FTC, States "Trip-Up" Travel-Related Scams in Latest Joint Fraud-Enforcement Sweep

The Federal Trade Commission has filed federal court complaints alleging that:

A Massachusetts firm offers immigrants "affordable" airfares to visit their homes in India or Africa, but never produces the prepaid tickets.

A California firm uses the Internet and other media to market a travel agent tutorial kit for operating a home-based travel agency and cashing in on discounted and upgraded travel and accommodations. But buyers cannot, in fact, operate a travel agency and the credentials rarely result in the promised discounts.

A South Carolina firm touts the hot European market for American timeshares and guarantees consumers 90 percent of their property’s value if it’s not sold. But the properties never sell and consumers never see the promised money.

A California firm telemarkets prepaid travel certificates for luxurious vacations at discounted prices, but consumers find they have to pay substantial additional fees to redeem the certificates, and the trip is far from luxurious.

A Florida firm calling itself a "full-service travel agency" offers prepaid travel packages purportedly sponsored by well-known hotel chains and airlines at discounted rates to promote tourism. But the known companies have never heard of the travel firm, and consumers cannot get promised refunds.

Travel-related scams are taking off again, according to the Federal Trade Commission and 12 state Attorneys General, who today announced "Operation Trip-Up," a joint federal-state- local campaign targeting a wide range of vacation frauds. Officials said 36 law-enforcement actions have been filed as part of the campaign, which also includes an extensive consumer education program. The cases were filed against everything from run-of-the-mill vacation certificate telemarketers and timeshare resellers, to emerging variations of travel fraud involving flights pitched to immigrants, and a new type of scam called a travel agent "credential mill."

"Consumer complaints about travel consistently rank among the top five categories in an FTC-Attorney General complaint system, and annual losses to travel-related fraud are estimated to exceed $12 billion," said Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protec tion. "The goal of Operation Trip-Up is to stop the sources of a substantial number of deceptive travel offers, and to warn consumers about the many different types of travel scams they need to be aware of in order to avoid them. Our most universal advice is: Buy vacation travel only from a business you know, get the details of your vacation and any refund policy in writing before you pay, and be wary of pre-paying for multiple years worth of travel."

The state Attorneys General involved in Operation Trip-Up are from California, Connecticut, Florida, Illinois, Massachusetts, Michigan, New York, North Carolina, Ohio, Vermont, Washington and Wisconsin. Cases also were brought by the Napa County, California, District Attorney’s office, and by the Florida Department of Agriculture and Consumer Services. Several of the companies targeted face action by more than one law-enforcement entity.

Ohio Attorney General Betty D. Montgomery focused in particular on a timeshare resale company (Marketing Analysis Sales & Service, doing business as Oscar C. Bradley & Associates), and said, "For consumers, buying into vacation ventures such as campgrounds or timeshares is fairly common. Unfortunately, many have found that the resale market for these vacation sites is rife with unscrupulous companies and individuals who take advantage of consumers who are eager -- or even desperate -- to sell their memberships. The cooperation of numerous local and federal law enforcement agencies working together . . . has paid off."

Officials said one of the enticements used by scam artists is to offer an "affordable" travel package. These marketers pitch club memberships or prepaid, multi-year vacation offers at prices supposedly somewhat lower than consumers could find by booking their trips on shorter notice. Given price wars and other effects of increased competition in the travel industry, the offers often sound reasonable, the FTC said. Typically, however, fraud artists add undisclosed charges or hard-to-meet and expensive "conditions" every step of the way, making the actual travel extremely difficult to obtain and much more costly than was promised.

OPERATION TRIP-UP LAW ENFORCEMENT:
(See also list of state cases and contacts.[Not available on FTC website])

The FTC filed its actions under Operation Trip-Up against:

• Your Travels and Tours, Inc., of Cambridge, Massachusetts; company President Abul Khayer, and Umme Salma Momtaz Alam, Khayer’s wife and an owner of the company, of Lincoln, Massachusetts. These defendants allegedly advertised low-cost airline tickets to international destinations in publications such as India Abroad, News India-Times and The Ethiopian Review, and quoted prices ranging from about $1,100 to $1,700 to consumers who responded to the ads. Consumers had to submit payment immediately, based on the defendants’ promise that they would receive their tickets within a few days, the FTC alleged. But the defendants never delivered the tickets and, in most cases, refused to provide any refunds, the FTC charged. (Filed under seal in U.S. District Court for the District of Massachusetts, in Boston, on March 12. Civil Action No. not available at press time. FTC File No. 972 3068. FTC staff contact: Phoebe Morse, Boston Regional Office, 617-424-5960.);

• World Class Network, Inc., of Irvine, California, World Class Travel, L.L.C., of Calabasas; World Class Network Board Chairman Daniel R. Dimacale and Secretary Denise L. Dimacale, both of Newport Beach; Executive Vice President Robert C.K. Lee, of Mission Viejo; President and CEO Howard K. Cooper, of Woodland Hills; and World Class Travel owner and Chairman Jerome L. Goldberg, of Oxnard. According to the FTC complaint in this case, the defendants offered a travel tutorial kit that purportedly would allow purchasers to receive travel agent-like discounts and upgrades on their own travel accommodations, and to operate an at-home travel business and achieve specified earnings. In fact, the FTC charged, purchasers cannot obtain the promised discounts and upgrades for personal travel because many in the travel industry do not recognize the I.D. card provided by the defendants, and the kits are inadequate to allow pur chasers to open and operate a functioning business. Few if any consumers achieved earnings even approaching those promised, the FTC alleged. (Filed under seal in U.S. District Court for the Central District of California, in Los Angeles, on Feb. 28. Civil Action No. SACV-97-162 AHS(EEx). FTC File No. 972 3058. FTC staff contact: Eileen Harrington, 202-326-3127, or Ann I. Jones, Los Angeles Regional Office, 310-235-4040; California Attorney General Daniel E. Lungren’s office also has brought a case against World Class Network, Inc.);

• Gold Crown Express, Inc.; Worldwide Vacation Services, Inc.; and William Ernest Taft, doing business under those dissolved South Carolina corporation names; most recently of North Myrtle Beach, but they have moved around in recent years from Slidell, Louisiana; to Port Clinton, Ohio; Reisterstown, Hampstead and Columbia, Maryland; Grove, Oklahoma; Beebe, Arkansas; East Stroudsburg, Pennsylvania; and Longmont, Colorado. Beginning in at least 1994, the FTC charged, these defendants offered resale services for timeshare units and camp ground sites, through unsolicited telephone calls and direct mail, for fees ranging from $200 to more than $4,000. The defendants allegedly claimed they were agents for an English company called Oscar C. Bradley and Associates, or a Danish firm called Danish Leisure Promotions, which purportedly have been successful in marketing timeshares throughout European countries in response to a strong buyer demand. Gold Crown promised customers that another company, British Guarantee, would purchaser their timeshares for 90 percent of the property’s appraised value or list price if it didn’t sell within a certain time (typically nine to 12 months). But con sumers received no payment at all, or the property value on which the payment was based was substantially lower than the price at which the defendants agreed to sell it, the FTC charged. (Filed under seal in U.S. District Court for the District of South Carolina, in Florence, on March 3. Civil Action No. 4:97-0532-12. FTC File No. 962 3168. FTC staff contact: Eileen Harrington, 202-326-3127. Ohio Attorney General Betty Montgomery’s office also brought an action against a firm doing business as Oscar C. Bradley & Associates.);

• Roger S. Dolgin, who resides San Francisco, doing business as Design Travel and Design Travel of Santa Rosa, out of a Santa Rosa office. Dolgin allegedly operated a nationwide network of telemarketing boilerrooms which gathered consumer names from "win a free vaca tion" booths at local fairs or carnivals, among other methods. The telemarketers placed cold calls, sent consumers direct mail or unsolicited faxes, and operated an Internet home page, all representing that consumers were part of a select group specially chosen to receive a limited number of cruise vacations from Florida to the Bahamas worth as much as $1,500, but for which they would pay only $398, $498 or $598, if they did so immediately. But consumers actually were paying just for the option to purchase a vacation, the FTC alleged, adding that they had to pay an additional $198 to $298 to take the trip. Consumers who requested refunds after learning of the additional fees waited months for their accounts to be credited, the FTC charged. Con sumers who decided to pay the additional fees found, according to the complaint, that the promised "cruise" was just a ferry ride, and that the hotels were vermin infested. Consumers who asked to switch to the better-known hotels mentioned in Design Travel sales materials found they had to pay yet more undisclosed upgrade fees, the FTC alleged. (Filed in U.S. District for the Northern District of California, San Francisco Division, on March 10. Civil Action No. C-97- 0833 MHP. FTC File No. 962 3188. FTC staff contact: Eileen Harrington, 202-326-3127. The Florida Department of Agriculture and Consumer Services and the California and Wisconsin Attorney General’s offices also brought actions against Dolgin.); and

• Travel Bahamas Tours, Inc., of Deerfield Beach and Palm Beach Gardens, Florida; and company president Richard A. Raskin, of Boynton Beach, Florida and Dallas, Texas. The defendants call themselves a full-service travel agency, and allegedly use telemarketing and direct mail to market travel certificates, purportedly for extremely discounted "World Class Florida/Caribbean Vacation Packages" that supposedly are sponsored by select hotels (such as the Nassau Marriott), resorts (including Best Western British Colonial Beach Resort) and airlines. The cost is $276 to $498, according to the FTC complaint, and the defendants offer a 30-day no-obligation refund policy. In fact, the FTC charged, the package is not sponsored, endorsed or promoted by nationally-recognized hotels and the defendants, in numerous instances, refuse to provide promised refunds. The FTC told the court that Travel Bahamas Tours cannot even issue airline tickets and the named hotels have never heard of the firm. (Filed in U.S. District Court for the Southern District of Florida, in Fort Lauderdale, on Feb. 26. Civil Action No. CIV-Ferguson 97-6181. FTC File No. 972 3069. FTC staff contact: Eileen Harrington, 202-326-3127.)

In the Your Travels and Tours, World Class Network and Gold Crown Express cases, the FTC sought and won temporary court orders halting the challenged practices and freezing the defendants’ assets. In all five cases, the FTC is seeking permanent orders that require the defendants to pay redress to consumers and prohibit them from engaging in similarly deceptive travel schemes in the future.

OPERATION TRIP-UP CONSUMER EDUCATION

The Operation Trip-Up consumer education campaign includes a variety of materials. A free consumer alert titled "Travel Tips: How to Gear Up for a Great Trip" and three free brochures titled "Telemarketing Travel Fraud," "Timeshare Tips," and "Timeshare Resales," also offer a wealth of consumer tips, including:

• Buy from a business you know. Deal with members of a professional association, or get an unfamiliar company’s complete name, address and local phone number. Be wary when the seller’s name differs from the travel provider’s name, because you may be dealing with a telemarketer who has no further responsibility to you after the sale. Firms that send couriers for your payment may be trying to avoid detection and charges of mail or wire fraud.

• Verify the details of all arrangements and any cancellation policy before you pay.

• Don’t deal with telemarketers who claim they need your checking or credit card account information for identification or verification. They don’t. Your account number should be used only to bill you for goods and services.

• Multiple year memberships in vacation accommodations may come with increasing fees or, if the fees are guaranteed to stay the same, the property might become run down. Resales are difficult if not impossible because there’s no secondary market and timeshares rarely appreciate in value.

• Companies that offer to sell instant travel agent credentials have no control over the decisions of cruise lines, hotels, car rental firms, and airlines to extend professional courtesies to travel agents, so be wary of their promises for guaranteed discounts.

• Learn the vocabulary of travel. "You have been specially selected to receive our SPECTACULAR LUXURY DREAM VACATION offer" means only that you’ll be offered an opportunity to pay for a trip that may -- or may not -- fit your idea of luxury. "Subject to availability" means you may not get to travel when you want. "Blackout periods" are blocks of dates when no discount travel is available.

These consumer materials were produced in cooperation with the American Society of Travel Agents (ASTA), which will help distribute them to its members, the media and con sumers. The materials are available on the FTC’s web site at www.ftc.gov, from the FTC’s Public Reference Branch (see address below), and on ASTA’s web site at astanet.com. The U.S. Tour Operators Association and the National Tour Association also will distribute brochures to consumers.

Operation Trip-Up was announced simultaneously on both sides of the country at a press conference in Washington, D.C., and at the annual conference on travel scams held by ASTA in Los Angeles. The Commission vote to file the FTC cases was 5-0.

NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. A complaint is not a finding or ruling that the defendants have actually violated the law. The cases will be decided by the courts in which they were filed.

Copies of the FTC materials for Operation Trip-Up are available from the agency’s web site at http://www.ftc.gov and also from its Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(see also list of state cases and contacts [ Not available on FTC website ] )