Attorneys general in 10 states yesterday began filing 89 lawsuits against numerous firms for allegedly using fraud and deception to sell seemingly low-cost travel packages.
The lawsuits are the latest in a series of efforts to crack down on what federal, state and local consumer protection officials said yesterday is an exploding number of vacation trips sold by telephone that have involved consumers in every state.
"I don't remember anything that's been at such epidemic proportions as this," said Susan Cohen, an investigator for the Montgomery County Office of Consumer Affairs who said she had been in touch with the attorneys general in California and Texas yesterday.
"This is the hottest new fraud plaguing Iowans right now," said Bob Brammer of the Iowa Attorney General's office. "We've had more complaints on this subject than on any other this year," said Brammer, who predicted that there could be as many as 5,000 victims in the state. He said that each one could have lost about $300 in the alleged scams.
Many of the companies that are defendants in the suits are operating in one state and using a telephone sales firm in another state to sell vacation certificates or packages, said consumer experts. As part of the packages, low fares are promised for airline tickets if the traveler will stay in certain hotels at full price or buy an additional full-fare coach airline tickets for a companion traveler.
When the companion fare turns out to be as much as four times greater than a standard supersaver fare and consumers try to get their money back, they are told that the firm that took their credit card number is only responsible for selling the package and that another agency is responsible for the tickets.
At least one of the firms that the various states have filed suit against swept the Washington area with calls last fall. World Travel Vacation Brokers, operating out of Chicago, promised trips to Hawaii if consumers purchased a $31 travel certificate -- which included two round-trip tickets but required them to purchase hotel rooms for higher-than-normal costs.
The states filing suits against the travel companies and telephone marketers are doing so under their states' deceptive trade practices and consumer fraud laws. Minnesota, Wisconsin, Iowa, Illinois, Missouri, Kansas, Nebraska, Florida, Texas and California have filed or will file suits over the next several weeks, according to state officials.
"We'd like to see a more active role on the part of the FTC," said Hubert H. Humphrey III, Minnesota's attorney general, who said the cutbacks in funding for the Federal Trade Commission at a time of deregulation in the travel industry had compounded the problem of travel fraud.
Tom Miller, attorney general of Iowa, added that while the FTC has cooperated well in areas such as computerizing telemarketing complaints, "it certainly is an area where we'd like to see more."
William MacLeod, director of the bureau of consumer protection at the FTC, said yesterday that "these cases were put together with help from the FTC, and we have been sharing information. . . .One of the things we do is to determine when it makes more sense for the FTC to act and when it makes sense for state or local law enforcement agency to act."
All the state attorneys general who are filing suits are seeking restitution for damages, civil penalties and permanent injunctions against the companies, which officials said often move from state to state.
State and local consumer protection agency officials said yesterday that they are sending consumers to credit card companies to attempt to get their money back on the vacation packages, many of which ask for a credit card number on the phone before they will send information about what is included in the plan.
"Intelligence has nothing to do with it," said Cohen of consumers who sign up for the deals. "They make you believe you're getting something so attractive."
Consumers can take specific steps to protect themselves from such telephone sales pitches, according to consumer affairs officials. Most advise that consumers never give their credit card number over the phone and never sign up for packages unless they have the information about it in writing.