Design Travel Settles FTC Charges

For Release

A California telemarketer who promised "resort accommodations" and "luxury cruises," but delivered third-rate hotels and ferry boat rides, has agreed to settle Federal Trade Commission charges that he deceptively marketed travel services in violation of federal law. The settlement would bar Roger S. Dolgin, doing business as Design Travel, from any telemarketing in the future. In addition, it would bar him from marketing any travel packages or services; ban any processing of credit card charges, debit card charges or checks that have not been signed personally by the owner; and prohibit misrepresentations of material fact in connection with the sale of any products or services. Under the terms of the proposed settlement, Dolgin would pay $125,000 in consumer redress. A portion of the redress will be used to inform victims, by mail and telephone message, how to receive chargebacks of credit card charges processed by Dolgin and his agents. In addition, the settlement would impose a $25 million suspended judgment -- an amount representing consumer losses -- and a $10 million judgment should the court find Dolgin misrepresented his financial condition or concealed assets at the time of settlement.

Dolgin and Design Travel were based in Santa Rosa, California, but his boilerroom telemarketing network operated nationwide, targeting consumers in the United States, South America, Canada, and England.

In March 13, 1997, Dolgin, Design Travel and Design Travel of Santa Rosa, California were included in a law enforcement initiative targeting travel-related scams. The state of Michigan sent Dolgin a notice of contemplated relief. The state of California executed a criminal search warrant on Dolgin’s Santa Rosa premises. And the FTC and the states of Florida, Illinois, and Wisconsin filed suit, alleging that Dolgin operated a nationwide network of telemarketing boilerrooms which gathered consumer names from "win a free vacation" booths at local fairs or carnivals.

The telemarketers placed cold calls; sent consumers direct mail "certificates" 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. Consumers were told that these vacations were worth as much as $1,500, but they could purchase one for only $398, $498 or $598, if they signed up immediately. However, unknowingly, consumers actually were paying just for the option to purchase a vacation, because 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, if they were credited at all, the FTC charged. Consumers who decided to pay the additional fees found, according to the complaint, that the promised "cruise" was just a ferry ride, and that the Bahamas hotel was vermin infested and shoddy. Consumers who asked to switch to the better-known hotels mentioned in Design Travel sales materials found they had to pay additional undisclosed upgrade fees, the FTC alleged.

The settlement imposes a permanent ban on any future telemarketing by Dolgin, including banning him from assisting others who telemarket goods or services. It would also bar him from marketing any travel packages or services in the future. In addition, Dolgin would be prohibited from processing credit or debit card sales for third parties and from processing any debit card charges, credit card charges or checks that are not signed personally by the owner. The settlement would require that Dolgin credit consumers’ credit card accounts within seven business days of accepting a return or cancellation and would bar him from misrepresenting facts about goods or services he sells.

Dolgin will pay $125,000 in consumer redress. Of that amount, $10,000 will be earmarked to inform victims -- by mail and through a taped telephone message -- how to apply to their credit card companies for a chargeback of funds debited by Dolgin and his agents. The remaining $115,000 will be used to fund a consumer redress program, or, if such a program is not feasible, will be paid to the United States Treasury as disgorgement. In addition, a suspended $25 million judgment will be entered against Dolgin. That amount represents the amount lost to consumers by dealing with Design Travel. The amount of consumer redress was based on

Dolgin’s representation about his assets, income, liabilities and net worth. If the FTC determines in the future that Dolgin misrepresented his financial situation, the consent judgment provides for an additional $10 million payment from him.

California, Florida, Illinois and Wisconsin, the four states that coordinated their law enforcement initiatives with the FTC lawsuit, also have reached settlement with Dolgin.

In a related case, four corporations and four individuals who, with Dolgin, were principals in the Design Travel vacation venture, were sued in July 1997 by the FTC and the Attorney General of North Carolina. The suit was filed in U. S. District Court in Charlotte, North Carolina, naming Resort Sales Group, Inc.; Design Travel of Altamonte Springs, Inc.; Check America Corp.; Cruise Link Travel, Inc.; Willie Biles, Margaret Katherine Alexander; Seth Miller and Steven Brewer as defendants. The suit is still pending.

The Commission vote to accept the stipulated final judgment and order was 4-0. It was filed in U. S. District Court for the Northern District of California, San Francisco Division, and entered by the court August 18, 1998.

NOTE: This consent judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the complaint, stipulated final judgment and order for permanent injunction and monetary relief, and FTC consumer publications, "Travel Advisory: Get What You Pay For," "Telemarketing Travel Fraud," and "Wish I Was There!" are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD 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

(FTC File No. X97 0032)

Contact Information

Media Contact:
Claudia Bourne Farrell,
Office of Public Affairs
202-326-2181
Staff Contact:
Collot Guerard,
Bureau of Consumer Protection
202-326-3338