(CN) – Sunshine Promotions will pay $90,000 to settle a complaint accusing it of luring consumers to sales pitches by telling them they had won prizes, whose “numerous restrictions … made them impossible for many consumers to use.” The District of Columbia sued the Las Vegas-based company in DC Superior Court.
Sunshine Promotions agreed to stop using the word “free” in its sales pitches; the $90,000 will go to the DC’s Consumer Protection Fund.
Sunshine has been pushing its alleged gifts and services at its so-called “receptions” since 2008, through telephone calls and mailings, according to the complaint.
It promised free “travel services, merchandise ‘gifts,’ or one of four ‘prizes,'” the District of Columbia says. Consumers who responded were told that “the only thing they have to do to obtain the free gifts is attend a ‘reception,'” which was actually a sales pitch.
Sunshine’s salesmen offered memberships for a high price, then reduced it “to convince the consumers to buy,” DC says. The salesmen falsely claimed the low price was a “one time offer” only available to them, according to the complaint.
The alleged “gifts” and “prizes” required significant deposits, taxes and surcharges, and included “numerous restrictions, which have made them impossible for many consumers to use,” according to the District’s attorney.
“Consumers who have submitted the forms and deposits have often been told that they had failed to comply with the terms and conditions of the vouchers or that their requested travel dates were not available,” and many people found it difficult to get their deposits back, according to the complaint.
Consumers who were promised one of four “prizes” – a Lincoln Navigator, a television, cash or a vacation – were given a scratch-off card that claimed their chances of “winning a vacation was 49,542 out of 50,000,” according to the complaint. “A majority of these consumers” were given “travel vouchers,” the District says.
Consumers who tried to redeem a voucher found that they had to make a $100 purchase from a “participating retailer” within one month, in order to get a $25 gift card. Sunshine told some people they would get a “$500 merchandise ‘gift,'” though the people had to spend $2,000 to get $500 in merchandise, according to the complaint.
The District demanded disgorgement and restitution for misrepresentation and omission of material facts.
Sunshine settled by promising to pay $90,000 to the District’s Consumer Protection Fund and to stop using “terms like ‘free,’ ‘complimentary,’ ‘gift’ or ‘winner’ in promotional mailings to consumers and prohibit it from making false representations about price reductions.”