FTC Shuts Down Orange County Travel Company
The Federal Trade Commission, armed with a federal court order, has shut down a fast-growing Orange County travel company on complaints that it used deceptive tactics to sell training kits to would-be travel agents.
Without notice, the FTC closed World Class Network in Irvine and its World Class Travel affiliate in Calabasas on Monday and Tuesday, freezing the assets of its five owners, putting 180 employees out of work and halting countless travel bookings midstream for about 25,000 mostly part-time agents nationwide.
More than 200 agent-customers, from a minister in Bakersfield to a grocery store clerk in Riverside, rallied on Tuesday in front of World Class Network’s corporate offices in Irvine and vowed to fight the government for return of the company.
In addition, lawyers for the company argued in U.S. District Court in Santa Ana late Tuesday that the FTC was endangering the livelihoods of thousands of customers and timing its takeover to crush a three-day annual conference that starts Thursday in San Francisco.
“The conference is a critical part of the company’s support,” said Brenda Taylor, a Fountain Valley mother of two whose only job was booking travel and training other agents.
World Class Network is part of a fast-growing, do-it-yourself movement that is sweeping the travel industry and changing the way tickets, cruises and hotel rooms are sold.
Scores of new companies nationwide are now offering consumers the chance to earn extra money and industry perks by becoming independent, at-home travel sales representatives, often referred to in the industry as “outside” travel agents.
But many in the industry have been pressing for a crackdown on certain operations that provide little more than laminated travel agent ID cards along with exaggerated claims about discounts and perks that come with the cards.
The FTC, in a two-count civil complaint, accused World Class Network and its affiliate of failing to deliver on promises that customers could receive discounts and upgrades on their own travel accommodations. The federal agency also alleged that the company had falsely promised that customers would have sufficient training and support to operate their own in-house travel agencies.
The FTC is seeking court orders rescinding the operations’ contracts, refunding monies paid and returning “unlawfully obtained profits.”
Employees said FTC agents marched into corporate headquarters Monday, where they ordered them to stop working, herded them into one area and then sent them home and changed the locks.
In little more than two years, World Class Network built itself into a powerhouse nationally, said Scott R. Warren, a lawyer for the company, and several top agents. With kits sold to about 50,000 customers nationwide--about half of whom are active--the company is booking up to $700,000 worth of business a day, Warren said.
The asset freeze was ordered on the companies and its owners and operators, Daniel R. and Denise L. Dimacale, Robert C.K. Lee, Howard K. Cooper and Jerome L. Goldberg.
The Dimacales own World Class Network, Lee is the chief financial officer and Cooper was hired seven months ago as president. Goldberg and World Class Network each own half of World Class Travel, which handles ticketing.
