UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION

FEDERAL TRADE COMMISSION, Plaintiff,

v.

RESORTS EXCHANGE INTERNATIONAL OF AMERICA, INC. and ANTHONY A. ARRIGONI, Defendants.

Case No. _____-CIV.(_______________________)

COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF

Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), for its complaint alleges:

1. The FTC brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. 53(b) and 57b, and the Telemarketing and Consumer Fraud and Abuse Prevention Act ("Telemarketing Act"), 15 U.S.C. 6101 et seq., to secure permanent injunctive relief, restitution, rescission or reformation of contracts, disgorgement, and other equitable relief for defendants' unfair or deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a), and the FTC's Telemarketing Sales Rule, 16 C.F.R. Part 310.

JURISDICTION AND VENUE

2. This Court has subject matter jurisdiction pursuant to 15 U.S.C.  45(a), 53(b), 57b, 6102(c), and 6105(b), and 28 U.S.C. 1331, 1337(a), and 1345.

3. Venue is proper under 15 U.S.C.  53(b) and 28 U.S.C.  1391(b) and (c).

PLAINTIFF

4. Plaintiff, the FTC, is an independent agency of the United States Government created by statute. 15 U.S.C.  41 et seq. The Commission is charged, inter alia, with enforcement of Section 5(a) of the FTC Act, 15 U.S.C.  45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The Commission also enforces the Telemarketing Sales Rule, 16 C.F.R. Part 310, which prohibits deceptive or abusive telemarketing acts or practices. The Commission is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act and violations of the Telemarketing Sales Rule, in order to secure such equitable relief as may be appropriate in each case, and to obtain consumer redress. 15 U.S.C.  53(b), 57b, 6102(c), and 6105(b).

DEFENDANTS

5. Defendant Resorts Exchange International of America, Inc. ("REIA") was incorporated in Florida in 1987. REIA's principal place of business is 1 South Orange Avenue, Suite 404, Orlando, Florida 32801. The company sometimes operates under the d/b/a "Players Exchange." REIA transacts or has transacted business in this District and elsewhere.

6. Defendant Anthony A. Arrigoni is an owner, officer, or has held himself out as an officer, of defendant REIA. At all times material to this complaint, acting alone or in concert with others, he has formulated, directed, controlled, or participated in the acts and practices of defendant REIA. He transacts or has transacted business in this District and elsewhere.

COMMERCE

7. At all times relevant to this complaint, defendants have maintained a substantial course of trade in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C.  44.

DEFENDANTS' COURSE OF CONDUCT

8. Since at least 1999, defendants have operated a business enterprise that deceives consumers throughout the United States by deceptively marketing vacation travel packages.

9. In addition to using in-house sales personnel, defendants also contract with and utilize a number of "third-party" boiler rooms throughout Florida to sell defendants' vacation travel packages.

10. Defendants contact consumers by sending unsolicited facsimile transmissions ("faxes") to the consumers' offices. These faxes describe vacation travel packages being offered by the defendants at a deeply discounted rate. The faxes, addressed to "All Corporate Employees," typically state that the "wholesale travel department" is releasing price-reduced, corporate closeout, discounted vacations. In a great many instances, consumers believe that the faxes they receive at work are from the travel division of their company or are in some way approved or sponsored by their employer.

11. Typically, the packages include a number of nights lodging in various vacation destinations including Orlando, Florida; Cancun, Mexico; and Hawaii, as well as a complimentary Carnival Line cruise. Consumers are invited to call an 800 number to purchase the vacation packages, which are priced at $349 per person.

12. When consumers call the 800 number on the faxes, they are assured that the vacation travel packages are worth more than the requested price. Consumers are told that a $349 per person charge will be placed on their credit card accounts or a debit will be made against their bank accounts to pay the discounted price for the vacation travel package. Consumers are also told that there will be a $149 per person charge when they arrange for their vacations.

13. During the initial sales presentations, defendants misrepresent material terms of their refund and cancellation policies. For example, in numerous instances, defendants' sales personnel ask for and are given consumers' credit card or bank account information while telling consumers they can cancel if they desire to do so. However, when consumers subsequently attempt to cancel, defendants tell consumers they have no right to do so.

14. Defendants' sales personnel tell consumers that they must decide during the telephone call whether they wish to accept the vacation travel package, and that if they do not accept during the call, they will lose the opportunity.

15. After consumers purchase the vacation travel packages, defendants send consumers confirmation materials that contain advertisements, information about the locations they will visit, and travel documents that require consumers to send "reservation" forms to defendants either 60 or 90 days prior to the consumers' desired travel date.

16. Often, when consumers read the fine print of the confirmation materials, or when they begin to schedule their vacations, they learn for the first time that defendants have misrepresented the actual cost of the vacation packages as well as other material terms and conditions. For example, consumers are routinely required to pay additional fees and upgrade charges to book a vacation. Accommodations are seldom, if ever, available at the discounted price that the consumers paid pursuant to their original arrangements with the defendants. Consumers wishing to take the complimentary Carnival Line cruise are typically told that they must pay $500 or more for a cabin upgrade for the "free" cruise. If consumers do not purchase the "upgrade," defendants have been unwilling to make a reservation for the consumers.

THE FEDERAL TRADE COMMISSION ACT

17. Section 5(a) of the FTC Act, 15 U.S.C.  45(a), provides that "unfair or deceptive acts or practices in or affecting commerce are hereby declared unlawful."

VIOLATIONS OF SECTION 5 OF THE FTC ACT

COUNT I

18. In numerous instances since at least 1999, in connection with the advertising, marketing, promoting, offering for sale, or sale of vacation travel packages, defendants have represented, expressly or by implication, that the price quoted to consumers in the defendants' sales solicitation is the total cost to purchase, receive or use the vacation travel package offered by defendants.

19. In truth and in fact, in numerous instances, the price quoted to consumers in the defendants' sales solicitation is not the total cost to purchase, receive or use the vacation travel package offered by defendants.

20. Therefore, defendants' representation set forth in Paragraph 18 is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a).

COUNT II

21. In numerous instances since at least 1999, in connection with the advertising, marketing, promoting, offering for sale, or sale of vacation travel packages, defendants have failed to disclose in a clear and conspicuous manner, until after the consumer pays for the goods or services offered by defendants, material facts including the conditions and restrictions to purchase, receive or use the vacation travel packages offered by defendants.

22. Defendants' failure to disclose material facts as set forth in Paragraph 21 is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a).

COUNT III

23. In numerous instances since at least 1999, in connection with the advertising, marketing, promoting, offering for sale, or sale of vacation travel packages, defendants have represented, expressly or by implication, that consumers can receive a full refund of the money paid to defendants.

24. In truth and in fact, in numerous instances, consumers requesting a refund do not receive a full refund of the money paid to defendants.

25. Therefore, defendants' representation set forth in Paragraph 23 is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a).

THE TELEMARKETING SALES RULE

26. In the Telemarketing Act, 15 U.S.C.  6101 et seq., Congress directed the FTC to prescribe rules prohibiting abusive and deceptive telemarketing acts or practices. On August 16, 1995, the Commission promulgated the Telemarketing Sales Rule, 16 C.F.R. Part 310. The Rule became effective on December 31, 1995.

27. Defendants are "sellers" or "telemarketers" engaged in "telemarketing," as those terms are defined in the Telemarketing Sales Rule, 16 C.F.R.  310.2(r), (t) and (u).

28. The Telemarketing Sales Rule prohibits sellers and telemarketers "[b]efore a customer pays for goods or services offered" from "failing to disclose, in a clear and conspicuous manner . . . [t]he total costs to purchase, receive, or use, and the quantity of, any goods or services that are the subject of the sales offer ." 16 C.F.R.  310.3(a)(1)(i).

29. The Telemarketing Sales Rule prohibits sellers and telemarketers "[b]efore a customer pays for goods or services offered" from "failing to disclose, in a clear and conspicuous manner . . . [a]ll material restrictions, limitations, or conditions to purchase, receive, or use the goods or services that are the subject of the sales offer." 16 C.F.R.  310.3(a)(1)(ii).

30. The Telemarketing Sales Rule prohibits sellers and telemarketers "[b]efore a customer pays for goods or services offered" from "failing to disclose, in a clear and conspicuous manner, . . . if the seller or telemarketer makes a representation about a refund, cancellation, exchange, or repurchase policy, a statement of all material terms and conditions of such policy." 16 C.F.R.  310.3(a)(1)(iii).

31. Pursuant to Section 3(c) of the Telemarketing Act, 15 U.S.C.  6102(c), and Section 18(d)(3) of the FTC Act, 15 U.S.C.  57a(d)(3), violations of the Telemarketing Sales Rule constitute unfair or deceptive acts or practices in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a).

VIOLATIONS OF THE FTC TELEMARKETING SALES RULE

COUNT IV

32. In numerous instances, in connection with the advertising, marketing, promoting, offering for sale, or sale of vacation travel packages, defendants have failed to disclose, in a clear and conspicuous manner before consumers pay for the vacation travel package, all material restrictions, limitations or conditions to purchase, receive, or use the goods or services that are the subject of the sales offer. Defendants have thereby violated Section 310.3(a)(1)(ii) of the Telemarketing Sales Rule, 16 C.F.R.  310.3(a)(1)(ii).

COUNT V

33. In numerous instances, in connection with the advertising, marketing, promoting, offering for sale, or sale of vacation travel packages, defendants have failed to disclose, in a clear and conspicuous manner before consumers pay for the vacation travel package, the total costs to purchase, receive, or use any goods or services that are the subject of the sales offer. Defendants have thereby violated Section 310.3(a)(1)(i) of the Telemarketing Sales Rule, 16 C.F.R.  310.3(a)(1)(i).

COUNT VI

34. In numerous instances, in connection with the advertising, marketing, promoting, offering for sale, or sale of vacation travel packages, defendants have failed to disclose, in a clear and conspicuous manner before consumers pay for the vacation travel package, all material terms and conditions of their cancellation or refund policy when making a representation about such policy. Defendants have thereby violated Section 310.3(a)(1)(iii) of the Telemarketing Sales Rule, 16 C.F.R.  310.3(a)(1)(iii).

CONSUMER INJURY

35. Consumers throughout the United States have suffered, and continue to suffer, substantial monetary loss as a result of defendants' unlawful acts and practices. In addition, defendants have been unjustly enriched as a result of their unlawful acts and practices. Absent injunctive relief, defendants are likely to continue to injure consumers, reap unjust enrichment, and harm the public.

THIS COURT'S POWER TO GRANT RELIEF

36. Section 13(b) of the FTC Act, 15 U.S.C.  53(b), authorizes this Court to issue a permanent injunction against defendants' violations of the FTC Act and, in the exercise of its equitable jurisdiction, to order such ancillary relief as consumer redress, rescission, restitution and disgorgement of profits resulting from defendants' unlawful acts or practices, and other remedial measures.

37. Section 19 of the FTC Act, 15 U.S.C.  57b, and Section 6(b) of the Telemarketing Act, 15 U.S.C.  6105(b), authorize this Court to grant such relief as the Court finds necessary to redress injury to consumers or other persons resulting from defendants' violations of the Telemarketing Sales Rule, including the rescission and reformation of contracts and the refund of money.

38. This Court, in the exercise of its equitable jurisdiction, may award other ancillary relief to remedy injury caused by defendants' law violations.

PRAYER FOR RELIEF

WHEREFORE, plaintiff Federal Trade Commission, pursuant to Sections 13(b) and 19 of the FTC Act, 15 U.S.C.   53(b) and 57b, Section 6(b) of the Telemarketing Act, 15 U.S.C. 6105(b), and the Court's own equitable powers, requests that the Court:

1. Permanently enjoin defendants from violating the FTC Act and the Telemarketing Sales Rule, as alleged herein;

2. Award such relief as the Court finds necessary to redress injury to consumers resulting from defendants' violations of the FTC Act and the Telemarketing Sales Rule, including, but not limited to, rescission or reformation of contracts, restitution, refund of monies paid, and disgorgement of ill-gotten monies; and

3. Award plaintiff the costs of bringing this action, as well as such other additional relief as the Court may determine to be just and proper.

Respectfully Submitted,

William E. Kovacic
General Counsel

Gary D. Kennedy
Trial Counsel
Oklahoma Bar No. 4961

Susan E. Arthur
Texas Bar No. 01365300

Attorneys for Plaintiff

Federal Trade Commission
Suite 2150, 1999 Bryan Street
Dallas, Texas 75201
(214) 979-9379 (Kennedy)
(214) 979-9370 (Arthur)
(214) 953-3079 (Facsimile)