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April 1, 2005

Statement of the Iowa Attorney General's Office

Commenting on the Iowa Supreme Court decision in State of Iowa vs. Cutty's Des Moines Camping Club Inc.

"We are elated with today's Supreme Court decision," said Attorney General Tom Miller. "The decision goes a long way to strengthen consumer protection statutes aimed at unfair practices that injure consumers." [Click here for Supreme Court decision.]

The Supreme Court, reversing earlier decisions by lower courts, found that statutes prohibiting 'unfair practices' are "designed to infuse flexible equitable principles into consumer protection law so that it may respond to the myriad of unscrupulous business practices modern consumers face."

Miller hailed the Court's decision. "The decision sharpens consumer protection statutes for the benefit of all consumers," he said.

The decision sends a lawsuit against Cutty's Des Moines Camping Club, Inc., which was filed by the Attorney General's Consumer Protection Division, back to Polk County District Court for trial. At issue has been the effort by the Club to collect past campground dues from some of its members. [Click here for earlier news release about the State's lawsuit.]

The State lawsuit had argued that Cutty's efforts to collect past dues of thousands of dollars amounted to an unfair practice under Iowa law. According to the suit, the Club launched collection actions to collect purportedly long-past due amounts of up to $4000 from individual consumers, even though many consumers had ceased using the campground and Cutty's policies had made membership shares "virtually unmarketable" for sale to other consumers.

The campground originally was owned by Cutty's, Inc., which in 1980 decided to create a "camping club" by selling 3000 "shares" in the campground to consumers. "Membership dues" originally started at $96 per year, but rose to approximately $400 per year -- an increase of nearly 400 per cent. While membership dues rose, the Camping Club and Cutty's, Inc., continued to hold unsold shares and made no effort to sell new membership shares since about 1986-88.

Referring to the long period during which the Club made no effort to collect membership dues that were allegedly owed, the Court said "[b]y all accounts the Club snoozed for as many as sixteen years."


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