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Alleged Vacation Travel Scam [08/08/2001]

August 8, 2001

In an action brought against a company that target-marketed its travel packages primarily through unsolicited faxes, the Federal Trade Commission today announced a settlement that will bar Resorts Exchange International of America, Inc. (REIA) of Orlando, Florida and its owner from similar actions in the future. The Commission's complaint, which alleges violations of the FTC Act and Telemarketing Sales Rule (TSR), was brought as part of Operation Travel Unravel, a 2000 joint federal and state law enforcement sweep that resulted in 85 actions against companies and individuals allegedly involved in vacation travel fraud.

According to the Commission's complaint, since at least 1999, REIA (which also did business as Players Exchange) and its owner Anthony A. Arrigoni, have deceived consumers throughout the United States by deceptively marketing travel packages. Using in-house sales personnel and a number of third-party boiler rooms throughout Florida, the FTC contends, REIA contacted consumers by sending unsolicited faxes to their workplace promoting travel packages at a deeply discounted rate. The faxes, which were addressed to "All Current Employees," typically said that the "wholesale travel department" was releasing reduced-price, corporate closeout discount vacations.

In many cases, consumers who received the faxes at work believed either that they were sent from the travel division of their company or were approved or sponsored by their employer, the FTC alleged. The packages promoted typically included a number of nights in destinations such as Orlando, Cancun and Hawaii, as well as a "complimentary" Carnival Line cruise. Customers were invited to call a toll-free line to purchase the vacations for $349 per person. When they called the number, they were told that REIA would charge them an additional $149 per person to book each package.

The FTC's complaint states that during the initial sales presentation, the defendants misrepresented the material terms of their refund and cancellation policies, at times telling consumers that they could cancel their payment in the future if they wanted to. However, when customers did call to attempt to cancel, they were told that they had no right to do so.

After consumers bought the packages, REIA sent them written confirmation material containing ads, information about the locations they were to visit and travel documents that required them to send "reservation" forms to the company either 60 or 90 days before they wanted to travel. Often, when consumers read the fine print in the confirmation materials or began to schedule their trips, they learned for the first time that the company had misrepresented the total cost of the package, as well as other material terms and conditions.

For example, consumers were routinely required to pay additional fees and upgrade charges to book their trips. Accommodations were seldom available at the "discount" prices quoted in the original solicitation, and it was up to the consumer to pay the difference. In addition, consumers who wanted to take the Carnival cruise were typically told that they had to pay $500 or more for a cabin upgrade for the purportedly "free" cruise. If the consumers did not pay for the upgrades, the company was allegedly unwilling to make their reservations, according to the Commission.

Under the terms of the stipulated final judgment, the defendants will be permanently barred from violating both the FTC Act and the TSR. In addition, the stipulated judgment requires the defendants to post a $400,000 performance bond prior to engaging in telemarketing or the sale of travel-related products. The judgment also provides for a $4 million suspended judgment that can be reinstated if the defendants are found to have misrepresented their financial situations.

The Commission vote authorizing staff to file the consent in settlement of the court action was 5-0. The stipulated final judgment was filed in the United States District Court for the Middle District of Florida, in Orlando, on August 8, 2001.

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