In the second court settlement resulting from several Federal Trade Commission travel related enforcement actions brought in August of 1999, collectively named "Operation Trip Trap," a Nevada-based company has agreed not to make travel-related misrepresentations in the future, and to post a $175,000 bond before reentering the travel service business. Through the Final Judgment and Order filed with the Federal District Court in Las Vegas, ASQ, Inc. d/b/a Resort World and defendants Frank Abatangelo, Jr. and Allen H. Abolafia, Resort World's owners, will also be required to pay $75,000 in consumer redress, which, if practicable, will be used to partially compensate the thousands of consumers who lost money after making travel arrangements that were not adequately fulfilled.
According to the Commission's complaint, starting in late 1997 Resort World began selling vacation packages to consumers in the United States, primarily in the western part of the country. Resort World "faxed" advertisements to business establishments, citing extremely low airfares to vacation destinations, such as $99 round-trip airfares to Hawaii, and giving a toll-free number to call for further information. Consumers responding to these advertisements were informed that in order to receive the advertised fares, they had to book an eight-day, seven-night stay at one of Resort World's participating hotels or resorts.
Under the plan, consumers paid for the airfare portion of the package up-front (a minimum of four round-trips were required), after which "trip request" forms and names of participating lodging facilities were sent to the consumers. When the consumers decided to plan their vacations, they sent in a travel voucher to Resort World with the desired dates and locations. Once the specific arrangements had been agreed on, the consumers sent Resort World payment for the "land portion" of the trip. Resort World would then obtain the necessary tickets and vouchers and forward them to the consumers.
According to the Commission's complaint, Resort World was unable to fulfill vacation requests in the manner represented or in a timely manner for many of the customers who made up-front "airfare" payments. The Commission alleged that the defendants misrepresented that the vacation packages they sold included lodging at or around specific or "competitive" prices; or that lodging would be available for the dates or destinations requested. The Commission's complaint also alleged that Resort World failed to disclose material facts regarding the costs or other facets of the vacations. Finally, according to the Commission's complaint, Resort World failed to fill consumers' travel plans in a timely manner. Because of this, numerous consumers who had paid the up-front fee were unable to obtain any vacation at all.
Under the terms of the settlement with the Commission, the company and the individual defendants are required to modify their conduct in the area of vacation marketing and sales. Specifically, they are prohibited from making specific misrepresentations regarding: 1) the cost and availability of accommodations; and 2) the fulfillment of travel requests in a timely manner. In addition, they are prohibited from failing to reveal material facts associated with the marketing and sales of travel-related services, and from offering for sale any vacation travel service unless they have "the present capability" of providing such services (or component thereof ) at the stated price.
Finally, the defendants are required to post a $175,000 bond prior to engaging in the sale or provision of any travel-related services in the future, and will pay a total of $75,000, which, if practicable, will be used to partially compensate those consumers who lost money due to their inability to take the vacations that they had booked and paid for through Resort World. The order also contains standard monitoring provisions to ensure that Resort World and the individual defendants comply with its terms.
The Commission vote to authorize the staff to file the Stipulated Final Judgment and Order for Permanent Injunction was 5-0. The judgment and order become final only 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.
(FTC File No. X990071)