What's the book corporate America doesn't want you to read? Find out now -- or you could get scammed.

Palm Coast Travel fined $2,500 and placed on probation for selling unauthorized travel insurance

March 10, 2010

Looks like Palm Coast Travel, the Boca Raton, Fla., agency accused by the state of Florida of selling unauthorized travel insurance, while at the same time trying to sue one of its own customers and me into silence, has quietly negotiated a settlement with insurance regulators.

Under the agreement (PDF), which was signed today, Palm Coast Travel, which also does business online as Smartcruiser.com, has agreed to cease and desist selling unauthorized insurance and will pay a $2,500 fine as well as restitution to its customers affected by the purchase of an unauthorized insurance policy. It will be placed on 18 months’ probation and has agreed not to sell unauthorized insurance in the future.

The consent order is practically identical to a draft settlement agreement (PDF) that has been circulating between Palm Coast Travel and insurance regulators since last summer, and which I obtained after filing a public records request.


But some of the points merit a closer look.

Here’s the “lead” as they say in journalism:

Respondents shall CEASE AND DESIST from representing any unauthorized insurers, including but not limited to Prime Travel Protection, Inc.;

SMOLINSKI AND ASSOCIATES, INC., D/B/A PALM COAST TRAVEL (“Palm Coast Travel”) has applied for a Section 626.32l(l)(c), Florida Statutes, resident travel firm (2-41) license. Upon entry of this Consent Order, the Department shall approve Palm Coast Travel’s application for a Section 626.32l(l)(c), Florida Statutes, resident travel firm (2-41) license.

In other words, stop selling unauthorized insurance and get a license. Palm Coast Travel appears to have already done that.

The state would also fine Palm Coast Travel.

Respondents shall pay, jointly, an administrative penalty in the amount of TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500.00) within thirty (30) calendar days of the entry of this Consent Order.

And here’s the language regarding probation:

Upon issuance of the resident travel firm (2-41) license, Palm Coast Travel shall be placed on probation, pursuant to Section 626.691, Florida Statutes, for a period of eighteen (18) months. Such probation is self-terminating at the end of the eighteen (18) month period.

As a condition of probation, Palm Coast Travel shall comply with all the terms and conditions of the Settlement Stipulation for Consent Order and this Consent Order and shall strictly adhere to all provisions of the Florida Insurance Code and Rules of the Department.

As a specific condition of probation and in order to determine compliance with the Settlement Stipulation and this Consent Order, Respondent shall give the Department, upon the Department’s request, full and immediate access to all books and records relating to Palm Coast Travel’s insurance business;

Whoa. Open the books to the government. How interesting.

Palm Coast Travel would also agree to pay all valid insurance claims — which, by the state’s own estimates, it has largely done.

Whether known to the Department or presently known just to Respondents, as to those clients whose travel departure date has passed and who have an outstanding travel insurance claim, Respondents shall, within sixty (60) days following the issuance of this Consent Order, make complete financial restitution regarding all unpaid valid travel insurance claims resulting from Respondents having placed clients with an unauthorized insurer.

So what does all of this mean?

It essentially means Palm Coast Travel sold unauthorized travel insurance. It means the government has told it to stop selling unauthorized insurance — which is exactly what they’re suing me for saying.

The company didn’t want to take its chances in front of an administrative law judge next month. Think they’re going to risk taking my frivolous case to court?

Update (3/14): Palm Coast Travel’s attorney, Dan Newman, says his client won’t drop the suit. Why? Two likely explanations come to mind. Either he or his client have lost their grip on reality or this is a cynical attempt to run up Palm Coast’s legal bills. Perhaps it’s a little of both. I’ll continue to cover this story here, of course.

(Photo: vissago/Flickr Creative Commons)

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.

Tagged as: , , , , , ,

14 comments

  • Wrona

    Chris, like the picture with this one!

  • LeeAnne

    So are they going forward with their suit against you and Peter Lay? I don’t see how they can, given that they have now, by accepting this agreement, effectively admitted that the allegations that you reported, and that Mr. Lay posted about, were all true.

    So…where are the “falsehoods” that they are suing you for publishing?

    As they say in the gaming world: PWNED!!!

    (Oh, and love the graphic. Yeah…KABOOM!)

  • Eugene Hahn

    While I’m happy that action has been taken against this company, I still can’t escape the feeling that it amounts to a slap on the wrist. I understand that the company sold hundreds, or possibly thousands of illegal policies, and was rewarded with commissions of 40%. Despite this, the State of Florida appears to be limiting their liability to repayment to those clients who purchased an illegal policy, but haven’t yet taken their trip (“…as to any client that previously purchased travel insurance through the respondents from an unothorized insurer and whose travel is prospective, Respondents shall, within sixty days following the issuance of the Consent Order, …refund the premium paid by the client for the unauthorized travel insurance”)

    Why should the payment only apply to the Clients who haven’t yet taken their trip? Most travel companies and cruise lines only open their trips for booking eighteen months before the initiation of the trip. Prime Travel Protection folded about a year ago, so this means that Florida is ignoring at least 2/3 of the Clients who purchased illegal insurance. Chris, these people took trips and were unaware that they were not covered for potential disasters necessitating medical evacuation, which can cost $50,000 or more! I was under the impression that, recognizing the value of the product (approximately $0.00) that was sold by Trip Assured, Vacation Protection Services, Prime Travel Protection, etc., the State could require the Travel Agents to refund ALL of the premiums paid, regardless of whether the Clients had a claim. Am I wrong about this?
    I’ve been reading horror stories about these companies for years, and I’m afraid that I’ll be reading the same stories in the future. Someone has to stop the next vendor of these products, and $2500 fines aren’t going to do it. Fines which greatly diminish the wealth of the travel agents who have been selling this junk for six or seven years would be a promising start.

  • SirWired

    This is all too similar to FTC settlements, which consist of a token fine and a promise to go forth and sin no more. These jokers got pretty much a free pass, and I don’t see how a $2,500 fine is going to deter somebody else from doing the same thing.

    Disgorgement of several years worth of profits from these bogus policies would be FAR more appropriate!

  • Myrna Bailey-Calhoun

    This is a great start, but I’m sorry Florida didn’t act sooner. If they had issued these orders a few years ago, agencies like Palm Coast would never have sold Prime Travel Protection. I’m glad at least now Florida is doing something and this administration should be commended. As for the lawsuit – don’t be too optimistic Chris and Mr. Lay. Anyone with the gall to file such a frivilous suit is not going to drop it that quickly. Chris is right, though. The lawsuit centered on defamation. How can one cry defamation when what they were allegedly defamed about is what they admitted they did?!?

  • Cliff Sousa

    @SirWired
    Yes, this punishment is a bit lenient and the fact the state is not making these agents refund all of the premiums collected on the fraudulent policies is disappointing. DFS’ civil unit has to do what’s in the best interest of the consumer and that is to see individuals with unpaid claims are reimbursed and that’s exactly what they have accomplished. It’s still possible a criminal investigation is being undertaken. (Someone wrote on this board earlier that they had been contacted by a criminal investigator). The two investigations would be separate and if there is a criminal investigation we may see some of these travel agency sellers charged with felonies. The law is clear regarding aiding and abetting unauthorized insurers and the crime can carry more severe penalties than a $2500 fine.

  • Cosmos Human

    This is a slap on the wrist!

  • Lisa S

    Shame on the state of Florida for slapping the write of Palm Coast Travel. The fine is paltry. I agree with Eugene that they should have to refund money to everybody to whom they sold the bogus policy and they should pay a much higher fine. Crime really does seem to pay.

  • Ed Davenport

    Yes, the fine is paltry and the penalty was minor. However, Palm Coast is guilty of selling illegal insurance. Whether they were fined $100,000 or $2500, they signed a settlement admitting their wrongs and were placed on probation. This is clear vindication for Chris and the customer that was sued for merely crying foul over these fraudulent practices.

  • Eugene Hahn

    Why isn’t the State of Florida using laws which are already on the books to punish those who violate the laws? Here’s some information on Florida Law that I found today:
    “The Pete Orr Act, which took effect on July 1, 2003, provides that anyone who transacts unlicensed insurance can be charged with a first-, second- or third-degree felony depending on the amount of premiums collected. The law also makes it a third-degree felony for any individual who has been banned from the industry or a licensee whose license has been suspended or revoked to transact any insurance, licensed or unlicensed. It also allows policyholders to sue an unlicensed entity that has left them with unpaid claims.
    Policyholders already can sue licensed agents who sell them unlicensed insurance that results in unpaid claim. And, as of last October 2002, it is a third-degree felony for any licensed agent to sell unlicensed insurance.”

    Florida politicians are fond of saying “The law is the law” each time that they sentence an individual to twenty years for having a small stash of pot, or shoplifting a loaf of bread to feed his hungry child. Apparently, though, the “law isn’t the law” when a well-connected Travel Agent with multiple Lawyers on retention sells hundreds or thousands of useless illegal insurance policies to unwary customers, which according the Pete Orr Act, is a 3rd Degree Felony.

    I leave it to others to figure out why this is so. I can’t.

  • Myrna Bailey-Calhoun

    @Eugene
    You are obviously quite upset. If you are a victim of this fraud like our family was, I do understand. However, as the saying goes, “it ain’t over ’til the fat lady sings” and there’s a lot of song left, trust me. As a victim, Mr. Hahn I urge you to contact the fraud division of the DFS if you purchased from a Florida agent. The DFS Fraud Division can charge individuals with felonies and it may just happen. So, keep your chin up!

  • Mike P

    Personally I think the real issue here is the lack of teeth in this settlement. The State of Florida has essentially set a legal precident now in this type of case where you get off the hook with a slap on the wrist and a $2,500 fine. There is no deterrent for anyone else to not do the same sort of thing because it is essentially worth taking the risk! The amount of money made I am sure far exceeds the fine imposed here, and that is sad.

  • Mary H

    Crime does seem to pay….
    I was done out of about $1500 by a computer sales person. Charged with a class H felony in NC, he admitted guilt & signed a court order to repay me the money, then I found out I had to pay more for legal service and collection, and he wouldn’t pay it, anyway, because I have not the heart to face him down alone, and he has larger criminal charges to face. Some of his crimes were committed while he was on probation, according to the sheriff. If I ever see a dime, it will be a miracle–and I don’t believe in those. I wanted this guy making license plates in prison with me getting the dollar a day he’d be paid…no such luck. In this state, they will put you under the jail if you write a bad check, but you have to enforce court orders for other swindles on your own. When the court gets through dealing with this guy on the multiple check and theft of property charges, I sure hope he doesn’t have enough political pull to get off free and clear, which is just about what Palm Coast was allowed. Sometimes we just have to admit that there is little to no justice in the “criminal justice” system, unless the case makes the celebrity headlines, and even then justice is often denied. Might just be best to save ourselves the trouble and let it all go, while learning what to watch out for next time. Chris, good luck with disposing of the suit against you. You need a break after this puny resolution, right?

  • Ty

    What a business! If I can just sell 500 of these fake policies at a mere $200 a pop that would gross $100,000. I’ll set aside $2500 for the fine I will pay to the state of Florida; $5000 for legal fees; $10,000 for advertising and marketing to stupid travel agents and I’ll make a cool $80,000 plus.

Previous post:

Next post: