FTC and State Sue 20 Travel Firms Over Alleged Fraud
Warning that consumers are losing billions of dollars a year to travel scams, federal and state authorities said Thursday that they are suing 20 companies nationwide--including two Irvine operations--as part of a crackdown on travel marketing networks and do-it-yourself come-ons.
The Federal Trade Commission, a dozen states and two California counties--Ventura and Napa--filed 36 lawsuits against the companies and their operators, asserting that the businesses are deceiving and misleading consumers.
Promises of low-cost travel and upgraded accommodations either never materialized or, as in one advertised “cruise,” amounted to little more than ferry rides and vermin-infested hotels, the authorities contend.
In two cases, criminal charges were filed against operators in Massachusetts and Louisiana.
“Travel fraud comes in many more packages than it used to, and it can turn a much-anticipated dream vacation into a frustrating and expensive nightmare,” Eileen Harrington, an FTC consumer protection official, told travel agents in Los Angeles on Thursday at a national conference on travel fraud.
“The scams we see range from the run-of-the-mill vacation certificate telemarketers and timeshare resellers,” she said, “to emerging variations of travel fraud involving flights pitched to immigrants and a new type of scam called the travel agent ‘credential mill.’ ”
Outside the Westin Bonaventure Hotel in Los Angeles where Harrington spoke, about 50 protesters carried placards and picket signs complaining about the actions of the FTC and the American Society of Travel Agents, the primary industry group that has pushed for a crackdown.
The protesters, members of various travel networks whose livelihood depends on the sales of travel products and bookings, charged that the FTC and ASTA were more interested in protecting the turf of traditional travel agents than in rooting out scam artists.
“This is about the old line trying to keep new people out of the industry,” said Ben Cane of Newport Beach. “They are scared to death of the competition.”
ASTA’s president, Michael Spinelli, scoffed at such assertions. “We’re talking about a total misrepresentation of the product,” he said, calling card [credential] mills “a breach of integrity in our industry.”
Already seized and shut down under the FTC’s Operation Trip Up is World Class Network in Irvine, which is now under the control of a court-appointed receiver. The FTC and the state attorney general’s office won court orders keeping the multitiered marketing operation closed and freezing the assets of its owners and operators.
On Thursday, state prosecutors sued a similar Irvine multitiered marketing network. They charge that Nu-Concepts in Travel Inc. and its Jetaway Travel Corp. ticketing subsidiary are violating state business laws and are operating an illegal “endless-chain scheme.”
“An endless-chain scheme is where you pay money for the opportunity to make money by bringing other people into the scheme,” said Susan Henrichsen, a deputy state attorney general.
