Travel Company Ordered to Pay on FTC Complaint

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The Federal Trade Commission yesterday won its court fight against a travel company that it accused of using unsolicited fax advertising to market a vacation package that bore hidden costs to consumers.


A judge in U.S. District Court for the Middle District of Florida signed an order forcing the operators of Discovery Rental Inc. of Cocoa Beach, FL, to post a $100,000 bond and to pay consumer compensation of $125,000 before using any form of telemarketing in the promotion of vacation packages.


One of the individual operators of the company, Fereidoun Khalilian, was barred from any travel-related telemarketing and must pay an additional $185,000 for consumer compensation. He must post a $500,000 bond before engaging in telemarketing for any other types of products.


According to the FTC complaint, Discovery Rental sent unsolicited faxes to consumers at their workplace offering discounted vacation packages to Florida and the Bahamas with free round-trip airfare to Hawaii or Cancun. The package was offered for $299 per person, the FTC said.


However, in addition to $598 for two people, consumers also paid $398 for "port and service charges" and an undisclosed $78 processing fee. Also, consumers later discovered that they would not qualify for the free airline tickets unless they paid for a set number of nights at their hotel, at a cost of $150 to $300 per night for up to 11 nights, according to the complaint.


They also were required to attend time-share sales tours, of which consumers were not informed until after they arrived at their Orlando or Cocoa Beach destinations, the FTC said. Discovery Rental, which also operated as Leisure Time Marketing Inc., often failed to disclose its no-refund policy and refused all refund requests, according to the complaint.


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