By William C. Lhotka - St. Louis Post-Dispatch
Knight Ridder/Tribune Business News
Mar. 8 -- A travel discount club criticized for high-pressure sales tactics and poor delivery of services has reached
a settlement with Missouri Attorney General Jay Nixon that exceeds $700,000.
Bailey and Associates, of Litchfield, Ill., agreed to give customers $45,937 in restitution; cancel at least $634,647
in customer contracts and pay $32,844 in penalties and court costs, including $20,000 to public schools in St.
Louis County.
The settlement also includes provisions curtailing past sales practices that required a customer to bring a checkbook
or credit card to seminars, bound heirs of customers to the third generation in the contracts and misrepresented
the club's relationship with the Better Business Bureau.
The settlement was filed in St. Louis County Circuit Court. The consent judgment was approved Wednesday by Judge
Bernhardt C. Drumm Jr.
Bailey and Associates does business under several names: New Horizons; Winner's Circle of Chicago; and National
Resorts. It operates travel and vacation clubs and resorts in Missouri and Illinois.
Nixon called the settlement "a long, hard battle in which hundreds of consumers were involved."
With high-pressure tactics, the right to cancel the contract within five days was hidden from customers, Nixon
said in a phone interview. "It put consumers who didn't want a contract in a position where they didn't have
a choice but to pay."
Bill Bailey, the president of the companies, said Wednesday: "We recognized the seriousness of the situation
and we diligently worked hand in hand with the attorney general's office to correct the infractions. . . . We want
to move forward and take care of the needs of our customers."
Bailey blamed the problems of his companies on "overzealous sales people in the St. Louis office."
New Horizons has held seminars to get people to join the travel club at 12140 Wood Crest Executive Drive, at 11977
St. Charles Rock Road and at 1600 South Brentwood Boulevard.
The company gets customers through direct mail, telephone solicitation, and sweepstakes box drawings at malls and"oovie
theaters.
One couple told the Post-Dispatch they attended a seminar at the Brentwood location in October 1999 and paid $4,000
for a membership. They said they were told to expect 50 percent off of condominium and motel rentals. They said
they tried several times to get a condo for a summer vacation but never were able to get a reservation.
A couple from Sullivan, Mo., didn't join; they said salesmen got angry with them when they told them they wanted
to go home and think it over.
Most of the contracts, Nixon's suit said, were in the $3,000 to $5,000 range, with an additional maintenance fee
of $110 a year.
Jim and Donna Demiere signed a $6,000 contract on May 13, 1999. They testified they tried to use their membership
for a reduced lodging rate in Springfield, Mo., only to be told the hotel had never heard of New Horizons. The
Demieres sued and a jury awarded them $2,000 in December.
Their attorney, Ken Gibert, said Wednesday that in January, Judge Barbara Wallace raised the amount awarded to
the Demieres to more than $30,000 by tacking on punitive damages, attorney's fees and court costs.
Gibert disclosed in that trial and in a trial before Judge Barbara Ann Crancer last year that New Horizons had
used a fake BBB report to convince customers that the company had the consumer agency's approval. In reality, New
Horizions has been the subject of 288 consumer complaints since 1997. Crancer gave the plaintiffs in that case
$67,000 in actual and punitive damages and attorney's fees.
Assistant Attorney General Michael J. Delaney said the settlement doesn't affect consumers who have hired private
counsel to pursue New Horizons in court. Those customers, Delaney said, are adequately represented. Gibert, for
example, has 34 additional lawsuits pending.
Eight pages of names listing 178 customers completes the 33-page settlement. They will get relief in the form of
a contract cancellation or refund. The list showed contract amounts from $308 to $7,975.
If they are unhappy with the offer, the customers have the option of arbitration either through the American Arbitration
Association or a retired judge.
The settlement is open to any customers who signed contracts since Jan. 1, 1997, and can show they were misled.
They have 30 days to notify the Attorney General's office that they are dissatisfied with their contract. The hotline
number is 800-392-8222.
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(c) 2001, St. Louis Post-Dispatch. Distributed by Knight Ridder/Tribune Business News.