SB 274 Regulates travel clubs
Sponsor: Taylor
LR Number: 0253L.02T Fiscal Note: 0253-02
Committee: Small Business, Insurance & Industrial Relations
Last Action: 7/12/2005 - Signed by Governor Journal Page:
Title: Calendar Position:
Effective Date: August 28, 2005
House Handler: Richard

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Current Bill Summary


SB 274 - This act concerns travel clubs exclusively and does not include travel agencies.

In this act, travel clubs are defined as businesses selling the reoccurring right to purchase vacation benefits at discounted prices and charging customers a membership fee that collectively equals at least $750.

Travel clubs will be required to maintain an effective registration statement with the Attorney General's office. The registration statement must contain the following information:

(1) Pertinent identification information - the club's name, affiliation with other organizations, place of organization, bylaws, governing documents, names of owners and directors, address, and other organizational information; and

(2) A description of the vacation benefits offered for sale.

The Attorney General must provide evidence of his or her approval of the registration statement within 30 days of its submission. If the registration statements meets the requirements stated, the Attorney General must approve the registration. If deficiencies exist, the Attorney General must inform the vacation club in writing to allow the club the right to cure. The Attorney General must provide the advice needed to cure the deficiency within 15 working days from the initial filing of the documents.

Travel clubs that are operating prior to the effective date may continue their business activities while the Attorney General is processing their registration statements as long as the statement is filed with the Attorney General within 90 days. Registration is not transferable.

The Attorney General may charge an annual renewal fee of no more than $50 for registration statements. The renewal must be made within 30 calendar days of the anniversary date of the issuance of the club's registration statement.

In addition to the registration statement, the Vacation Club must provide the following:

(1) The form of contract which contains a rescission statement; and

(3) Payment of $50.

The rescission statement in the contract will state that the customer has the right to rescind the transaction for 3 working days after the date of agreement by delivering a written statement and he or she must return all materials received from the club.

The surety bond that is required to be delivered by travel clubs that have been adjudged to have violated this act shall be for $50,000. In the event that such surety bond is accessed subsequent to posting as a result of the need to reimburse purchasers, the amount of the surety bond shall be increased by ten thousand dollars per reimbursement.

The surety bond is designed to reimburse customers who exercise their rights under the rescission statement but do not receive a refund or those who are subjected to fraud or misrepresentation.

Under this act, all purchasers of vacation benefits from a registered club have a non-waivable right for 3 working days to rescind and cancel their purchase and receive a full or partial refund minus any services actually consumed or utilized. Upon rescinding the contract, the purchaser must return any materials he or she received from the club. However, all purchasers of vacation benefits from a non-registered club have a non-waivable right for 3 years to rescind and cancel their benefits.

Any individual who purchases a membership and has a complaint has the option, in addition to filing a civil suit, to file a written complaint with the Attorney General or county prosecuting attorney. The office receiving the complaint must deliver to the club that is the subject of the complaint, within 10 working days, all written complaints. If the office fails to do so, subsequent actions will be stayed for 30 business days.

Prior to being subject to any available remedies under this act, a travel club shall have 30 days following the date that a complaint is filed to cure any grievances. The parties cannot seek over forms of redress during this period. Upon satisfaction or settlement, the parties shall execute a written mutual release. Any payments under a settlement must be made within 15 days of the signing date.

The Attorney General, prosecuting attorney, or complaintant may bring an action to enjoin violations if certain conditions have been met.

A person who violates this act is guilty of a class D felony and is subject to a $10,000 fine. Money collected under this act are transferred to the State School Moneys Fund.

Any travel club registered to operate in this state, which has been adjudged to have failed to provide a refund equal to the purchase price of the unused travel benefits within 15 business days of such valid exercise or has been adjudged to have failed to honor a settlement agreement, shall post a surety bond upon the earlier of a judgment entered on said violations or its next annual registration.

Any travel club registered to operate in this state which has been adjudged to have engaged in fraud in the procurement or sale of contracts shall be required to post a security bond upon the earlier of the judgment finding such or its next annual registration.

This act is similar to SB 1034 (2004).

SUSAN HENDERSON