Washington area residents have been flooded in recent weeks with more than a million pieces of mail touting free prizes--microwave ovens, a one-carat emerald or perhaps a Las Vegas vacation.
The offers come from companies selling memberships in country clubs, interest in campground developments and time-share ownership of condominium units. To collect, an individual must drive to the prize headquarters and listen to the company's sales presentation.
There's nothing illegal about those activities, according to consumer officials, but they caution that buyers should know that they probably won't get their prizes until after they have listened to company representatives try to sell them something.
And that something could require a cash deposit of $400 to $500 and a loan agreement for the balance--which could range up to slightly more than $3,000.
Some people have complained that they were subjected to high-pressure sales tactics during the presentation and that they signed sales contracts that they later regretted. In some cases, consumers were able to get their money back after complaining to local consumer agencies or to the company itself.
Then there is the matter of the prizes. Consumers say that in many cases they have little value.
Tom McClure, a U.S. postal inspector who has received complaints from consumers in Maryland, Virginia and the District of Columbia, has examined some of the most frequently offered prizes. He gives these assessments:
* Five-foot grandfather clock: "A pasteboard thing, with chimes of plastic, that you put together yourself."
* One-carat emerald: "The gemologist appraised them at $1 each. He described them as pebbles."
* Las Vegas three-day vacation: You provide your own transportation and pay a registration fee of $3 and a surcharge of $8.50 per person per night, except during March and December.
* Camera: "A primitive box camera that couldn't have cost more than a few dollars to manufacture."
* Jewelry: "Very low quality and not worth more than a couple of dollars."
McClure said that the promoters also give away the more valuable prizes they promise: cars, televisions, microwave ovens. But under the law the promoter doesn't have to give away more than one of each prize cited. That makes the chances for getting a car extremely slim, McClure said, and the chances for getting a $1 emerald extremely good.
After examining the complaints and the promotions, McClure concluded: "They haven't violated the law. They do give prizes away. They do have property to sell . They have physical buildings and lots."
But he says there "is a need for the public to know what they are getting into" when they respond to the mail offers. "I am not saying it is a ripoff; I am saying it is caveat emptor," McClure said.
At least eight companies are now mailing out prize promotions to attract Washington area residents to their offices where salesmen explain the deals they are offering. Those may range from membership in a rural country club to time-share ownership of a fancy condominium unit. These eight developments are located in Virginia within 100 to 200 miles of the metropolitan area, where city dwellers may be interested in nearby weekend or vacation getaways. Area residents also receive prize promotions periodically from developments in other parts of the country, such as Florida.
Consumer officials say that the complaints they have received about the eight companies generally focus on the quality of the gifts and the use of high-pressure tactics. Maryland Assistant Attorney General Deborah Hines, who handles such complaints for that office, gave this summary of the problem that consumers have:
"They say, 'I got this thing in the mail and went down there to collect my prize . I bought something I didn't want. I was pressured into buying it. And I want my money back."
Hines has obtained refunds for some consumers by mediating the complaints with the attorneys for the companies. In addition, some consumers have won refunds by filing complaints with local consumer offices.
Consumer complaints against one company--Belle Mount Associates--triggered an investigation that resulted in the company making 13 refunds, paying $600 to the Fairfax County Office of Consumer Affairs to cover the cost of the investigation and then signing a written agreement that admitted to no improprieties but promised not to misrepresent prices or facilities.
Belle Mount officials also said in the agreement that, from now on, they will give consumers seven days in which to cancel sales contracts if they change their minds about buying memberships in the Belle Mount Country Club, a 250-acre development in Richmond County, Va., about 150 miles from metropolitan Washington.
Harold Grossmann, a partner in Belle Mount Associates, said the problems stemmed from sales practices used by an outside marketing company hired to sell memberships in the club. That marketing company has been replaced with another marketing firm, Grossmann said.
"We have tried our best to make this a clean marketing operation, because we cannot afford to have people who are unhappy or dissatisfied with us," Grossmann said.
One consumer remembers the Belle Mount presentation she was given before the company changed marketing firms:
"The first thing the salesman said was that this is a wonderful investment and you can double your money," said Virginia Kirk, a Reston resident who paid $3,500 for what she thought was a piece of property in rural Virginia but which turned out to be a membership in an undeveloped country club. (Construction has begun on a swimming pool and other facilities, Grossmann said.)
At 77, Kirk said she had no use for the club camping privileges provided by the club membership and no easy way to reach the campsite.
Belle Mount refunded her money--she had paid $450 in cash and charged the balance on a credit card--after she complained to the Fairfax County consumer agency.
Other consumers said that the country club didn't contain the improvements they had been promised when they signed up for membership at Belle Mount's Annandale sales office.
A Fairfax County couple, Donald and Susan Bageant, both 21, concluded from the presentation they heard that the club had a bathhouse, a sandy beach area and a three-hole golf course. They paid $450 and signed a promissory note for the $3,050 balance.
But when the Bageants drove with their two children to the club, they found that there was no bathhouse, no beach and no golf course. "There was just an old farmhouse with one man living in it," said Mrs. Bageant.
They received a full refund after complaining to the Fairfax County consumer office.
Consumers have reported similar problems with other companies.
Consumer authorities say shoppers can save themselves time and energy if they think through the deals they are offered before signing up. Once consumers have signed the contracts, they typically are bound to abide by their terms, according to Anthony D. Provine, chief investigator for the Fairfax County consumer office.
Some contracts do contain escape clauses permitting consumers to change their minds and get refunds, Provine said. But others don't, and if there is no escape clause in the contract, he said, "it is very difficult" for the consumer to get his money back and to get out of the deal.