Festiva Under Scrutiny in NC

ATLANTIC BEACH (WTVD) -- According to its website, Festiva's Peppertree resort on North Carolina's Atlantic Beach offers a "peaceful vacation oasis."

Chapel Hill resident Roy Fagerberg sure liked what he saw when he stopped by the sales center.
"They said it was going to become the best resort on the East Coast," he recalled.
So Fagerberg says he got out his checkbook and paid $18,000 for a vacation program from Festiva. It's like a timeshare plan, but it's slightly different. You buy a share in a specific property, but you're buying points that can be used for vacations at other properties owned by the company across the country and in the Caribbean.
"These people seemed a cut above. They were nice people," Fagerberg told Eyewitness News investigative reporter Steve Daniels.
But now, Fagerberg says he thinks he's the victim of broken promises.
"I was duped," he said. "Ripped off to the tune of $18,000."
Fagerberg has spent his entire career working as a real estate broker. He said he can't believe that he of all people feels ripped off.
"You paid $18,000. You were supposed to get one week every year for 40 years at one of these resorts. You were supposed to get to round trip airline tickets and you were supposed to get a week long Caribbean cruise?" Daniels asked.
"Correct," replied Fagerberg.
"Have you seen any of that yet?" Daniels inquired.
"Not yet," Fagerberg responded.
"Does any of it appear available to you?" asked Daniels.
"No, in spite of writing to the CEO of Festiva resorts," Fagerberg said.
And, Fagerberg claims that when he tried to book a trip to the mountains, he was told he would have to pay even more money if it became available.
"They told us there was nothing available that weekend we wanted to go. So, we said 'How about the next weekend?' 'No.' 'Well when could we go? 'Well, not this year,'" He recalled.
From its headquarters in Asheville, Festiva told Eyewitness News that Fagerberg's expectations were different from what he agreed to in writing and maintains it did provide him with certificates for airline tickets and a cruise.
CEO Don Clayton also said Festiva repeatedly tried to address his concerns and offered him a chance to make a vacation reservation.
Fagerberg is not alone in his frustration. Other people have complained about sales tactics, misleading offers, and broken promises. In fact, the State Attorney General's office says it has 150 complaints about Festiva Resorts.
"We want to respond to that. That's why we are investigating this case," North Carolina Attorney General Roy Cooper said. "We move as quickly as we can on these cases. We have to conduct interviews and investigations."
The Missouri attorney general has already taken action - suing Festiva Resorts. The lawsuit said Festiva used high-pressure, false and misleading sales tactics. Festiva has now agreed to stop using those tactics and agreed to pay $325,000 in restitution to consumers.
Festiva says the Missouri problems happened while it was using a third party company for sales and marketing and that company may not have been following Festiva policies.
Festiva says it no longer uses outsourced companies for sales and marketing.
During our Eyewitness News investigation, we discovered complaints extend beyond Missouri and North Carolina. Attorneys general in Tennessee, Florida, South Carolina, Wisconsin, Maine and Louisiana have received a total of 35 complaints about Festiva.
In Raleigh, Attorney General Roy Cooper promises to focus on Festiva too.
"We certainly will give this matter thorough consideration and thorough investigation," he told Daniels.
Roy Fagerberg says he came to Eyewitness News because he thinks it's important to spread the word about vacation programs.
"I would say to people that are contemplating this, you better take a couple of days and think about it. Add up all of the ducks," he offered.
Festiva CEO Don Clayton also told Eyewitness News that "While we do acknowledge that we have had isolated problems with customers who may have been misrepresented, we do make every attempt to resolve all consumer complaints."
He said Festiva sells a complicated product in a short amount of time, and they realize that misunderstandings can occur. He said they make every effort to resolve all legitimate complaints brought to any attorney general as quickly as possible.
"We categorically deny that we have any systematic approach or business practice that intentionally misleads customers in any way," he said.
"While even one complaint about our company is more than we would like, we can put into perspective that 150 complaints over seven years is a relatively small number compared to the amount of families and individuals we have interacted with during that same period. We have approximately 60,000 active owners and members, and in 2008 alone we communicated with more than 350,000 individuals through sales and marketing efforts," he continued.