Consumers' Rights -- State Sues And Settles With Ultima Travel Club

Washington state simultaneously sued and settled a complaint against Ultima Systems Inc., a travel club, yesterday.

The state charged Ultima with violating the Consumer Protection Act, the Sellers of Travel Act and the Promotional Advertising of Prizes Act.

Ultima, which also does business as Vacation Systems Inc., B.E.M. Associates and Ultima of Washington L.L.C., neither admitted nor denied the allegations. The company is based in Bothell and Lynnwood.

The case against Ultima was the seventh brought under the state's travel sellers act, the second against a travel club. The travel sellers act became law in January 1996.

"Any time you sell a product that promises savings, you have to realize that consumers are pretty smart. They want to see those savings," said Regina Cullen, an assistant attorney general.

Consumers who purchased memberships from Ultima but who did not get services or discounts have until April 4 to request a refund. Call the attorney general's office at (800) 551-4636 to order a claim form for a refund. Completed claim forms must be returned to the attorney general by June 3.

The state said Ultima:

-- Failed to provide the retail value of prizes in its promotional offers and failed to state the odds of winning.

-- Failed to disclose that participants had to attend a sales presentation to win a free trip.

-- Represented the prize trips as free when consumers were required to pay a deposit and/or handling fee.

-- Failed to disclose restrictions on the free trip, such as age, income and marital status.

-- Failed to register under the travel sellers act.

-- Misrepresented the number of consumers who joined the travel club.

-- Misrepresented the size, quantity and availability of discounts it could provide.

-- Misrepresented its ability to provide prompt service to consumers with inquiries and complaints.

-- Misrepresented that the attorney general approves of Ultima's travel program.

-- Stalled those consumers who wanted to cancel memberships within the three-day period allowed under the contract. What the company must do

As part of its agreement with the state, Ultima will:

-- Establish a $100,000 escrow fund for refunds to consumers and arbitration.

-- Pay the state $20,152 in attorneys' fees.

-- Provide the state with verifiable documentation to support savings promised in future presentations.

Over the past three years memberships have ranged from just under $1,000 to $3,495. The club says it has 10,500 memberships representing more than 25,000 travelers on the West Coast.

Martin J. Ericksen, one of 120 consumers who filed written complaints with Washington's attorney general, said he was lured to an Ultima sales presentation by a free trip.

While there Ultima persuaded Ericksen and his wife, Erin Enloe, to join on a $975 membership.

When the couple tried to use the "free" ski trip to Whistler, B.C., they first were asked for pay a $5 processing fee, which they did. Next they were asked to pay $80 for registration, Ericksen said. At that point Ericksen and Enloe tried to cancel their club membership which they'd paid for on a credit card. It took several months before Ultima finally canceled their membership, Ericksen said.

Ericksen, who runs a construction company in SeaTac, urged other consumers to think carefully about spending their money when they encounter high-pressure sales presentations.

Bill Hunter, Ultima's president, blamed some of the travel club's problems on growth.

"We grew so quickly in three years that some of our systems did not keep up," Hunter said, adding the club is the largest of its kind on the West Coast and that "we do provide the value we promise."