Office of the Attorney General News Release Archive

Wednesday, September 26, 2001


Members to be Reimbursed for Payment of Excessive Fees

AUSTIN - Texas Attorney General John Cornyn has obtained an agreed final judgment and permanent injunction against the former owners of retiree campground company San Jo Cove Inc. near Willis north of Houston. The judgment requires the former company, including owners Larry and Sandra Carlson, to refund dues to more than 500 former members who have claimed financial abuse.

The company will pay a total of $450,000, as ordered by the Harris County District Court, which includes restitution for members, as well as attorneys' fees and investigative costs incurred by the state. The claimants, mainly senior citizens, will receive refunds ranging from $500 up to $2,545. The claims date to as early as 1997.

"These types of predatory membership practices and companies that prey on those enjoying the best of their golden years will not be tolerated in this state," said Attorney General Cornyn.

San Jo Cove engaged in selling "perpetual" campground memberships, while not defining in its contract documents what this type of membership entailed. Many who attempted to terminate their memberships for good cause, such as serious illness or inability to drive a vehicle, were told they must remit a $500 cancellation fee in advance. Neither the company's contract with these members, nor any other company document, contained mention of this fee. The company further notified these members that if payment was not received prior to cancellation, their accounts would be forwarded to a collection agency and reported to a credit bureau.

Some members who called regarding cancellation were told by San Jo Cove employees that the contract followed them to their death and no cancellation would be possible. Others were told that unless they remitted the $500 cancellation fee, and in some cases past unpaid dues, the company would access their bank accounts and the debt would follow their heirs. Still others were told to upgrade to a "deluxe" membership for $2,500 in order to cancel the membership and also unburden their heirs from perpetual debt.

The Attorney General's Office cited the company for several violations of the Deceptive Trade Practices and Consumer Protection Act and Texas Finance Code, as well as the Texas Membership Camping Resort Act. Under the latter law, the company failed to disclose in its membership statement any expected fees, dues, taxes or other assessments to be paid by its members for use of amenities.

The permanent injunction prohibits the company from expressing or even implying that its memberships are perpetual in nature, thus obligating members for life and their heirs after death.

San Jo Cove was purchased in December 2000 by new owners, who fully cooperated with the investigation of the former company. The new campground operates under the name Castaways.

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