WASHINGTON, Feb. 23, 2000 -- The Federal Trade Commission
today announced the first court settlement resulting from a
series of travel fraud complaints brought in August of 1999
and together termed "Operation Trip Trap."
Through the Final Judgment and Order filed with the court by
Commission staff, All Around Travel Club, and its owners will
be permanently barred from misrepresenting specific claims to
consumers regarding travel clubs and credit cards, and will
be enjoined from misrepresenting any material fact concerning
their ability to perform or provide travel or credit products
or services for consumers.
The order settles charges that the defendants billed some consumers for travel club membership package charges that were never authorized. The order also settles charges that the defendants failed to deliver promised packages to consumers who had chosen to join the travel club.
According to the Commission's complaint, AATC contacted consumers
with poor or no credit histories. The consumers were told
that they could join AATC's travel club and receive the AATC
travel package and a BestBank unsecured VISA credit card.
They were further told that membership in the travel club
would cost $498, which could be paid by charging this amount
to the BestBank VISA credit card that consumers would receive
after joining the club. The credit card also had a $45 annual
fee. Consumers then were sent an authorization form to fill
out and return to AATC, along with their check for the first
monthly payment of $20, in order to receive the travel package
and credit card.
In many instances, however, consumers were billed for the AATC membership fee and the BestBank VISA credit card fee, for a total of $543, even though they had not authorized these charges and, in many instances, had expressly declined the AATC offer. In addition, many consumers who did choose to join the AATC travel club did not receive their membership packages.
Under the terms of the final order, the defendants are prohibited
from engaging in a variety of business activities, including
misrepresenting: that consumers will receive travel club membership
benefits if they join a travel club; that consumers will be
billed for a travel club membership only if they authorize
a charge to a credit card for the travel club membership fee;
and that a written authorization or application is required
for the issuance of a credit card or for the posting of a
charge to a credit card. The defendants are also prohibited
from misrepresenting any material fact concerning their ability
to perform or provide any travel or credit products or services
for consumers.
In addition, the order permanently enjoins the defendants
from selling or renting the customer lists it developed during
the alleged unlawful activity, and requires them to stop making
collections of accounts and to send notices to consumers in
certain circumstances.
Commission staff worked closely with the Federal Deposit
Insurance Corporation (FDIC) in this matter. The FDIC is currently
involved in a civil case against three of the defendants for
alleged bank fraud relating to the same business activities
as the FTC action and which allegedly resulted in the failure
of BestBank.
When BestBank failed, the FDIC took over numerous consumer
VISA credit card accounts which had been opened as a result
of the defendants' actions. The FDIC has now forgiven the
outstanding debts of all consumers who alleged fraud against
the defendants.
