FTC Reaches Court Settlement with Third "Trip Trap" Defendant

The Federal Trade Commission today announced the third court settlement resulting from a series of travel fraud complaints brought in August of 1999 and together termed "Operation Trip Trap." Through the final judgment and order filed with the court, First Impressions, Inc. d/b/a Air-Land-Sea; Air Land Sea, Inc.; Vacations R Us, Inc.; and Vacation World, Inc.; and individual defendants John Bundy and James Burns will be permanently banned from engaging in travel-related telemarketing for deceptively pitching vacation packages in violation of the FTC Act and the Commission's Telemarketing Sales Rule (TSR). The company's consumers have already received more than $600,000 in indirect redress through credit card charge-backs since this case was filed, according to the Commission.

"Consumers should never have to pay phantom charges to collect a so-called free vacation," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "When you hear the words 'you've won a free vacation,' ask about the fees. A healthy dose of skepticism may save you a suitcase full of money."

According to the complaint filed by the FTC and the state of Wisconsin, First Impressions, Bundy and Burns engaged in a fraudulent scheme to promote and sell vacation packages to the public by misrepresenting the value of the packages and/or telling consumers that they had "won" free vacations. They primarily operated under the Air-Land-Sea name (with Bundy acting as president and CEO and Burns as the sales manager) and marketed the packages using their own sales force and through independent telemarketers. Most of their leads came from postcards completed by consumers at restaurants, local fairs and other events, many of whom believed they were entering a drawing for free vacations or other prizes.

Consumers called by Air-Land-Sea were told by its sales representatives either that they had "won," or were "specially selected" to receive a vacation package for free or at a significant discount. The packages were supposedly all-inclusive, and were for stays in Orlando or Ft. Lauderdale, Florida and a cruise to the Bahamas - all with "four-star" accommodations. Many consumers were also told that they had qualified for a "bonus" trip to Cancun, Mexico or Las Vegas.

During the pitch, consumers were told of several incidental charges of between $149 and $299 per person that had to be paid separately. As each trip required a minimum of two travelers, the total cost of these "incidentals" typically ranged from $300 to $600. Some consumers were also told that "port fees" for the cruise were extra, with such fees totaling at least $150 per person. Additional travelers also were required to pay $29 to $99 each, and the "quality" hotels described in the sales pitch were only available as upgrades for between $19 and $79 per person per night - a fact some consumers learned only after they had arrived at their destination.

Consumers who eventually did take the trip - many requested their money back after learning of the additional costs - often found that the company had not yet paid for their accommodations or cruise, requiring them to pay for these items directly. Finally, many were pressured into attending long timeshare presentations, and were often told that only by going to the presentation would they receive their cruise or hotel vouchers. While most consumers were not told of the timeshare tour requirement during the sales pitch (or were told it would be brief), the tours often took up the better part of a day.

Under the terms of the stipulated final order, the defendants are permanently banned from any telemarketing activities with respect to vacation or travel-related products or services. They are also prohibited from violating Section 5 of the FTC Act and the TSR in the future and from selling or otherwise disclosing their customer list. In addition, they will be required to pay $15,000 in outstanding costs of receivership and another $7,500 to cover the State of Wisconsin's investigative costs.

The order also contains monitoring provisions to ensure the defendants' compliance with its provisions, and enhanced provisions that require them to take steps to: 1) monitor the claims of their sales representatives; 2) investigate any consumer complaints; and 3) fire any employee or independent contractor who is not complying with the terms of the order. Finally, the order contains a "Right to Reopen" provision, under which the Commission can request that the court order the defendants to turn over any asset that it either misrepresented the value of, or failed to disclose, during the FTC investigation. The defendants are also required to distribute copies of the order to its businesses that are engaged in telemarketing or the sale of travel products in the future.

The Commission vote to authorize the staff to file the order for permanent injunction was 5-0.

NOTE: Stipulated final orders are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Stipulated final orders have the force of law when signed by the judge.

Copies of the documents mentioned in this release are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. Consumers with concerns about travel-related fraud or any other potentially fraudulent business practices may also report those complaints to the FTC. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

Mitchell J. Katz

Office of Public Affairs

202-326-2161  

David A. O'Toole

Bureau of Consumer Protection

312-960-5601

(FTC File No. X990070)