FTC Halts Telemarketing Vacation Scam

Companies that used celebrities, including Robin Leach, to tout luxury vacations in tropical settings, have been charged by the Federal Trade Commission with operating a telemarketing scam in violation of federal law.

According to the FTC, Commonwealth Marketing Group Inc., Great Escape Vacations & Tours and their principals deceptively marketed and sold vacation packages throughout the United States, Canada and abroad.

Consumers were promised resort accommodations and a luxury cruise for a small promotional fee. Those consumers who took the trip found it was not the world class vacation they were led to expect. Other consumers, faced with restrictions and extra costs, canceled their plans and lost their initial payment of as much as $600, according to the FTC.

At the request of the FTC, a US District Court has frozen the assets of Commonwealth, Great Escape, Frederick F. Zeigler, III and Robert E. Kane, appointed a receiver to oversee their businesses and temporarily halted the deceptive business practices, pending trial.

According to the FTC's complaint filed in federal court, the defendants operated their scam through a network of telemarketing boiler rooms. The FTC alleged that the Hopwood, PA-based businesses urged consumers at local fairs and trade shows to register for a “dream vacation.” Their names were passed along to third-party telemarketers, who called the consumers and led them to believe they had won a vacation. Other victims were sent mail solicitations saying they could receive a “fantasy cruise holiday” by calling an 800 telephone number.

Once the telemarketers got the consumers on the line, they described an exciting vacation in Florida, including a luxury cruise to the Bahamas, for which the consumer could register for $598 or less, the FTC alleges. The telemarketers urged the consumers to provide credit card information immediately with lines such as, “This is a limited promotion based on availability.” After their credit information was verified, the consumer learned that there would be additional charges of hundreds of dollars for “port reservation processing fees” and that the vacation package was “nonrefundable.”

According to the FTC, the initial fee of as much as $598 went to the defendants and the telemarketers, and the “port reservation processing fees” paid for the accommodations and cruise.

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