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REDMOND, WA-In an settlement with the state of California, locally based Trendwest Resorts, the world’s third largest timeshare operator, has been ordered to pay more than $4 million and reform its business practices, according to the California Attorney General’s office and the California Department of Real Estate.

“Trendwest misled consumers through deceptive sales practices and non-disclosure, and illegally denied consumers the ability to cancel their contracts,” says California Attorney General Bill Lockyer. “This settlement will help make victims whole, and ensure Trendwest operates lawfully in the future.”

The state Department of Real Estate estimates the restitution, penalties and reimbursement for fees and costs could bring the settlement’s total value to about $4.3 million. The Attorney General’s office says prosecutors are calling it the largest settlement of a consumer protection lawsuit filed by a law enforcement agency against a timeshare operator.

Under the settlement approved by San Mateo County Superior Court Presiding Judge Mark Forcum, Trendwest will pay restitution to consumers who purchased timeshare contracts since March 31, 2001 and who requested cancellation within 45 days of executing the contract. Trendwest also must provide restitution to consumers who signed up for the firm’s Explorer Program and have yet to exercise their rights under that contract. Total restitution to consumers could top $2 million, according to he AG’s office.

Additionally, Trendwest must pay $795,000 in civil penalties-–$625,000 to the state and $170,000 to San Mateo County. To cover attorneys’ fees and investigative costs, Trendwest will pay $625,000 to the Attorney General’s Office, $55,000 to the San Mateo County District Attorney’s Office and $225,000 to the state Department of Real Estate.

Finally, over the next four years, the company will fund DRE’s audits of Trendwest to determine its compliance with the settlement. The judgment grants the Attorney General’s Office authority to inspect and copy all of the company’s accounts, contracts, correspondence, financial records and other documents related to the case. The DRE also is authorized to conduct onsite investigations of Trendwest and inspect its records, at the company’s expense.

Trendwest, a subsidiary of Cendant Corp., develops and operates 48 timeshare properties located in the western US, British Columbia, Mexico, Hawaii and the South Pacific. The company sells its timeshare interests through direct marketing in which the firm offers consumers gifts and incentives to attend sales presentations.

The Attorney General’s office says the majority of Trendwest’s marketing revolved around timeshare use credits, which the company normally sold for between $14,000 and $25,000 and for which Trendwest provided financing. Trendwest also sold a “trial” product, good for about one year, for $595.

The complaint alleged Trendwest engaged in deceptive marketing and sales practices, and misrepresented its timeshare products. Additionally, the firm violated cancellation notice requirements and unlawfully failed to accept cancellation requests, according to the complaint. Trendwest also violated the law in its telemarketing practices by using automatic dialing devices and failing to honor consumers’ “do not call” requests, the complaint alleged. Other violations, according to the complaint, included selling products not covered by its DRE permit and noncompliance with laws governing prizes and incentives.

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