Facts

California's Attorney General and the San Diego District Attorney filed a complaint on behalf of the citizens of California against Welk Resort Group, Inc. seeking penalties under the Business and Professions Code.

PLAINTIFFS' CONTENTIONS: Plaintiffs contended that defendant failed to make certain required disclosures to its timeshare holder customers. Defendant launched numerous misleading and untrue timeshare advertisements that enticed consumers to spend millions of dollars in membership and other fees. Plaintiffs contended that defendant's marketing strategies and business practices violated applicable law and warranted a fine against defendant.

DEFENDANT'S CONTENTIONS: Defendant denied the contentions.

Result

The parties agreed to enter a $3,550,000 settlement agreement that included a customer restitution program. The program required defendant to either rescind the reservations of aggrieved customers or provide a refund in the form of cash, additional timeshare points, or resort credits.