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Are travel agents liable for selling bogus travel “insurance” policies?

February 9, 2009

Virginia Hamlin is upset.

A year ago she booked a Panama Canal cruise through Legendary Journeys, a travel agency based in Sarasota, Fla. At the time she was offered a $177 “travel insurance” policy through Travel Protection Services.

Last week, Legendary sent her a registered letter with some bad news:

Our travel insurance company, Travel Protection Services, Inc., had filed for bankruptcy. There was no recourse for us except to buy new insurance with a company, Travelex.

They offered to give us a $200 credit on our next trip to make up for the inconvenience. At this point we have completely paid for the trip, and if I read the instructions correctly, the most we could expect to get back is 50 percent of our payment, or less.

This has opened up all kinds of questions for me. There doesn’t seem to be any recourse.

Actually this has opened up all kinds of questions for a lot of folks.

You can read all about Travel Protection Services and Legendary Journeys here, along with this follow-up post, which is now the most-commented story on my blog.

Curiously, I’ve already received two letters from attorneys about the comments on the latter posting, which I find a little disappointing. I’m used to them coming after me, not the commenters whose opinions are completely protected under the Communications Decency Act.

A review of the 100+ comments, and Hamlin’s case, leads me to believe there’s one big question that’s begging to be asked: Are travel agents who sold travel “insurance” that wasn’t insurance liable in any way?

There are two answers. If customers were advised that this wasn’t insurance, and that it might not cover them the same way traditional travel insurance would, and they still signed up for it, then I think agents are off the hook.

But if agents presented this as insurance, sold it as such, and left their customers with the impression that they were covered as if they had insurance, then their customers have every right to be angry.

“I think Legendary is guilty in this situation because they should have checked better on the company they associated with,” Hamlin told me.

Legendary would not respond to my requests for a comment the last time I wrote about it, but a representative found the time in early December to post the following comment on my blog:

Legendary Journeys discontinued selling this insurance product when all of this came to our attention. We now sell Travelex, licensed to sell insurance in all 50 states.

I share some of the skepticism in the comments made by Hamlin and others. I find it difficult to believe travel agencies were completely unaware of the problems with Travel Protection Services.

But I don’t know that for a fact. Maybe that’s something for a judge to decide.

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

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25 comments

  • David Z

    Maybe that’s something for a judge to decide.

    Unfortunately it is. IMHO the question isn’t if travel agents are liable for selling bogus travel “insurance” policies, but who’s prepared to hold them liable for that as others surely disagree and want to expand that further.

  • http://raulzambrana.webs.com/ Raul

    Hum… I wonder why lawyers will be coming after Chris? The fact is that when we buy insurance, there is an expectation of a “safety net” that we are taken care of… that is why we buy insurance in the first place. More shall be given and the travel agents need to be more responsible as to which insurance they sell… not for the big commission but for the ones that truly insure their customers. Otherwise, why buy insurance in the first place if we are not protected???

  • Lianne

    >>Hum… I wonder why lawyers will be coming after Chris?

    Probably the standard cries of defamation. They may also be trying to get Chris to turn over identifying information about the blog commenters, which is just plain silly.

  • Christopher Elliott

    @Lianne you’re pretty close to the truth. However, I would be breaking the law if I revealed any information about the identity of my commenters.

  • Carver

    No doubt. Then the lawyers would send cease and desist letters to every warm body that they could find.

  • Harry Baxter

    This is a direct quote from Adrian Ferguson, CEO of Legendary Journeys, on Chris’ previous blog, …….the Mystery is Solved, and in the current Chris Elliott article above::

    “Legendary Journeys discontinued selling this insurance product when all of this came to our attention. We now sell Travelex, licensed to sell insurance in all 50 states”.

    Check LJ’s website: http://www.goLJ.com, as of today. Click on “Travel Protection” at the top right. Does that look like Travelex Insurance?

    We’ve sometimes been accused of emotionalism and shading the facts. There are nothing but facts here. Mr. Ferguson’s actions betray his words.

  • Joe Farrell

    its only defamation if 1) it speaks a fact not the truth and 2) it tends to hold you up in a false or unfavorable light. If the company has already filed bankruptcy, well, one thinks #2 is not gonna work, and if the information expressed is an opinion, or th truth, then they fail test #1. The ONLY threat a lawyer can make is a SLAP suit, which is an unfair trade practice and also a violation of the attorneys ethical duty to the process.

    For the unaware, a SLAP suit is a lawsuit you file to shut someone up by making them have to pay for a lawyer to defend a meritless claim with money they do not have. . . .

    As I said back on Aug 27 in Chris’ blog post – travel insurance is mostly not insurance, it is a Ponzi scheme that eventually collapses. . . . and it did.

    Go ahead guys, find me and sue me. This is my real name and I am admitted to practice law and can easily defend myself. In order to sue me, well, you need to come out of the woodwork. I’ll be sure to place your notice of deposition on the blog so ALL the unhappy people can come to my office and ask you questions and sit in the room – after all – a depo is an open court proceeding in most states. . .. I dare you.

  • Paul Donohue

    I have been waiting patiently in the wings since Jan 2008 for the state of Florida Dept. of Financial Services to nail down these travel insurance frauds. According to the Florida laws–section 626.901 {1} {ah} I am not going to name these travel agencies–{but we all know who they are ] are liable financially to pay these insurance claims that were represented as “Trip insurance” to the people who bought these policies. The reason I am not naming any of them is that the first thing they due is have their attorney write you a letter with intentions to sue on the grounds of defamation. The problem right now is that the line of people who have been ripped off is so long that it is staggering. All sorts of lies and scams are being perpitrated so that that they dont have to pay on these policies. The only ones who seem to be winning right now are the attorneys who are fighting the people with legitimate claims. We all are looking at one very ,very, large chunk of money!!! Paul Donohue

  • Robert

    Mr. Farrell: Do you think these travel agents who previously sold their clients the illegal trip protection from a company that went out of business and then did it again are liable?

  • Peter

    I am a client of Smartcruiser.com and have been asked to post a final demand letter addresses to Lee Smolinski. Before I do that I have posted below my second letter to Smartcruiser.com (the first was ignored) dated November 2008. No reply or acknowledgement.

    November, 9 2008
    Smartcruisers.com/Palm Coast Travel/Smart Travel Group Ltd
    To fax: 561-393-7622

    Lee Smolinski

    Cruise Booking: HAL Alaska 8X7XVW
    The claim I referred to has officially been denied. I hold you responsible as their agent to reimburse our claim. Please pay our full costs within 7 business days

    There is what looks like a scam, involving your recommended travel insurers and your clients.
    Prime Travel Protection Inc. /Prime Travel Protection Services/Travelers Protection Services/Vacation Protection Services/ and Trip Assured (all the same) have been represented by you as a legitimate insurance provider on your web site and in several documents. Mr. J Watson has been owner or manager of all these firms but is not licensed as an insurance supplier. Indeed he has been prohibited from carrying out insurance activities in five states
    Please take time to study http://www.elliott.org/blog/the-prime-travel-protection-services-mystery-is-solved/ and especially the follow ups where you will see a Florida travel agent Legendary Journeys was also held responsible for a failed claim. It is a very frightening picture.
    Complaints against Smart Cruisers.com/Palm Coast Travel/ Smart Travel Group Ltd
    Your web site automatically selects one of the above mentioned insurers
    You represent them as travel insurers when the companies claim they sell protection – to bypass the state and federal overseers.
    In a letter/e-mail you inform me that travel insurance is with Access America and this name has never been amended by you.
    After requesting insurance information twice it eventually arrived 4 months after you had bought a policy thus rendering the clause of a 10 day review ineffectual.
    You and your firm as official agents of the above “protectors” should have been aware of the insurance misreprentation so are complicit and responsible for their non payment of a legitimate medical cancellation claim.
    Unless by liaison with Mr. J Watson you can get our claim accepted and paid I will bring action against you and your firms as responsible partners in the contract in the courts of Florida and California. For your information I have also instructed counsel to discuss a class action suit.

    Yours sincerely
    Peter Lay
    Cop letter HAL
    Copy letter PTP
    Copy Florida Department of Ivestigation.

  • David

    Harry you are a gentleman for continuing your research but at the end issuing an apology. We are complainants, but we are honorable people.

    Some simple peripheral news:

    BPC has over $100,000 of claims against them.

    Smartcruiser.com (Lee Smolinski) has attempted to ban postings on Chris Elliott’s blog.

    Lee Smolinski has sued one of his clients for trying to recover his money.

    BPC even made a half hearted effort to appease their clients. Smolinski went straight for the throat.

    LJ are remaining quite.

    There are over twenty complaints about BPC.

    Florida authorities are good people but they have had complainst since August 2008. How long does this take? Travelers are scammed by the minute and you have been warned like Bernard Madoff the fraud is nationwide and of gigantic proportions.

    The group volunteer media officer is in early negotiation with 48 Hours and several investigative reporters. Some of these media people are eager for a human relations story and it will be available soon when Lee Smolinski issues his suit against over 100 members of our contributors.

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  • Sam

    Chris, are they threatening you with litigation or do they just want the commenter info? Any lawyer who has read the Communications Decency Act knows you can’t go after someone who allows commenters because of what the comments have said and you can’t force them to reveal the commenters.

    Your lawyer could easily make you some money if it got sanctions against these lawyers, who should know that their claims are baseless.

  • http://www.ffocus.org Mr Bad Example

    Dear Mr Smolinski,

    I am NOT a customer, nor will I ever become one. Why not get your little piss ant of a lawyer and come after me. I’ll show you an exercise in futility. I EARNED my screen name and I say go for it, Lee.

    I’m not going to share my OPINION of you specifically but of people like you. A hypothetical Lee Smolinski if you will. A hypothetical liar cheat and general all around thief. Someone with no morals, values and ethics what so ever.

    I’d love to debate you on national TV and expose you for who you are. No lawyers, No advisers, just you, me and say Larry King? What do you say?

    If you’re pure as the driven snow then you’ve nothing to fear now do you????? A sharpy business person like you should be able to clean some washed up old Sales Trainer’s clock. What’s to fear? The truth will set you fee Mr Smolinski, so wander out from under your rock and face me.

    Bet if you ask Mr Elliott he could set it up. So when you want to do this? I’m pretty open. Hey if you ask nice I’ll front you some Frequent Flyer miles so you can wander up to the CNN studios for free. (actually I’d give him a taste of his own medicine and cancel his ticket when he’s at the airport so he gets a taste of what he does to his customers)

    The offer is sincere Mr Smolinski? Tick Tock!!!!

    Let’s see what happens now?

  • Katy

    I purchesed cruise tickets and insurance thru Legendary Journeys. The insurance co. was Traveller Protection Svcs. My husband became very ill 3 days before cruise and needed to be treated immediately. We cancelled on the same day. Travel ler Protection became Universal Assurance 3 mos.later. After many calls(none returned) I called Florida Dept of financial Svcs. They said Universal was not licensed in Fl, however, they would contact them for me. soon after, I received a letter from Universal, signed by JERRY WATSON, stating that My claim had been process and they would send me my refund as soon as possible. that letter was dated 12/16/08. Today is 2/10 and I have not received a penny . I recently found out that Universal filed bankrutcy 1/29/09.
    I spoke with a Legendary Journey spokesperson (he returned my call). He gave me JERRY WATSON’s new address but said they can’t help. I told him it was legendary’s responsibility to make sure that what they’re selling is legit. I’m planning to call the T.V. stations consumer help lines tomorrow. What about John Stoessel from ABC?

  • David Z

    Any lawyer who has read the Communications Decency Act knows you can’t go after someone who allows commenters because of what the comments have said and you can’t force them to reveal the commenters.

    Yup. And I recently found one possible decision (out of various, I’m sure) Chris’ lawyer can use if needed: Enterline v. Pocono Medical Center, 2008 WL 5192386.

  • Joe Farrell

    @ Robert – I would certainly make a pretty decent negligence claim against the travel agent if their clients were once burned by a scam or a failed insurer. Most travel agents who rely on travel sales for full time income have insurance, and their insurer would defend and pay such a negligence claim. I would think that the claim would be pretty darn good. . . .

  • http://www.ChoosingTravelInsurance.com Terry Seligman

    Full disclosure: I own a licensed Travel Insurance agency.

    Stories like this make me furious because they make our industry, which is perfectly legitimate and useful in the vast majority of cases, look awful. FOR FUTURE REFERENCE: In order to protect yourself, your travel investment and your premium, always purchase travel insurance from a licensed insurance agency or from the insurance company directly. Here’s why:

    Legitimate insurance providers are regulated by the states in which they do business. They must meet stringent requirements, including the maintenance of large amounts of financial assets for the purpose of paying claims. You can go to the state department of insurance to see if there is any recourse there.

    If you are not familiar with the provider that is being offered to you, go to http://www.AMBest.com and check out their financial stability (AM Best is the major rating bureau for the financial services industry.) If you can’t find them on AM Best, do not purchase the product.

    An experienced travel insurance agency keeps tabs on the ratings and will help you buy the appropriate plan that fits you.

  • Harry Baxter

    The gall of Mr. Adrian Ferguson, the CEO of Legendary Journeys, never ceases to amaze me. Do you know that his business has an “F” rating with the Better Business Bureau? This is truly hard to do, but Mr. Ferguson has achieved the dubious distinction.
    He makes his money by saturating the Sunday Travel Section market with ads that feature impossibly low priced cruise and travel specials. These prices are, of course, nearly impossible to obtain. Go to his webside at http://www.goLJ.com, pick out one of these specials, and using his online booking engine, try to obtain the price. See that he, almost alone among travel agencies, charges a HUGE non-refundable initial deposit. Notice while you’re at the website that he’s STILL selling bogus travel insurance, despite documented proof that he told aggrieved customers that he was changing to Travelex, an honest, respected seller of travel insurance.
    He’s been selling this crap for years, and he’s making so much money that he doesn’t care what his customers and former customers think.
    Do some research, tell your friends, complain to your newspaper, contact the State of Florida, and MAKE HIM CARE!

  • Ben99

    This plea is from http://www.cruisemates.com

    I have only cruised once before and booked with a local travel agent. This time I decided to book online. I booked with Smartcruiser and they are not at all friendly or helpful. They took my deposit and I haven’t heard from them since. Am I suppose to get something from them. I wanted to pay the cruise off early and so I called them since they wouldn’t answer emails and they told me they can’t do this. Anyone have any suggestions???

  • Peter

    As has been posted before, Ron Russo and Best Price Cruises’ current involvement with selling illegal travel protection plans is not the first time. On June 16, 2003, Orange County Florida resident, Mark Golden sued Mr. Russo’s Vacation Superstore Network and Trip Assured for failing to honor his claim on an illegal travel protection plan sold to him by Mr. Russo’s company. (Case Number 48-2003-CC-007925-O). I spoke to Mr. Golden today and was informed that he has settled the matter and was reimbursed.

    If Best Price Cruises sold you an illegal travel protection plan from Prime Travel Protection, you should contact Mr. Russo and refer to the above case for a settlement.

  • Harry Baxter

    I really don’t understand how BPC can get away with what they’re doing. They sold Trip Assured about six years ago, and then switched to Vacation Protection Services. After that company went belly up, they switched to Prime Travel Protection, and when Jerry Watson went bankrupt, they had another “travel protection” package available to foist on the unwary customers immediately. The State of Florida knows that they’re selling a bogus product, but nothing is done, and every day that passes results in additional customers getting defrauded. I guess that I now understand why they call the State “Flori-duh”! State of Inaction would also be appropriate.

  • Robert

    Did anyone see the report on WFTV regarding illegal travel insurance? A friend told me that consumer reporter, Todd Uhlrich filed a report about a local couple who purchased an illegal travel insurance policy from a Florida travel agent and are now out several thousand dollars.

  • Harry Baxter

    I did see the article, Robert. For the benefit of others who might have missed it, here’s a link to the video and text. As usual, there are some harrowing stories from victims who, after experiencing a big tragedy, are forced to undergo another, because of the heartlessness and greed of TAs vending this useless product. There are also some tips on where to get help. Feel free to add your own story to the list. http://www.wftv.com/action9/18750714/detail.html#comment_a65kRM_5Gr3yzIaby-QDJN

  • david sparrow

    Hi
    We have been using Travel Protection for 3 yrs and decided about 9 months ago to get rid of them as the claims were getting ridicules but the problem was existing policies. We ended up getting stuck for one claim an Alaska cruise which we spent 8 months to collect but bottom line these are very good clients so it is coming out of our pockets . The dept of insurance for california was useless i was wondering if anybody had anymore info or had received any paperwork related to this problem as they promised on the recording.
    Thanks David

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