms at which members would be able to obtain travel services, and the ability and ease with which members would be able to obtain various travel services.
• Placing information about the consumer's right of cancellation in a barely discernible typeface on the back of the contract. "Consumers should be able to carefully review contracts outside a high pressure sales atmosphere," Nixon said. "That's why the five-day rescindment period, and consumers being well-informed about it, are so important."

Under the consent judgment, the defendants will pay $45,937 to the state for consumer restitution and release consumer debt of $634,647, which includes $180,000 in debt already canceled by New Horizons. They also will pay $8,250 to the Attorney General's Office for the costs of pursuing the case, $4,594 to the state for administering the court judgment, and a civil penalty of $20,000 to the St. Louis County School Fund.

Consumers who believe they were the victims of misrepresentation or were denied the five-day right to cancel their contracts and who have not yet filed a complaint with the Attorney General's Office should contact the Attorney General's Office by April 6, 2001. They can contact the office through the Consumer Protection Hotline at 1-800-392-8222 or by writing to the Attorney General's Office, P.O. Box 899, Jefferson City, MO 65102.

Nixon said today's agreement does not prevent consumers from pursuing their own legal recourse against the defendants.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818