Whispers
Online Magazine for Women
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Travel Scams by Ann Shulman and Stephen
Colwell
authors of Trouble-Free Travel
Each year, fraud costs American consumers over $100 billion. One out of every seven cases of fraud involves travel, with most travel scams being carried out over the telephone or by mail. Travel fraud knows no socioeconomic boundaries--scam artists ply their wares in every travel market. This section describes some common travel scams to help you avoid becoming part of these grim statistics.
Are there any general rules to follow to avoid being the victim of a travel scam?
As with most things in life, if the offer sounds too good to be true, it probably is. That being said, here are some signs to watch out for:
- The solicitation says that you were "specially selected" or "awarded" a trip or prize, but you haven't entered any contest.
- You must make a payment to collect your prize.
- The salesperson uses high pressure sales tactics or insists on an immediate decision.
- You must disclose your income, Social Security number, bank account number or other private information.
- The company offers great bargains, but refuses to put the details in writing unless you pay first.
- The salesperson makes vague references to "all major airlines" or "all major hotels," without saying which ones you will use.
- You must wait more than 60 days before taking the trip or receiving the prize. (Most scam victims pay for their "prize" on their credit card; scam artists know that you must dispute any credit card charge within 60 days. If they force you to wait more than 60 days, you can't challenge the charge.)
- The caller asks for your credit card number over the phone.
- The company requests a direct bank deposit or certified check, or offers to send a courier to your home to pick up your check.
- The deal cannot be booked through a travel agent.
- You must call a 900 number.
- The company cannot provide the names of references, or the references you call repeat nearly verbatim the claims of the travel provider.
Use a Credit Card Whenever Possible
Although using a credit card is not a surefire way to protect yourself, if you act quickly, you can dispute the charge and avoid paying for a scam. The Fair Credit Billing Act gives you 60 days from the date you receive your bill-not the date of your travel-to contest a charge. Some credit cards offer more extended coverage; a few even give members up to a year to contest a charge.
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Some of my daughter's college friends lost money when they signed up for a trip that was canceled at the last minute. How can my daughter avoid becoming the next victim?
Many fly-by-night travel operations pitch specifically to students through telemarketing and other hard-sell tactics, hoping to take advantage of inexperienced travelers on a tight budget who are looking to save money.
Students should find out whether the tour company meets the standards set by the Council on Standards for International Educational Travel (CSIET). To qualify, tour operators must submit a review signed by an independent certified public accountant as well as extensive documentation concerning government regulations for student exchanges, promotions and student insurance. The Advisory List of International Educational Travel and Exchange Programs, an annually-updated booklet listing companies that meet the standards, is available from CSIET, 3 Loudoun Street, SE, Leesburg, VA 22075, 703-739-9050. Be sure to call first for price information.
We just returned from Hawaii, where we were constantly solicited to buy a timeshare. Are these deals as good as they sound?
Probably not. An estimated 94% of all timeshare owners never intended to buy in the first place; they are swept away by high pressure sales pitches and cleverly disguised promotions.
The idea behind a timeshare is simple: for a one-time price plus an annual maintenance fee, you can buy the right to use a given vacation property for a certain amount of time (typically one week) each year. What you may not be told is the extent to which the annual maintenance fee will increase over time-one timeshare owner in Hawaii saw her annual maintenance fees climb 76% in six years. Timeshare operators also may force owners to pay unexpected special assessment fees, sometimes as high as $1,000. While a timeshare has the potential to be a satisfactory arrangement, it often yields a variety of pitfalls and frustrations for the unwary purchaser.
A Typical Timeshare Sales Pitch
A new camera, a half-price parasail ride, a free day's rental car, a free gourmet meal-you name it; timeshare salespeople have offered it. Many timeshare developers lure tourists to sales presentations by selling tours and activities at highly discounted prices, but provide only vague disclosure of what is required to qualify for the discount deal.
In the usual scenario, the catch for the gift is that you must sit through a presentation about a timeshare vacation property. The presentations vary, but most include high-pressure sales pitches that drone on for hours and leave visitors desperate to get out. Timeshare salespeople frequently go over the advertised time allotted for their presentation and are not responsive if you complain. They sometimes refuse to give the promised gift or discount if you don't buy. Although it may be illegal to not give you the gift or discount, few consumers complain--they just want out.
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I've been told that I shouldn't by a timeshare because it will be hard to sell it later. Is this true?
Very likely, yes. Timeshare owners face a couple of traps when they try to sell. The first hurdle is the lack of a strong resale market. Although statistics vary, all studies show that there are many more timeshare owners wanting to sell than there are buyers.
Another problem is the likelihood that you will lose money on the sale of a timeshare. The original price of a timeshare may have included premiums of up to 40% to cover sales costs. As a result, a resale will yield as little as 60% of the original purchase price-plus you will have to pay a commission to the broker (often as high as 20%) who sells the property for you.
Is it possible to get out of a timeshare after signing a contract?
Maybe. Thirty states have cooling-off laws; these let you get out of a timeshare contract if you act within a few days after signing (three to ten, depending on the state). If there is no cooling-off period, or you change your mind after the time has passed, your only recourse may be a formal lawsuit. Timeshare sellers are accustomed to handling claims from unhappy buyers and are unlikely to refund your money unless forced to do so.
Suing a Timeshare Operator
There are several types of claims you might bring against a slippery timeshare seller. The first, breach of contract, involves promises explicitly made and set forth in the sales agreements. If the size, location, condition or some other important fact about the timeshare is materially different from what you agreed to in the sales contract, you may have a basis for claiming breach of the contract. But beware: These contracts are carefully drawn up by the timeshare sellers' attorneys and are likely to cover almost any contingency--scrutinize carefully before signing.
You may also bring claims based on tactics used and promises made before you agreed to purchase your timeshare. These claims may be covered under state laws prohibiting unfair business practices or those designed to prevent fraudulent inducement. In both cases, the idea is that the seller used unfair sales tactics or lies to get you to buy the timeshare. You will have to show:
- what the seller said or did
- why it was misleading
- that you wouldn't have bought the timeshare if the seller hadn't used the misleading tactics or promises, and
- that you suffered some monetary loss because of the purchase.
Timeshare sales contracts usually include clauses that disclaim any promises made during the sales pitch. The contract you sign will ask you to agree that you are making the purchase only on the basis of the representations in that contract. Prospective purchasers who notice differences between what is in the contract and what was promised by the salesperson are likely to be told that the contract is only "legal jargon." This is not true. If a timeshare salesperson will not put a promise in writing, don't go through with the sale. You will be forced to argue afterwards that you relied on that promise, even though you signed a contract that explicitly says you did not rely on any promises.
If you are the victim of a timeshare scam, you can ask for two things. First, you can ask to rescind the contract. You would get your money back, and the seller would regain title to the timeshare. If the seller (or court) refuses this, you must prove monetary damages, the largest of which is the difference between the amount you paid for the timeshare and its actual value. As you can imagine, it can be quite difficult to determine the actual value of a timeshare, although the amount you could obtain by reselling it is one possible indicator.
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I received a vacation certificate in the mail. How can I figure out if it's legitimate?
First, review the tips at the beginning of this section. Then, if you note any of the following on a travel certificate, treat it with maximum skepticism and send it to the recycling bin:
- Words such as Certificate of Guarantee and a spread-winged eagle or other prominent symbol designed to convey a sense of legitimacy.
- A variety of possible vacation destinations, with no designated dates or price.
- Exciting descriptions of what you will do, such as gala cruise, glittering casino action, moonlight dancing or resort accommodations with no designated company names.
- A phrase in the fine print indicating you were chosen "using credit and purchasing criteria to select individuals interested in the many benefits of travel.
- Fine print language stating that the receipt of one portion of the offer (for example, the airline ticket) is dependent on purchase of something else (such as hotel accommodations).
Where to Report a Travel Scam
If you are the victim of any kind of travel scam, contact one or more of the following agencies or associations:
State and Local Government Agencies
- State consumer protection office. See the list of state agencies in the Purchasing Goods and Services section of this Consumer site.
- Local prosecutor. Call the nearest district attorney or state attorney general's office and ask whether there is a consumer fraud division.
- State licensing board. Some states are starting to license travel providers. Ask your state attorney general if travel providers are licensed in your state.
Federal Government Agencies
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National Fraud Information Center. NFIC can help you file a complaint with the appropriate federal agency, give you tips on how to avoid becoming the victim of a scam or send you consumer publications. You can reach NFIC as follows: 800-876-7060 (voice), 202-835-0767 (fax), 202-347-3189 (electronic bulletin board), 202-737-5084 (TTD), nfic@internet.mci.com (e-mail) or http://www.fraud.org. Or you can write to NFIC, 1701 K Street, NW, Suite 1200, Washington, D.C. 20006.
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Federal Trade Commission. Although the FTC generally does not intervene in individual consumer disputes, any information you provide might lead to an FTC investigation. Also, the FTC has free consumer publications that could be helpful before or after you travel, including Car Rental Guide, 900 Numbers, Telemarketing Travel Fraud, Timeshare Resales and Timeshare Tips. Contact the FTC, 6th and Pennsylvania Avenue, NW, Washington, DC 20580; 202-326-2222 (voice); 202-326-2050 (fax); http://www.ftc.gov.
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Department of Transportation (DOT) Consumer Affairs Office. DOT's Fly Rights guide contains information on federal regulations regarding delays, bankruptcy protection, overbooking, smoking and refunds. Copies cost $1.75 each and can be ordered by sending a check or money order to Superintendent of Documents, Consumer Information Center, Department 133-B, Pueblo, CO 81009. You can also register a complaint about an airline with DOT's Office of Consumer Affairs, 400 Seventh Street, SW, Room 10405, Washington, DC 20590; 202-366-2220 (voice), 202-755-7687 (TDD). DOT's website has additional helpful information at http://www.dot.gov.
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Federal Communications Commission. If you were defrauded by a telemarketer or phone solicitor, or sucked in when a travel service provider aired a fraudulent ad on radio or television, contact the FCC, Office of Complaints, 1919 M Street, NW, Washington, DC 20554; 202-418-0200 (voice); 202-418-0232 (fax) http://www.fcc.gov.
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U.S. Postal Service. If you were cheated by anyone who used the U.S. mail, contact a postal inspector. Look in the government listing of your telephone book white pages for the local address or contact the federal office, USPS, Inspection Services, 475 L'Enfant Plaza, SW, Washington, DC 20260; 800-654-8896 (voice); 202-268-4563 (fax); http://www.usps.gov.
Private Industry
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American Society of Travel Agents (ASTA). If you have a complaint concerning an ASTA member, contact ASTA, 1101 King Street, Suite 200, Alexandria, VA 22314; 703-739-2782 (voice); 703-684-8319 (fax); http://www.astanet.com. You can also request a free copy of Avoiding Travel Problems.
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United States Tour Operators Association (USTOA). If you have a complaint concerning a USTOA member or a question about USTOA's consumer protection plan, contact USTOA, 342 Madison Avenue, Suite 1522, New York, NY 10173; 212-599-6599 (voice); 212-599-6744 (fax); http://www.ustoa.com.
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Better Business Bureau (BBB). You can provide a public service to other travelers by filing a complaint with all offices of the BBB where the scammer operates. In addition, the National Council of Better Business Bureaus operates a nationwide system for settling consumer disputes through mediation and arbitration. So, if you can find the company, you might be able to get some recourse through a BBB. BBB's online site is http://www.bbb.org.
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How can I find out if a cheap airfare offered by a charter airline is legitimate?
Although many charter companies provide legitimate low-cost travel options, their reliability is far from uniform. Over the past few years, many charter operations have collapsed, leaving consumers in the lurch--and some that are still in business pose financial risks for current customers.
The Department of Transportation (DOT) regulates the manner in which charter operators must handle consumer funds. Among other things, the regulations require charter operators to post a bond or deposit consumer funds in an escrow account. Nonetheless, charter operators have found ways to shirk the rules; they may fail to deposit passenger funds into escrow accounts or divert funds that have already been deposited.
DOT regulations require sellers of charter flights to file a prospectus with the DOT, explaining how their business is organized. To find out whether a low-fare carrier has at least done this, call DOT's Consumer Affairs Office at 202-366-5957 and ask for the carrier's prospectus number.
How can I tell whether a deeply discounted airfare is legitimate?
Deceptive airline advertising is so frequent that you may have already learned to read between the lines and scan the fine print to get the real picture. If you are not so savvy, watch out for the following:
Deceptive two-for-one offers. The airline promises two tickets for the price of one, but then requires you to buy a ticket in a class that costs the same, if not more, than two tickets at some other published fare.
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Misleading discounts. Some airfare promotions advertise drastic price reductions on airfares without specifying the base fare from which the discounts are calculated. Furthermore, airlines usually advertise ticket prices at half their true cost. The fine print explains that the fare is "each way, based on round-trip purchase," despite the fact that you cannot buy a one-way ticket at the price shown.
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Phantom sale seats. The classic airline bait-and-switch tactic is to promote low airfares for a given route and then fail to disclose the strict limitations on the availability of seats. The airline may try to sell you a higher-priced seat or may offer a reasonable number of low-fare seats for the first few days of the promotion, and then retract the seats for the duration of the ad campaign.
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Frequent flyer deceptions. Airlines continue to severely limit the number of seats that they allocate to frequent flyers, especially for business and first class seats. As a result, frequent flyer customers may have a difficult time getting the seats they've earned.
Copyright © Nolo Press
Ann R. Shulman
Constantly on the road as an international mediator, facilitator and
trainer with Interaction Associate, Ann Shulman, the co-author of
Trouble-Free Travel, has developed a specialty in travel and tourism
dispute resolution. Believing that people should be able to resolve many
of their disputes without resorting to lawyers and litigation, Shulman
founded Tourism Solutions and is director of the Travel and Tourism
Dispute Resolution at George Washington University, which promotes the
cooperative resolution of travel disputes. Shulman received her bachelor's
degree in psychology from Duke University, a law degree from Boalt Hall
School of Law at the University of California, Berkeley, and a master's
degree in International law from the European University Institute in
Florence, Italy and is certified in mediation and facilitation.
Stephen D. Colwell
An attorney specializing in travel and tourism law, avid traveler, and
author of Trouble-Free Travel, Stephen Colwell has a passion for travel.
In addition to being the Director of CORAL--The Coral Reef Alliance which
uses the power of tourism to help protect coral reefs around the world,
Colwell sits as the North America Chair for the International Forum of
Travel and Tourism Advocates and serves on the California State Commission
for Tourism Education, as well as the Travel Agent Arbiter's Appellate
Panel. He holds an undergraduate degree from the Woodrow Wilson School of
Public and International Affairs at Princeton University and graduate
degrees from Boalt Hall School of Law at the University of California,
Berkeley and George Washington University in Tourism Administration.
Nolo Press
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www.nolo.com.
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