Travel company's fraud case settled

© St. Petersburg Times,
published November 7, 2001

SPRINGFIELD, Va. -- Defrauded consumers stand to recover up to $5-million in a settlement of a fraud case against a Clearwater travel company accused of illegally marketing its vacation packages.

The Federal Trade Commission and the state of Virginia announced the settlement Monday of a fraud case against Med Resorts International.

The complaint alleged that Med Resorts engaged in misleading marketing practices by misrepresenting the costs and benefits of its travel club memberships.

Med Resorts, headquartered on U.S. 19, has more than 20,000 members, including about 2,000 Virginians. The company operated sales offices in Atlanta, Chicago, Philadelphia and Vienna, Va.

Randy Davis, a spokesman for the Virginia attorney general's office, said Virginia took the lead in pursuing the complaint against Med Resorts because the Vienna sales office sold the most memberships. Virginia has received more than 300 consumer complaints about Med Resorts since 1991.

"Consumers who join travel clubs should expect to receive exactly what they paid for, with no surprises and no disappointments," said Virginia Attorney General Randolph A. Beales. "This result will hopefully send that message out loud and clear."

Med Resorts has since been purchased by American Vacation Resorts Inc., also based in Clearwater. A court order requires AVR to allow Med Resorts customers to cancel up to $22-million in membership dues that the company had been slated to collect.

Barrie Berman, a lawyer representing AVR, said she did not know how many of Med Resorts' former customers have canceled their memberships.

Also, as part of the settlement, a court-appointed receiver is required to correct the credit records of consumers that Med Resorts claimed had been delinquent on membership accounts.

Med Resorts' former owner, J. George Claveau, also is required to contribute $500,000 of his personal funds into the account that will be used to reimburse consumers.

The settlement with Med Resorts is the final cases in the FTC's Operation Travel Unravel, initiated last year.

Investigations by the FTC and 19 different state agencies resulted in 85 complaints against travel companies for alleged fraud, including the failure to tell travelers they would be required to attend time-share presentations when purchasing a travel package, misleading consumers into thinking they had won a free trip and failing to disclose the actual cost of the travel packages.

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