In WI v. Going Places Travel Corp., Nos. 2014AP1859-62 (April 14, 2015), the Wisconsin Court of Appeals affirmed a $3.8 million restitution order and nearly $842,000 in forfeitures against companies (“Travel Services”) stemming from multiple misrepresentations and failures to disclose required information when selling travel club memberships to Wisconsin residents. In this case, Travel Services essentially sold expensive memberships (costing as much as $4,000) to travel “clubs” that promised “access to discounts that did not exist.” Travel Services’ sales process included the mailing of over 460,000 postcards addressed to consumers by name, “pressured” sales presentations and the display of its bylaws.
The state filed its original action in February 2010 based upon allegations that the defendant violated Wis. Stat. § 100.171 (governing prize notices), Wis. Stat. § 100.18 (prohibiting deceptive advertising) and Wis. Admin. Code § ATCP 127.44(15) (prohibits deceptive mail transactions).
On appeal, Travel Services argued that the trial court improperly shifted the burden of proof concerning the amount of restitution as well as improperly counted the number of violations in calculating the forfeitures. Travel Services also claimed that the trial court erred in excluding an expert witness report and violated Travel Services’ due process right to fair warning through an unforeseeable application of consumer protection laws.
The court of appeals rejected all of these arguments, concluding that the state had produced “reasonable evidence of pecuniary loss” to support the trial court’s restitution order. The court of appeals also held that counting each postcard as a separate violation comported with the legislative intent of Wis. Stat. § 100.171. In so holding, the court of appeals noted that because Travel Services made one misrepresentation during the sales presentations and three misrepresentations in the bylaws, which were both viewed by 884 consumers, it was liable for 3,356 violations of § ATCP 127.44(15)(number of misrepresentations times number of consumers). Finally, the court of appeals rejected Travel Services’ claim that the trial court erroneously excluded its expert report and violated its due process right to fair warning, observing that the admission of evidence is within the ambit of the trial court’s discretion and that number of violations were supported by existing law.
Going Places Travel Corp. underscores the legal obligations attendant to business sales, marketing and advertising and the state’s interest in protecting consumers from misleading and deceptive sales practices. Businesses large or small seeking to expand their market share through advertising should ensure that their advertising materials are accurate and honest or else face stiff penalties.
If you have any questions or would like additional information about advertising practices under Wisconsin law, please contact Sara MacCarthy at (414) 721-0478 or smaccarthy@wp.hallrender.com or your regular Hall Render attorney.
