The Federal Trade Commission and officials from the District and about 20 states will announce today that they are taking legal action against 25 travel agencies accused of duping customers who had booked vacation packages by collecting hundreds of thousands of dollars for services never delivered.
The allegations stem from a sting, dubbed "Operation Trip Trap," in which local law enforcement and federal and state agencies investigated complaints by travelers who purchased package tours, an increasingly popular option that for one price provides hotel accommodations, transportation and meals. The agency believes thousands of consumers lost money in deals with the targeted companies.
The FTC contends that the travel agencies, in selling packages to consumers, failed to disclose restrictions on travel, charged for services or amenities that were never delivered, and subjected consumers to inappropriate behavior, including an incident last summer in which a crew participated in a wet T-shirt contest on a charter flight.
"This is an effort to really root out the bad actors in the industry," said Jodie Bernstein, director of the Bureau of Consumer Protection at the Federal Trade Commission in Washington. She noted that travel consistently ranks among the top 10 complaint areas at the commission and that consumers in that industry are bilked out of an estimated $12 billion a year.
At a news conference this morning, the FTC will disclose the names of the companies charged in the complaints. The FTC joined officials from the District and about 20 states in filing complaints with the Department of Justice.
D.C. officials joined more than half a dozen state attorneys general in a suit filed last July that charges National Travel Services of Fort Lauderdale, Fla., with falsely telling consumers they had won $1,600 vacations and then charging them $954 a couple for the trips and requiring attendance at marketing pitches for time-share properties.
National Travel Services' attorney was not available for comment yesterday, but the company has denied the charges.
The FTC's latest investigation follows Operation Trip Up, launched in 1997, which focused on vacation frauds. The current operation, Bernstein said, was motivated in part by the growing number of college students and elderly people who have been victims of package-tour sales. Prices for package tours are lower compared with what consumers often pay when they book each component of their vacation separately.
The package-tour industry has been growing at about 10 percent annually over the past several years, generating revenue of $10 billion in 1997, according to the most recent figures from the American Society of Travel Agents. By dealing with a large volume of travelers, tour operators can purchase services at heavily discounted rates, said Dina Long, a spokeswoman for the society.
The FTC and the travel agents group stressed that most package-tour operators are not fraudulent.
"I don't think they're more troublesome than any other segment of the industry," said Stan Bosco, assistant director of consumer affairs for the society.
But FTC officials said package tours are often more susceptible to fraud because they involve several different vendors and it is easier for operators to hide costs.
Many operators the FTC investigated were involved in bait-and-switch schemes in which they would sell a tour package at one price, then add fees along the way. Consumers have become more vulnerable to too-good-to-be-true deals because of the rise in discount travel outlets, particularly on the Internet.
Charlene Kuhaupt, who lives in a suburb of Dallas, fell victim to such a scam two years ago when her son gave her and her daughter a package vacation as a gift. Kuhaupt and her daughter paid what they thought was a flat rate of $316 to cover taxes and other charges for a cruise vacation to the Bahamas. Later, Kuhaupt got a call from the tour company suggesting that she and her daughter "upgrade" to a more expensive hotel, but she declined.
Kuhaupt ultimately decided to move to the more expensive hotel after the tour operator told her that the original hotel was being renovated. She and her daughter paid $179 each for the upgrade to a room in a "better" hotel that ended up having a broken toilet. In addition, what was supposed to be four days spent sightseeing in Orlando ended up being a time-share tour.
The "cruise" to the Bahamas was anything but, Kuhaupt said, with a pool "that was a laugh."
Vicki Walker's daughter Sara, now 19, fell prey two years ago to a student travel company offering a package deal to Mexico. On the flight, the daughter were subjected to a wet T-shirt contest in which the crew participated.
"We actually thought she would be on a legitimate airline," said Vicki Walker, who admitted that she did not check the details ahead of time. "The brochure was very professional."
That is one of the problems, said Terry Trippler, a consumer travel advocate from 1travel.com, an online travel company. He said parents need to call ahead to every hotel and airline involved in a package tour to make sure they are getting what is advertised. "I get a little irritated every spring when I see this," he said.
In a separate matter, the FTC is to announce a settlement with four individuals who will be forced to pay $142,000 in consumer redress for fraudulent telemarketing practices related to package tours. They will also be required to secure $500,000 each in bonds before reentering the telemarketing business.