During desperate times, some resort to desperate measures.
In a recent crackdown on the industry, California regulators say
they have found economic strains leading some travel businesses to
use money that is required by state law to be kept in a trust fund
to keep their business afloat instead.
Others, they say, have intentionally defrauded clients out of
thousands of dollars before their businesses fail and they
“Some could have closed shop and gone out of business, but
instead they decide to go out in a blaze of glory,” said Antoine
Georges, co-owner of Happy Traveler and president of the Travel
Consumer Restitution Corp.
The TCRC is charged with overseeing the state restitution fund
used to compensate consumers who are defrauded by sellers of
travel. It recently has intensified efforts to fight travel-related
scams by requiring consumers seeking restitution to file police
“Many people who come to us don’t even go to law enforcement,”
said Georges. “They are just looking for a refund, so no one
prosecutes the people who ripped them off because no one knows
about it. We can’t get law enforcement involved unless a consumer
files a report with them.”
The strengthened enforcement effort is boosting the profile of
travel-related crimes in the state and is getting law enforcement
involved from the federal level to the state attorney general’s
office to local police.
“There’s been an increased interest in this,” said Herschel
Elkins, head of the California Attorney General’s consumer law
section. “The depressed economy has caused some travel agents to
use shortcuts or to redirect money to help their businesses. Some
travel agents who are in an economic pinch are using money for
purposes that are not allowed under state law.”
The TCRC recently released details on 13 travel sellers that
have had criminal charges filed against them this year for
allegedly violating state law.
Of those, Georges said some may not have intentionally defrauded
clients and that economic strain caused by cancellations after
Sept. 11 and global instability likely caused them to redirect
funds to make up for losses, leading to a downward spiral into
Some of the recently prosecuted include Hesderia-based A1-EZ,
whose owner pleaded guilty to charges that he booked a group on a
Carnival cruise but never forwarded the money. David Anderson of
Santa Barbara-based David Anderson Safaris also pleaded guilty to
three felony counts and is expected to be ordered to pay $193,000
Georges said three of the agencies currently being prosecuted
will have a significant impact on the restitution fund, and may
represent the future mold of travel-seller scam artists.
Georges said these are people who, rather than cheating
consumers out of low-priced items like airline tickets, are setting
their sights higher.
“It now involves a total package that includes air fare, hotel
and other accommodations,” he said, noting the amount is now around
$10,000 to $15,000 a package.
The result places a bigger demand on the fund.
“The trend in the future is that each consumer claim is going to
be more than it has in the past,” Georges said.