The Federal Trade Commission today announced that for the third time in four years it has completed a law enforcement sweep of the United States travel industry. The FTC has been working together with state authorities to uncover fraud and deception that are costing consumers hundreds of thousands of dollars each year and often ruining what are supposed to be relaxing and enjoyable vacations. Today's announcement of "Operation Travel Unravel" caps investigations by the FTC and 19 state law enforcement agencies, resulting in 85 actions for alleged violations ranging from failure to disclose the actual cost of travel packages to misleading consumers by telling them they have won a free trip and failing to tell travelers that in purchasing a package they will be required to attend one -- and possibly more -- timeshare presentations.
The FTC complaints resulting from this sweep come one year after the Commission brought similar complaints in "Operation Trip Trap" and three years after those brought in "Operation Trip Up." The Commission cases announced today were filed by the FTC's Southeast Region and Midwest Region (with the Commonwealth of Virginia a co-complainant) and the Commission's Division of Marketing Practices.
The Commission today also announced the settlement of one other travel fraud case brought as part of "Operation Trip Trap." In this matter, the FTC approved a stipulated final order settling a court action brought last year against American International Travel Services, Inc. (AITS) and its owners.
"This is the third travel fraud law enforcement sweep the Commission has coordinated since 1997, illustrating the FTC's continued commitment to working with the states to take action against these bad actors," said Jodie Bernstein, Director of the Commission's Bureau of Consumer Protection. "We're working diligently to ensure that consumers' plans for enjoyable travel do not unravel, and we appreciate the help we have gotten nationwide in focusing attention on the continuing problem of travel-related fraud and misrepresentation."
Through "Operation Travel Unravel," the FTC has filed three complaints in federal District Court seeking to permanently enjoin the alleged law violations and award consumer redress. The complaints were brought against Leisure Time Marketing, Inc./Discovery Rental, Inc. of Cocoa Beach, Florida; Med Resorts International, Inc. of Clearwater, Florida; and Epic Resorts, Inc. of King of Prussia, Pennsylvania. In each case, the Commission is seeking an temporary restraining order with asset freeze and appointment of a receiver to ensure that no additional consumers are defrauded while the permanent injunctions are being sought. The Commonwealth of Virginia is a co-complainant with the FTC in the Med Resorts matter, and is filing additional state-related charges.
The FTC filed its actions in "Operation Travel Unravel" against:
In addition, Med Resorts allegedly violated the Commission's Holder in Due Course Rule by not including required disclosure language in consumers' membership contracts, then reselling those contracts to third-party finance companies.
The Commission vote to authorize the filing of the three complaints was 5-0. The Discovery Rental and Epic Resorts complaints were filed in the U.S. District Court for the Middle District of Florida, in Orlando, on August 14, 2000. The Med Resorts complaint was filed in the U.S. District Court for the Northern District of Illinois in Chicago, on August 9, 2000. The FTC's Midwest Region would like to thank the Pinellas County, Florida Department of Consumer Protection for their significant assistance in bringing the Med Resorts complaint. A table listing all of the federal and state actions in "Operation Travel Unravel" is also available.
In addition, the Commission today announced a stipulated final order settling a complaint against the following:
The Commission vote to approve the stipulated final order settling the court case against AITS was 5-0. The settlement will be filed in the U.S. District Court for the Southern District of Florida, Miami.
The "Operation Travel Unravel" consumer education program includes a variety of materials, including several recently revised FTC products. The first, "Facts for Consumers: Telemarketing Travel Fraud" contains information on how telemarketers obtain consumers' names and the techniques they employ to convince people to purchase their products. It also explains how consumers can protect themselves from travel-related telemarketing scams. The second product, a Consumer Alert titled "Avoid a School Break Bust," is designed to help students and their parents identify and avoid travel scams when planning vacations. It includes a variety of tips regarding the companies that market these trips, as well as useful contact information on organizations such as the American Society of Travel Agents' Consumer Affairs Department and the Department of Transportation's Public Charter Licensing Division. Finally, it describes how individuals can file a complaint with the FTC if they feel their school break has been a "bust."
In addition, a Consumer Alert and two Facts for Consumers publications remain available to the public. They are: "Traveler's Advisory: Get What You Pay For," "Timeshare Resales," and "Timeshare Tips," respectively.
Tips provided in the Commission's consumer education material include:
All consumer education pieces can be found on the FTC's Web site and from the FTC's Consumer Response Center (see address below).
NOTE: The Commission files a complaint when it has "reason to believe" that the law has 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.
NOTE: Stipulated final judgments are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.
Copies of the Commission's complaints and related documents 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 them to the FTC. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
Andrea L. Foster, Director
FTC Southeast Region, or
Valerie Verduce or Barbara Bolton (Discovery Rental, AITS)
C. Steven Baker, Director
FTC Midwest Region, or
Russell W. Damtoft (Med Resorts)
Bureau of Consumer Protection (Epic)
(FTC File Nos.: Discovery Rental, Inc. - 002-3259; Med Resorts - 002-3206; Epic Resorts - 002-3157; AITS - X990074. Civil Action Nos.: Discovery Rental - 6:00-CV-1057-ORL-19B; Med Resorts - 00C-4893; Epic Resorts - 6:00-CV-1051-ORL-19C.)
Attachments (List of Enforcement Cases)
Facts for Consumers
Telemarketing Travel Fraud
FTC Consumer Alert!
Travel Tips: How to Gear Up for a Great Trip