State probing complaints about travel club

Article Courtesy of The Sun Sentinel

By Ron Hurtibise

Published December 29, 2014


Barbara and Julius Glassman, snowbirds who divide their time between South Florida and Poughkeepsie, N.Y., were looking forward to spending time with their grandchildren when they paid $5,000 to join a travel club they knew as Global Paradise Outlet..

It was a decision the couple and 19 others who filed formal complaints against the company would soon regret — but not soon enough to be allowed to cancel their memberships and get their money back.

The Glassmans and others contend that the travel club's sales representatives persuaded them to spend thousands of dollars upfront for access to deep discounts on a wide range of travel products such as hotels, cruises and airfares, then refused refund requests after the members complained that the types of discounts they thought they would get were not actually available.

Officials of the state Department of Agriculture and Consumer Services say they are investigating whether the club's practices violate state laws.

They say the state cannot force the company to refund money because customers signed contracts. But investigators want to know to whether the company's salespeople falsely claim that "travel club" membership entitles customers to deep discounts that they cannot get themselves on the open market. The company's purchase agreements stipulate only that customers have the right to request condominium rentals along with unspecified "rights and benefits" of club membership.

The state also is investigating whether the company is properly registered with the state as a "seller of travel" under all of the names it has used when entering into contracts with customers.

The company has operated on the third floor of the Beach Place retail complex in the Fort Lauderdale's beachfront area since 2012 under multiple names. It is the subject of 23 complaints to the Better Business Bureau and 20 complaints to the Department of Agriculture and Consumer Services over three years.

According to complaints:

Five customers said the types of discounts promised by salesmen were not available when they requested quotes trips through the club's booking agency. Seven customers said they didn't receive credentials to access the travel club's website and browse the discount offerings until after the three-day period to cancel their membership — and get their money back — had expired.

Except for condominiums, prices displayed in searches on the club's website differed little from prices available from online travel agencies such as or through airlines and hotels that don't require a membership fee.

Other public records show:

• The owner paid an administrative fine for circumventing the state's Do Not Call list with automated travel marketing calls that respondents were told were political polls.

Since 2012, the company has operated under seven names at various times: Global Paradise Outlet, Wholesale Rewards, Top Travel USA, Club Travellooga, Compass Travel, Paradise Plus and, most recently, Travel Request.

During a sales presentation in February, one of the club's salesmen told the Glassmans that a club membership would entitle them to discounts on Club Med vacations they wanted to buy as a treat for their 27-member extended family, Barbara Glassman said in an interview.

"We thought the savings on Club Med would pay for the membership," Glassman said. But it turned out the travel agency associated with the travel club couldn't secure a better Club Med price than what the Glassmans could get on their own, she said.

In its sales presentations, the company promotes its ability to deliver discounts on a variety of travel products and services, several of the complaints state. Affixed to the business' front window is a list that reads: "Condos, Hotels, Cruises, Flights, Car Rentals, and More."

"They say they sell travel," Mrs. Glassman said. "The first thing they tell you is they're not timeshare sales."

No response from owner

Contacted by telephone in late November and asked to discuss the complaints about his travel clubs, Richard T. Franken, identified in state records as the only corporate officer of Travellooga LLC, contradicted statements that new members were not given access to the clubs' websites until after their cancellation periods lapsed. Every new member gets a user name and password to access the site the day after he or she joins, Franken said.

Yet that statement is contradicted in a letter to the state by one of Franken's representatives, who wrote that members get their user name and password within three to five days after joining. And a long list of "Acknowledgements" that new members are told to initial as part of their contract includes the statement that they will receive their username and password within seven days.

In two responses to complaints about delays in getting logon information, travel club representatives wrote that even if members did not have access to the website offerings within those first three business days, they were able to call the club's booking agency, Member Services Group, to start requesting rates and making reservations.

Franken took the names of customers who filed complaints and said he would be willing to discuss their cases in an interview with the Sun Sentinel a few days later. He also agreed to provide names and contact information of customers who were satisfied with their travel club memberships.

Reached Nov. 26, Franken directed a reporter to instead speak with his attorney, Josh Entin.

An email to Entin, sent on Nov. 26, requested that he ask Franken: What does the travel club offer that's worth $3,000 to $10,000 upfront? How do members recoup this investment? If he stands behind the quality and value of the travel club product, why is the cancellation/refund period so short?

Entin said he would forward the Sun Sentinel's findings and questions to Franken. In an email Dec. 2, Entin wrote that Franken would be prepared to respond by Dec. 10. Through Friday, despite two follow-up requests to Entin, Franken has not forwarded any further response.

Members seek refunds

Of 19 customers who filed complaints after asking to cancel their memberships and get their money back, refunds have been given in three cases to date, records show.

The complaints describe a similar pattern of business:

While in the city's beachfront resort area, customers were approached by field marketers and offered a vacation "gift" for attending a resort presentation. Later, they said, they found that fees required to redeem the "gift" rivaled the actual cost of the vacation package if purchased elsewhere.

Inside, a salesman presented a slide show featuring attractive vacation resorts and explained that the club is connected to a wholesaler who buys in bulk and provides deep discounts exclusively to members.

Then the conversations turned to whether the customers have any upcoming travel plans.

On Dec. 27, 2012, Alan and Judy Feigelson of Commack, N.Y., asked their salesman how much he could save them and told him the exact cabin, ship and dates of an upcoming cruise. "We were quoted a savings of more than $800 per person," they wrote in their complaint to the state.

Jo Knox wrote that on Jan. 23, 2013, she "was given multiple examples of great deals such as a six-night Ireland vacation, including airfare and rental car, for $549.00 or an eight-day Carnival Cruise for $245."

On April 10, 2013, Michael Labaton and his wife told their salesman Randy Bates about an upcoming flight to Italy and a cruise from that country. Bates said that by joining the club, the Labatons could get the trip for $2,100 per person.

A few days after the Labatons spent $2,548 to join, the club's booking agency told them their package would cost $5,894 per person — "almost triple the price represented by Randy Bates," their complaint states. The Labatons were among the three members who complained to the state who were given refunds and allowed to cancel their memberships.

In 10 complaints filed with the state, customers described calling the company and requesting cancellation of their memberships and refunds of their signup fees. Those requests weren't granted because the requests were made after the three-day cancellation period. Customers' failure to cancel within the three-day period was cited by the company in 11 of 18 responses to complaints filed with the state.

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Responding to one member's complaint, Franken wrote that the only reason the woman was not satisfied with the membership "is a mere fact of 'buyer's remorse.' "

Most complaints from seniors

In an interview, Barbara Glassman described her contacts with the travel club after the couple returned to their Poughkeepsie home last spring.

Glassman said she contacted the club's travel booking service and requested a price quote on the Club Med trip they discussed with the sales staff.

They found out the discounts they were told about weren't available, and the three days they had to cancel their membership was several days past. Glassman said she made numerous phone calls to the company and left voice mail messages asking for a refund of their membership fee, saying the couple felt the club wasn't what was represented.

The Glassmans concluded they'd been scammed. They're embarrassed about it. "Our children are becoming worried about us," Glassman said. "They think we're getting senile."

Twelve of the 20 complaints were from people who described themselves as older or checked a box stating they were over 55.

Lowell and Betty Zoller of Hampton Cove, Ala., who paid $2,995, wrote that "sales personnel assured us" in a July pitch that the club could secure reduced prices for their preferred vacations with the Road Scholar (formerly Elderhostel) program. After the couple joined the club, "the ladies at the reservation department checked, but found that we could not benefit on Road Scholar travel and that there were few assets at locations on our 'bucket list,' " they wrote.

Darlene Shannon of Parma, Ohio, who paid $4,798, wrote, "We have tried to get the travel deals they showed us during their presentation, and there are no such deals and the free seven-day cruise they gave us is not free either." In a later letter, she wrote, "We are an older couple probably a little backward and naοve and I guess you could add stupid. We actually believed what they told us and what we saw on their slide presentation, and it was all a lie."

Jo Knox of Hoover, Ala., wrote, "I can get better deals through my local travel agency and travel when I want to at prices I can afford. It is really a ripoff if you do not have much money to spend. I can go on several cruises for $3,000."

Disclaimers on the travel search site suggest the companies are aware of complaints that prices for most forms of travel are similar to those available on the open market.

When a member logs on, they first encounter a pop-up screen essentially telling them not to believe any of the prices they find listed on the site.

It states: "Because our 'Member Only' rates are lower than the supplier's "minimum advertised price," it is necessary for our members to call for quotes on all package vacations and cruise (sic) to be assured of our 'Member Only' prices."

But the site also shows Instant Booking prices for weeklong stays at condos that are as low as a third of the comparative "retail" price shown in an adjacent column.

For example, a one-bedroom, one-week stay at the Wyndham Palm-Aire in Pompano Beach starting April 25 is shown at $2117 retail and $719 for travel club members. An search for the Wyndham Palm-Aire comes up at $250 a night, for a total of $1945.35 with taxes and fees.

'Is that fraud?'

Paul Pagano, bureau chief for mediation and enforcement at the consumer services department, said regulators are interested in claims that the travel clubs' sales staff told customers that they can deliver special discounts on such products as hotels, cruises and airfares while the purchase agreement that customers sign promises only "all rights and benefits" of club membership and the opportunity to "request up to [a negotiated number of] weeks of condominium accommodations per year."

"I'd be extremely wary if I read that after being told I could save on hotels, cruises and airfares," Pagano said. Based on the complaints, "obviously you have people being told one thing and then being sold this purchase agreement, which is very narrow." Now, he said, investigators must determine "is that fraud, and if so, can we prove that?"

The investigation also will focus, Pagano said, on whether the business is registered with the state to sell travel under all of the various names it has used over the past two years at the retail complex and whether they are represented legally on the purchase agreements. "The purchase agreement I'm looking at has Travellooga's registration number on top of it but names Paradise Plus," Pagano said. "We need to look at that."

Complaints about travel clubs are becoming more common after peaking prior to the recession, said Sasha Velez, a senior investigator in the department's Regulatory Investigations Section.

Timeshare resellers embraced the travel club concept during the early 2000s as a way around restrictions imposed on "vacation certificates" in the 1990s. In those days, vacation certificates were commonly sold or given as inducements to attend timeshare presentations, generating frequent complaints that their values were overstated and came with hidden fees.

When new laws required disclosure that vacation certificate buyers had 30 days to get refunds, timeshare resellers turned to travel clubs because, as a product regulated under contract law, sellers don't have to require even a three-day cancellation period, Pagano said. "Buyers are obligated when they sign on," Pagano said.

History of legal troubles

Franken has recently been involved in legal disputes relating to travel and timeshare marketing activities, public records show.

Franken was sued in federal court in 2010 by the online travel booking site and accused of trademark infringement and cyber-squatting for registering 19 domain names "confusingly similar" to and using those domains to market vacations that require customers to attend timeshare sales presentations. Franken settled the suit in June 2011 by agreeing to surrender the domain names and stop marketing through them.

In a 2013 investigation, the state Department of Agriculture and Consumer Services documented 71 complaints from South Florida residents against a telemarketing company Franken operated at the same Beach Place address called "We the People Speak Inc."

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The complaints accused the company of violating the state's "Do Not Call" list with a campaign of automated travel services marketing calls that were represented to respondents as political polling. In negotiating a $7,500 fine, Franken's attorney wrote that Franken sought legal advice and was told it was OK because political poll takers are allowed to phone people on the Do Not Call list.

Deliberate delays alleged

Frank Gourley of Charleston, W.V., wrote to the state that he made a good faith effort to cancel within three business days but still failed to recover his signup money.

Franken's sales team was marketing as Paradise Plus at a Fairfield Inn in Charleston, W.V., when Gourley signed up for his membership and paid $6,594 on Wednesday, July 9. After investigating the company on Thursday and Friday, the couple decided to cancel on Monday by following the contract's requirement to deliver their notice in person or by certified mail before the end of the third business day after joining.

Gourley wrote that he and his wife went back to the hotel and tried to find members of the sales team. At the front desk, they "called the room of the person in charge from Paradise Plus," Gourley wrote. "When we told him what we wanted, he refused to meet with us and told us we could not cancel the contract." When they pointed out the cancellation clause, "he hung up the phone on us." Next, the hotel desk clerk offered to call another Paradise Plus employee "who sent her husband down to meet us."

"We tried to get him to accept the cancellation letter, which he refused to do, but recommended that we mail in our notice of cancellation the next day" — a day late. "We expressed concern about waiting until then, but he assured us that it would not be a problem with the company and indicated that they did accept late cancellations from time to time, not wanting to get bad publicity," the Gourleys wrote.

They sent the letter via certified mail the following morning, July 15.

In an Oct. 10 response to the state, Franken's attorney, Josh Entin, stated that the Gourleys did not mail their cancellation notice before the deadline. In the Nov. 26 interview with the Sun Sentinel, Entin said "my client completely disputes" that the Gourleys met with any company representative at the hotel or that "any representative with the company said they could cancel after the three days."

"The three-day cancellation period is in the contract they signed," Entin said.