If you remember the consumer con games associated with recreation-lot sales in the early 1970s and time-share condominiums more recently, get ready for their booming replacement: private-membership campgrounds and "RV (recreational-vehicle) parks."
Barely known in many states as little as three years ago, campgrounds have turned into what may be the fastest-growing segment of American real estate development. More than $500 million worth of campground memberships will be sold this year in an estimated 600 separate projects. Four years ago, by contrast, no one even was counting sales volume, and there were fewer than 100 RV parks.
Typical camp memberships in 1984 sell for $4,000 to $7,000. They allow members the right to stay not only at their own camp resort, but also at associated camps scattered across the country in scenic sites. A tiny minority of the camp memberships convey actual ownership in the property. But the majority are analogous to "right-to-use" time shares, offering no equity or effective control to consumers for their dollars.
Like time sharing, camp resorts often use high-pressure tactics to sell memberships. Sales teams promise free TVs, money, vacations, appliances and other prizes to lure prospects to the property. Customers who sign up on the spot get big discounts off the regular membership price; those who want to think it over at home for a day or two pay full price.
The push for sales is so heavy -- and so costly to the developer -- that 55 to 60 percent of the membership price in many camp developments goes for marketing, not services. The mushrooming growth of the camp resort industry and its reliance on high-pressure sales are turning it into what one state official called "the biggest consumer-protection battleground in real estate for the rest of this decade."
Interviews with state attorneys general and real estate regulators by researcher Jennifer Goren during the past three weeks turned up serious, little-publicized problems in a growing number of states from the East Coast to the West Coast.
In California, the State Attorney General's Office has received more than 1,000 complaints from purchasers of camp memberships alleging marketing misrepresentations, securities-law violations, fraud and outright theft by promoters.
The state has sued several major firms during the past year and has obtained consent decrees prohibiting operators from selling campground memberships as sound investments, from failing to deliver on promised services and facilities, and from harassing disgruntled members. Deputy Attorney General John Porter said that his office is readying "additional litigation, you better believe it" in connection with "several hundred" complaints still outstanding against camp resorts.
An example of the type of problem popping up increasingly in California and other states was volunteered by a Sacramento retiree, Robert H. Duensing. He paid $2,700 last March to join a northern California camp resort known as Hidden Harbor. His on-the-spot cash price was discounted from the regular $3,500 price.
Duensing said he joined the resort primarily for its promised affiliation with the Camp Coast To Coast network of recreational campgrounds. (Washington D.C.-based Camp Coast To Coast has 400 participating resorts, all of which must adhere to a code of operating and marketing standards. Members of affiliated camps pay an annual fee to Camp Coast To Coast to receive access to any of the 400 resorts in the system.)
According to Duensing, he received a letter from Hidden Harbor barely four months after paying his money informing him that it had not obtained affiliation with Camp Coast To Coast, was closing down, but would not be able to return his money, however.
He said that the letter proposed softening the blow by transferring his membership to another camp in the area, Cedar Springs, for payment of an annual fee of $144. Duensing visited Cedar Springs in September, paid his money and signed up. Two weeks later, Cedar Springs went into bankruptcy proceedings.
The operator of the camp "simply disappeared, leaving a mountain of debts" against the park, Duensing said. "We haven't the slightest idea where the promoters of either camp have gone." In the meantime, "I'm out nearly $3,000 and I have nothing to show for it," he added. Roughly 70 other members of the first camp are in the same boat. Telephone lines at the promoters' offices have been disconnected.
Deputy Attorney General Porter would not discuss either resort, other than to say that "they are both under investigation." But he warned that the complaints he is receiving on campgrounds now are just the tip of a massive consumer-protection problem. Resort-campground promoters frequently do not own the properties they are developing, Porter noted, and they can walk away with purchasers' money if they choose to pull the plug.
No state regulates campground sales rigorously, he added. Disclosure requirements are lax because the campground phenomenon is so new, and escapes coverage under real estate laws.
"So you have consumers out there naked," in Porter's view -- throwing money hand over fist into a $1 billion boom business fraught with potential problems.