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Prime Travel Protection investigation at crossroads after Vacation Superstore/Best Price Cruises filing

April 6, 2010

Florida’s campaign to stop unlicensed travel insurance appears to be at a crossroads. State regulators yesterday sent a two-count notice to Vacation Superstore Network/Best Price Cruises, with the by-now familiar charges: selling travel insurance without a required license, employing agents who didn’t have the necessary paperwork, and, of course, identifying customers who were affected by the alleged purchase of unlicensed insurance.

Here’s the document (PDF).


This isn’t the first time you’ve heard the name Best Price Cruises or Vacation Superstore. Last year, authorities warned the agency and two others — Legendary Journeys and Palm Coast Travel — that it may have run afoul of state insurance statutes when it sold products offered by Prime Travel Protection. Yesterday’s “revised” notice essentially restated the state’s original charges, signaling that Florida does not intend to let the matter drop.

(Palm Coast Travel, which also does business as Smartcruiser.com, has sued a customer and me in an apparent effort to stop me from writing about it.)

So what now?

Sources close to the investigation tell me that agencies are lining up to settle with the government. Already, several companies, including Palm Coast Travel, have settled with Florida rather than face an administrative law judge. For example, Palm Coast Travel agreed to pay a $2,500 fine and be placed on probation for its role in the Prime Travel Protection scandal.

But that’s just the civil investigation. In the meantime, people familiar with this issue say there’s an ongoing criminal probe. It’s difficult to say who or what the likely target of such an investigation might be. Would it be Jerry Watson, the man behind the now-defunct Prime Travel Protection? Perhaps some of his associates and friends in the business? One of the reservations systems who distributed his policies? Or one of the large agencies that repeatedly sold Watson’s unlicensed insurance policies?

We do know that people are talking to investigators. We know hard questions are being asked — questions that should have been asked years ago when the first bogus insurance policies were being sold to unwitting travelers.

Exactly when the state might take action is not entirely clear. Actually, I should rephrase that: Even if I knew what the state was about to do, I wouldn’t say. Not here. It’s obvious, though, that the the Prime Travel Protection story isn’t over yet.

We’re probably about halfway done. And I intend to be here to write the last chapter.

(Photo: matt.hintsa/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.

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20 comments

  • JoeM1929

    @Chris
    I may be kind of dense, but can you explain what a “cease and desist” order is when issued by an administrative judge? Does that mean the travel agent in question is out of business or what?
    JoeM1929

  • Grace

    @Chris Elliott

    In August 2008, our dear friend, the late Paul Donohue posted the following on your blog:

    Chris-You have hit the nail right on the head. I have been scammed big time by Watson and friends. On both these trip cancellations my wife was unexpectantly physically not capable to take any of these trips. We had our physician completely fill out and sign the medical forms sent with my claims. Jerry Watson has obviously set himself up as GOD and has determined my physician is wrong. Watson has set himself up in various states and denied thousands of claims just like mine.His method is to wear the complaintant down and drop the whole thing. Further more on the web site of legendary Journeys – click on their “INSURANCE” box–everything right there–site claims its best to take out this insurance-it also says if you buy the “insurance” at the time of the first deposit on the trip any preexisting conditions are waived. There were no preexisting conditions but had there been they would been waived. I am out of pocket about $1,250.- on one trip-and the one with Legendary $5,878.-. I also will state that I am retired going on 78 years old and about at the bottom of our savings!! I really got taken to the cleaners here, and the people involved in the scam could care less. I thank you for making my problems be known to the public. Its a good thing there are people like yourself who can expose things like this so the whole world can see . Thanks Chris. Paul E. Donohue

    Mr.Donohue fought until the day he died for his rightful reimbursement. I sincerely hope, Chris when you get into court you make mention of Mr. Donohue. There is no denying these policies were sold as “insurance” by the travel agents. Like Mr. Lay, Mr. Donohue kicked, screamed and hollered about what happened to him and you reported the facts. For that, you were sued along with Mr. Lay – an absolute outrage. May Paul Donohue rest in peace.

  • John Redcorn

    @Chris

    “was able to offer Lay full cash compensation on the penalty imposed in the amount of $3688.30″

    What seems strange here is that you help people as a consumer advocate (which is admirable) yet it appears that you are advocating for someone that appears from the complaint that might have been trying to get more than they were actually entitled to whether they did have a legitmate insurance claim or not?

    Did you ever in your investigation find out and/or ask if Palm Coast did indeed offer Mr. Lay full compensation and if so why did he deny it?

    I would assume that you wouldn’t be advocating for someone who might be trying to take advantage of the unfortunate Prime situation if what is alleged in the complaint in respect to Mr. Lay is true.

    Thoughts?

  • Joe

    @John Redcorn

    Chris is not advocating for one person, he’s advocating for everyone like me who purchased unauthorized insurance and had their legitimate claims denied. Whether Mr. Lay was offered a refund or not is irrelevant, the order against Palm Coast is clear as to their violations – they sold unauthorized insurance and did so without the proper licensure. They were fined and put on probation for such activities. If you go back and read these blogs (which it appears you do), Palm Coast’s brush with selling unauthorized insurance was not only limited to Prime Travel Protection. Chris has been and continues to be one of the most outstanding consumer advocates. He shows no favoritism and works for all, not just one. I’m not taking sides here, but I can bet if Mr. Lay filed a lawsuit against Palm Coast for fraud, he’d get far more than his $3688.30.

  • Christopher Elliott

    @John Redcorn, it’s been a while since I first heard about Peter Lay’s case. I don’t think I ever was asked to mediate his grievance. So I didn’t have an opportunity to ask Palm Coast Travel about it.

    Do I have an opinion about his claim, and the way it’s been handled? Yes. And if it weren’t for this darned lawsuit, I would give it to you.

    But I would not assume that I’m “advocating for someone who might be trying to take advantage of the unfortunate Prime situation.”

    I would agree with you that the Prime situation is unfortunate. Mr. Lay and I are co-defendants, but our cases are quite different. All of that will come out in court soon enough.

  • Michael

    @ John Redcorn

    I’m not sure I understand your rationale. What difference does it make if the travel agency offered it’s customer a refund on the insurance claim? That doesn’t make the sale of the insurance right. The state of Florida was clear in violating all the travel agencies that sold such insurance – it was against the law! Your argument sounds like what the plaintiffs will try to do when it gets to court, deflect the issue. The defendant claimed he was sold something that wasn’t legal. The plaintiffs sued for defamation based on the defendant’s claims. The state concurred with the defendant. I rest my case.

  • Mo

    Don’t count on Florida FDLE to investigate anything. Last year I gave them a proof that Hillsborough County took money away from a state agency, FDLE investigator told me that he spoke(?) with the county and they said that they didn’t do it, so he concluded that they didn’t!. This is how they investigate, so do not count on those guys, they are not the smartest, and we are in Floridaaa.

  • NM Anasazi

    @JohnRedcorn, your post is certainly thought provoking. I wonder why no other poster has picked up on this? I do agree that consumer advocacy is an admirable trait, but Chris must know that that there are some consumers out there that are gamers intent on the beating the system and will do anything and everything to succeed. Some of them are serial complainers that try to extract compensation from a travel supplier on nearly every trip they take and some even resort to the very nefarious practice of “double dipping.” (The term double dipping is the practice of receiving compensation or benefits from two or more sources in a way that is regarded as unethical or improper). Frequently, double dippers even go so far as enlisting unsuspecting government agencies to help assist them in accomplishing their task. Rarely, (but sometimes), these consumers get “caught out.”

    @Chris, I hope that you and that travel agency can amicably settle that darned lawsuit.

    @Joe, you indicate that your valid insurance claim remains unpaid and you obviously want to be paid and that is what you say Chris is advocating for on behalf of yourself and others, correct? So, if the lawsuit is factual and the travel agency “was able to offer Lay full cash compensation on the penalty imposed in the amount of $3688.30,″ how could you claim that this compensation is irrelevant when this is exactly what you are seeking? Sounds like a bit of Texas two-step to me.

  • Christopher Elliott

    @NM Anasazi, I hope we can come to an agreement, too. I think as long as both sides are reasonable, it will happen.

  • Joe

    @Michael
    In my opinion you have hit the points of this festering issue perfectly.

    @NM Anasazi
    I think YOU are missing the point. The issue is a simple one – several travel agencies sold a product that was deemed to be illegal according to the laws of Florida. Whether the state of Florida was aware of this “double dipping” as you refer to it or not, their investigation would not have changed. You need to read the charges against these travel agencies. Had the investigators known of the possible double payment the charges would have still been the same. Selling without the proper license, representing an unauthorized insurerer, etc. were the charges and have nothing to do with the compensation received or not received. The “bottom line” is the sale of this trip protection “insurance” WAS NOT legal.

  • Michael

    @NM Anasazi
    Your argument is similar to what happens in court cases on a daily basis – throw enough against the wall and hope the judge buys some of it. You seem to believe if everyone is paid back, then all is forgotten; the travel agencies can declare they did nothing wrong and Jerry Watson can move on to his next venture without the fear of prosecution.
    The plaintiff travel agency will go into court making an issue of this alleged double payment. For argument’s sake, let’s say that is accurate.
    The defendant customer will claim he was defrauded by an agency who (according to the Sun-Sentinel and which will be confirmed in discovery if accurate) has a track record of selling these types of policies.
    You be the judge, Mr./Ms. Anasazi and tell me which argument is more persuasive, but most importantly which argument relates to the charges of defamation and tortious interference?

  • Moe Syzslak

    @Joe

    See Florida Statute 817.234 False and fraudulent insurance claims.–

    Someone who attempts to double dip on an insurance claim, if that were true, has committed fraud under the Florida statutes. That is far worse than any travel agency that might have not had proper licensing. Getting a travel insurance license in Florida for a travel agency takes about 5 minutes online and is merely collecting a fee for the state and checking to make sure that the agency has not committed fraud or something improper in respect to insurance. The failure to get a license in itself is not something that would necessarily be harmful to anyone except the state losing out on the fee.

    Insurance fraud as is the case where someone double dips on an insurance claim or if provide false information in respect to an insurance claim is one major reason why insurance premiums cost so much.

    Your posts are ridiculous. I am sorry. If no consumer is harmed by something then the fact that an agency may or may not have had a license is meaningless as compared to fraud. Direct your anger at Prime Travel Protection and the travel agency who you were a client of if they did not take financial responsibility for your claim.

    Many of these travel agencies were duped by Prime Travel Protection as was the consumer and to say that fully compensating the consumer back is not enough is ludicrous. A lot of these agencies are out hundreds of thousands of dollars. They are victims here.

    I am sorry. I only feel bad for the people who have not been compensated for legitimate insurance claims and I am only mad at agencies that have not paid consumers back on legitimate claims.

    From what I have been reading, Palm Coast Travel is the only large agency that paid all of their clients claims. If this is true then one has to wonder why they would sue a customer if they paid everyone else back?????? Those are questions that you should be asking.

  • Joe

    @Moe
    I read statute 817.234, but so far I don’t see that the DFS has brought any charges related to this statute. They did however, fine the travel agency and put them on probation. So your rationale as to what is worse, makes little sense. As far as directing my anger, Moe. I’m not angry, you are the one who appears angry. I’ll be reimbursed sooner or later and when I am you apparently want me to forgive my agency for selling me a policy that was not legal? Maybe some of these agencies were duped by Prime Travel. What about the ones who sold Vacation Protection Services, Traveler Protection Services and Trip Assured, too? Are we to assume they were duped four times and let it go? As far as why Palm Coast is the only agency to sue a customer – that’s a good question that you should ask them. I don’t see Best Price Cruises or Legendary Journeys filing lawsuits against their customers and they sold the same insurance. In your mind, Moe you think because someone commits a wrong, makes an excuse for their behavior and makes amends it’s all better. That doesn’t work in the real world.

  • Christopher Elliott

    @Joe, @Moe and everyone else … now I’m confused!

    If this case is about an allegedly fraudulent insurance claim, then why sue Peter Lay for defamation and tortious interference? And why the complaint against me?

    It should be abundantly clear to anyone reading about this case that the best the plaintiff can ever hope for from me is an apology for having reported an inaccurate fact given to me by a government official, and the removal of some incendiary blog comments — two things he could have gotten just for the asking more than a year ago, without paying a big law firm a dime.

    So why stick with it? I can’t think of a good reason.

    I’ve heard a number of theories, but none of them make any sense:

    - The plaintiff needed a Florida defendant in order to make the case stick, and Lay lives in California.

    - The plaintiff loves to go to court.

    - The plaintiff wants to inflict pain on yours truly.

    I don’t buy any of them. I think Lay would be here with or without me. From what I know of Lee Smolinski, he doesn’t spend his days wishing he were in court. And I would like to believe that as a father, business owner and a member of the travel community, he knows that vindictive behavior gets you nowhere.

    But it’s hard to know for sure what’s going on over at Palm Coast Travel. They insist on communicating with me through an attorney, and you know, a lot can get lost in translation.

    Suffice it to say that if this is about a fraudulent insurance claim, we’re heading down the wrong road. I hope we don’t have to talk to a judge to find out how lost we are.

  • Michael

    817.234 is a charge that can only be brought by the state of Florida. Until the state files charges and convicts, this alleged double-dipping issue will remain a non-issue and any judge will not even give the plaintiffs an ear on the subject.

  • Contra Costa

    @Michael, if the alleged double dipping occurred, you are probably correct that only the State of Florida, (or even California) can bring those charges, which could be why – I am speculating now – Palm Coast only alleged tortious interference and defamation in its lawsuit. To speculate further, maybe Palm Coast only learned of the alleged double dipping because of its lawsuit.

    However, based upon Palm Coast’s behavior by initiating the civil litigation, I wouldn’t be a bit surprised if it pursued or has been pursuing other remedies if indeed the alleged double dipping occurred. It’s anyone’s guess (except Palm Coast’s).

  • Moe Syzslak

    @Joe

    You live in movieland like me. Moe. At least I can admit that I live in a fantasy world. Your conspiracy theories are dumb. These are large travel agencies who have outstanding reputations in the travel industry. What information do you know that leads you to conclude that agencies that sold Trip Assured, VPS, and/or Prime intended to defraud consumers? Do these large agencies such as Palm Coast or Best Price Cruises have any consumers that you are aware of that had Trip Assured or VPS policies and were not paid? You think that they would knowingly sell unauthorized insurance? What would they have to gain by doing that? There is nothing to indicate that commissions paid to these agencies were anything greater than what other travel insurance companies pay according to charges we have seen by the State of Florida. Additionally, why would they risk harming their primary travel business by knowingly selling a product that they don’t make nearly as much as they do on the primary sale of a vacation. How many claims did Trip Assured, VPS, and/or Prime actually pay out? Do you have these numbers? If this was a scam by the travel agencies that used Trip Assured, VPS and/or Prime then don’t you think there would be more complaints about people who did not have their insurance claims paid over the years? Your conspiracy theories probably has cost the State of Florida a great deal of time and expense which should have been focused on stopping Prime and any other companies that have harmed consumers in the State of Florida. I don’t know whether other agencies besides Palm Coast have or have not sued their customers, however I am in agreement with Contra Costa that Palm Coast most likely has definitive evidence that there has been tortious interference and defamation to their business. How many customers has Palm Coast Travel sued in the history of its existence relative to the amount of vacations that they sold? I highly doubt that this customer that they are suing is just a typical customer. We will watch how this plays out and I am sure evidence at trial will explain why they filed their lawsuit.

    @Chris

    Why sue you? I don’t know, but what I do know in reading a lot of the postings on your website is that you knowingly allow people to post defamatory comments about companies. Maybe you don’t have the ability to determine what is fact from opinion because you obviously you can’t verify the information in every post. However, your website should have a process like any other type message board where people can report posts that are harrasing, defamatory, and/or inappropriate. Then you or someone else should review any posts that are reported in violation and decide whether it needs to be removed. Just a suggestion.

    @everyone
    Until I read the articles on this website, I had never heard of Prime Travel Protection. The real mystery that has not been solved on this website yet is how was a low profile company named Prime Travel Protection was able to win over all of these travel agencies as clients? Did someone with a reputation in the industry use that to lure the travel agencies in or did some company use their reputation to lure the travel agencies into going with Prime? We need to find the real people and/or companies which caused all of this financial harm to all of the travel agencies and their clients

    Homer is waiting so I have to run.

  • Christopher Elliott

    @Moe, I’ve gotta tell you, it’s refreshing to have someone take the other side in this debate.

    The truth of the matter is that I’m deeply conflicted about some of the comments on my blog. About a year ago, after receiving a lawyer letter from another company, I quietly switched over to “moderated” comments, which means I read everything before it appears.

    As you probably know, comments are protected under the Communications Decency Act. But still, I didn’t want this blog to become FlyerTalk, which is pretty much a free-for-all where the mob rules.

    Since then, I’ve moderated (read: deleted) quite a few comments. I have to be careful, because every time I do, I hear people screaming about censorship. I have to be prepared to explain my decision and live with the fact that they’ll probably never visit my site again.

    Just as an example, here’s a post where the commenters started to attack me. Ouch! I really wanted to delete some of the comments, but that would have permanently harmed the integrity of this site.

    Here’s an example where I have moderated comments. Ben Baldanza, the CEO of Spirit called me on Friday morning asking to respond to the Transportation Secretary’s comments. Here’s the interview.

    Now check out the reaction.

    I had to cut a few comments, because they were simply inappropriate. On Friday afternoon, just after arriving back in Orlando from Washington, I got a call from Baldanza on my cell phone, and he mentioned the comments on his interview were a little harsh. So I said to him, “Tell me which ones are out of line, and I’ll take care of them.”

    I was surprised by Baldanza’s answer. It was the same as Al Ferguson’s (the VP at Legendary Journeys) when we talked about the way his company had been criticized on this blog. He said, “I believe in free speech.”

    So, to answer your question, there’s a process in place. I haven’t had unmoderated comments since early 2009, but I’d be the first to admit that there are comments from before then that may have crossed a line.

    I think my attorney has signaled to the plaintiff that there could be some comments relating to Palm Coast Travel that need to be moderated, and I’ve always been willing to do that.

    Unfortunately, a lawsuit like this one has the exact opposite effect than the one that was apparently intended. I’m told to leave everything as it is, preserve evidence, etc., so any hope of an amicable, informal agreement to quietly deal with a problem is lost in all the lawyering. That’s really a shame.

    If what you say is true — if this lawsuit is about blog comments rather than defamation or tortious interference or a fraudulent insurance claim — then again, we are heading down the wrong road.

  • La Cumbre University

    Holy Cow Batman!

    It is being now alleged here that there may have been double-dipping on an insurance claim by the customer that is being sued by the travel agency. If this is true, I think it is going to make some investigators very angry.

    This is especially so after reading an email that a source sent me that was sent to Florida investigators whereby by Mr. Lay made statements against many individuals and companies. In the email to investigators he said, “You are aware that I have researched the birth of a group of fraudsters who initiated the Florida travel scam.” “Perhaps over their postprandial brandy they share stories, about defeating the law, like Robber Barons in the Pacific Union Club?”
    A source also told me that multiple allegations were made against Florida travel agents to Florida investigators by another man out in California who never even bought anything from a Florida travel agent. Does anyone know who this person is? Maybe the Sun-Sentinel or Mary Jo Melone could shed some light on this individual.

    Chris, if the double dipping allegation is true and the charges leveled in Palm Coast’s complaint are true, I don’t see an end to this lawsuit anytime soon (at least as it pertains to Peter Lay).

  • Christopher Elliott

    Holy cow, @La Cumbre — another Palm Coast supporter! What are the odds? ;-)

    I’ve seen some of the correspondence between the state and the defendant. It’s interesting reading.

    Here’s my position: I’ve never been asked to, nor have I, advocated for Peter Lay. Our cases couldn’t be any more different. I think Palm Coast Travel is entitled to its day in court — just as Lay is.

    The way I see it, there is no benefit to my continued involvement in this case. I’ve been pulled into this suit against my will. I don’t have a horse in this race.

    If anything, there’s only a downside to keeping me here.

    I mean, think about it — other than having a really good lawyer, my only defense as a journalist is to start asking questions about Palm Coast Travel. You know, talking to former employees, making open records requests and writing about the company at every opportunity on my site.

    And now my mainstream media clients want me to start covering the suit. Of course, those stories would get vetted by attorneys, but once they’re out there, it wouldn’t be helpful.

    I really don’t want to go there.

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