Another lawsuit filed in fake travel insurance case

That fake travel insurance story just won’t go away.

First I got sued by a travel agency for reporting on it, along with another customer. (Both cases were dismissed.)

Then their customers sued back. And now they’ve done it again.

A lawsuit was filed yesterday in United States District Court in Miami against Revelex, a booking engine used by agents, and two travel agencies, Legendary Journeys and Four Seasons Tours and Cruises. The suit, which seeks class action status, accuses some or all of the defendants of negligence, unfair and deceptive trade practices and unjust enrichment for their role in selling what the suit calls “bogus” travel insurance.

Here’s the full text of the complaint (PDF).
Read more “Another lawsuit filed in fake travel insurance case”

“Like everyone, we need the state to take action against Prime Travel Protection”

Florida regulators today filed a revised notice of intent to issue a cease and desist order against Legendary Journeys, a Sarasota, Fla., travel agency, as part of its investigation into Prime Travel Protection. It appears to be the state’s biggest action against a single company, with 17 counts and half a million dollars in outstanding claims, according to a government report. Here’s the order (PDF). Unlike some of the other agencies affected by this scandal, Legendary Journeys has been candid about its role and eager to face its critics. So I asked Al Ferguson, a vice president at Legendary Journeys, to answer a few questions.

Why do you think the state decided to revise its intent to issue a cease and desist today?

The intent is unclear. I think there is even conflicting opinion in Tallahassee on this.

We have complied on anything asked and submitted a mountain of paperwork to support everything that occurred. The revision is the same notice [we received a year ago] to not sell Prime Travel Protection policies. We stopped doing that six months before the first intent was issued.
Read more ““Like everyone, we need the state to take action against Prime Travel Protection””

Prime Travel Protection insurance cases linger, but they’re getting resolved

splendidRemember the Prime Travel Protection scandal? You know, the one involving fraudulent insurance policies, scores of denied claims and an investigation by state regulators?

Well, there’s good news and bad news. First the bad: After initially moving to stop the company, investigations by Colorado and Florida appear to be going nowhere. To date, there have been no substantive charges filed against anyone involved in the sale of these bogus policies.
Read more “Prime Travel Protection insurance cases linger, but they’re getting resolved”

“This is just the beginning of a much larger investigation”

What do the recent intents to file cease and desist orders by Florida against three travel agencies — Vacation Superstore, Legendary Journeys and Palm Coast Travel — mean for travelers?

I asked Barry Resnick, who has become something of an expert on the sale of unauthorized travel protection insurance plans. Resnick’s mother held a policy with Trip Assured, a Tennessee company that sold unauthorized trip protection plans. (I featured his comments in my MSNBC column last week.) Florida and five other states issued cease and desist orders against Trip Assured between 2005 and 2006. Jerry Watson began working at Trip assured in 2002 and left in early 2004 to start his own company, Vacation Protection Services, the predecessor to Traveler Protection Services and Prime Travel Protection.

Since the time his mother made a claim against Trip Assured that was eventually denied, Resnick has tracked these unauthorized companies and the agents selling the policies, working closely with the various state and federal investigators. But as a professor of counseling, Resnick also has an academic interest in recent events — as a case study in human behavior. I asked him for his perspective on the recent Florida rulings. Here’s our interview:

Q: What do the recent rulings mean for travelers?

Resnick: Simply put, it means buyer beware — not only for the product, but the seller of the product. It’s disappointing because many of these travelers relied on their travel agent for appropriate recommendations.

Q: What about travel agencies?

Resnick: Based on the intent to order a cease and desist, it’s rather confusing. The orders obviously put a stop to the sale of unauthorized insurance and insurance-like products. However, there seems to be issues with licensing that will need to be clarified. In speaking to the department’s legal counsel, it appears that this is just the beginning of a much larger investigation that entails several governmental agencies within the state of Florida and possibly the federal government.

Q: I read an interesting story in the Sun-Sentinel about one of the agencies, and it certainly seems like this is an innocent mistake. Do you think it is?

Resnick: I would hope a travel agent who sells insurance would be able to differentiate between legitimate insurance and non-insurance. However, based on the many sophisticated investors who were scammed by Bernard Madoff, I can condone an honest mistake.

When the Trip Assured investigation was being conducted, our lawyers received dozens of phone calls from both consumers and travel agents who purchased the unauthorized plan. The lawyers asked me to handle several of the calls as the volume was tremendous. I spoke to many people, including some very large producing travel agents. I certainly hope that those who were involved with Trip Assured did not sell Prime Travel Protection. I have been told that this issue is the focus of the state’s investigation to determine if any of the travel agents are repeat offenders.

Q: The press release issued by Florida makes this look like a minor infraction. No actual cease and desist orders have been filed. Isn’t this an almost victimless crime, in which only a handful of travelers lost their vacations?

Resnick: The state regulators usually act on complaints that are filed. I found in my personal investigation that many individuals do not even file with the state regulators. Therefore, the exact number of individuals who lost their vacations cannot really be determined. However, because it has been determined that these “policies” were unauthorized, even those individuals who did not file a claim may be entitled to a refund of their premium.

Q: Describe what’s at stake for the travel agencies selling these policies.

Resnick: The best word to describe what’s at stake for these travel agents is simply, “trouble”. The state has a lot of leeway in regards to how they may proceed. Civil and criminal penalties are possible. Individuals can also file civil lawsuits against their travel agent. Of course, it’s up to the courts to determine an agency’s liability. I would think a judge would be fairly sympathetic to a senior citizen who claims he or she relied on the travel agent’s advice in purchasing insurance. This will especially hold true if the individual bringing the lawsuit can prove that their travel agent has a track record of selling unauthorized travel protection plans. I know of a few such cases that were filed against the travel agency. Each was settled prior to trial.

Q: What’s the extent of the damage for travelers?

Resnick: I would hope at a minimum the cost of the trip and refund of the premium for those who filed a claim and those who did not. I know one traveler who passed away while battling for his claim. His family told me they were going to sue for damages against the travel agency. I do not know if the lawsuit was ever filed. In our litigious society it wouldn’t surprise me to see multiple lawsuits filed for damages above the cost of the trip. Whether the plaintiffs would prevail is another question.

Q: Do you think state and federal investigators are aware of the magnitude of this problem? And if not, why not?

Resnick: I know federal investigators have been made aware because I have been told by some individuals they have already contacted the Federal Trade Commission and the Department of Justice. Within the DOJ, the investigation would be assigned to an Assistant U.S. Attorney in the geographical region of the complainant. The Assistant U.S. Attorney would ask the FBI to conduct an investigation. These investigations can take a very long time and quite often those under investigation are unaware until an indictment is made. The state of Florida is very aware of the magnitude of this problem and they have been in communication with their counterparts in other states. It’s also possible the respective state investigators will share their information with the federal authorities.

Q: Are there any other travel agencies involved in this?

Resnick: As I mentioned, I spoke to many travel agencies a few years ago. I cannot recall offhand who I spoke to. I made copious notes that I plan to locate. I hope that none of the travel agencies I spoke to are involved with PTP. The Florida authorities did indicate that they are still looking at other travel agencies. I am personally not aware of any other agencies, but I am certain there must be more than the three who were issued the orders.

Q: In an interview with Al Ferguson of Legendary Journeys, he says only a a very small number of his clients are affected by the Prime Travel Protection and Vacation Protection Services bankruptcy. What’s your sense of how many travelers are currently affected by this scandal?

Resnick: That’s great, then Mr. Ferguson should pay them off right away. Everyone who purchased one of these plans has been affected. The plans are illegal. When asked about how claims will be honored, Mr. Ferguson responded that insurance products have a “mediation remedy”. He is absolutely correct, but what he does not seem to understand is the products he sold were illegal and are not insurance products. There is only one remedy in such cases and that is full reimbursement for the cost of the premium and claim, if filed.

Q: Legendary Journeys apologized for selling Prime Travel Protection and Vacation Protection Services. It’s so rare to find an executive apologizing for anything, and I have to be honest — I’m impressed. How about you?

Resnick: It’s admirable Mr. Ferguson has apologized, but he has to stop pointing fingers. He continues to put the blame on Prime Travel Protection and Vacation Protection Services and feels because other travel agencies have engaged in these activities it is somehow OK and he is not at fault.

Q: When I asked Ferguson how long his agency had been working with Jerry Watson, he answered by saying his agency was going to sue Watson. What do you think of that answer?

Resnick: I think Mr. Ferguson is evading the real issue here. First of all, he should immediately put his resources into reimbursing his clients. Many of these consumers are senior citizens and waiting years and even months is simply not acceptable. Last summer you posted information about Paul Donohue, a PTP claimant who purchased his trip protection plan from Legendary Journeys and was fighting for his claim refund. Unfortunately, Paul passed away this past week. He was a man of modest means and his wife is now left in a financial bind. How many other Paul Donohue’s will pass away before these travel agencies do the correct and moral thing and reimburse their clients?

I find it curious why Mr. Ferguson failed to answer the simple question of how long he has been working with Mr. Watson.

An Internet archive search shows that Legendary Journeys was selling “trip protection” plans as far back as 2003 and calling it “insurance”. This coincides with the time Mr. Watson was employed by Trip Assured and perhaps is the reason Mr. Ferguson failed to respond to your question regarding the longevity of his relationship with Mr. Watson. In my review of the archived Web sites, I found that the contract terms of these plans looked similar to the types of plans that are considered unauthorized by state insurance regulators. If Mr. Ferguson was indeed selling the same type of illegal trip protection as far back as 2003, this could be a very serious issue.

Q: Is that your only concern?

Resnick: No. Mr. Ferguson repeatedly refers to Vacation Protection Services. This company was issued a cease and desist order over two years ago by the state of Tennessee. I find it incomprehensible that Legendary Journeys would be selling a product from this company under the circumstances, especially after the date of the cease and desist.

Mr. Ferguson continues to use the excuse that Legendary Journeys was actually the victim and they were defrauded by Mr. Watson’s companies. As one of the largest travel agencies in Florida, if not the country, this is simply not an acceptable excuse.

The sale of unauthorized insurance by travel agents was widely publicized when Trip Assured was issued a cease and desist order in September 2006. Every trade publication covered the issue multiple times. A travel agency as large as Legendary Journeys certainly should have been aware of this matter considering the action was taken by the very state Legendary Journey conducts the majority of its business – Florida.

For a travel agency to engage in the sale of the same type of illegal product after the September 2006 Trip Assured cease and desist is incomprehensible in my opinion. More shocking, however would be to learn that an agency sold illegal trip protection through another unauthorized company and then later sold again through Prime Travel Protection.

As I write this, an investigation is underway to determine which Florida travel agents were involved in these illegal sales prior to Prime Travel Protection. It is my understanding the findings will be made public this week.

Q: I’ve received no fewer than three cease and desist letters from agencies and their lawyers, trying to stop me from publishing blog posts about them. Is this a tactic commonly used by agencies that sold Watson’s policies?

Resnick: This is typical behavior. I was threatened in a similar manner as was my mother and several others who pursued their claims. Threatening letters from lawyers, intimidating correspondence to the employers of those seeking claim reimbursement were common tactics. It’s just a way to move the focus away from the actual issues. My guess is whoever sent you the letters are possibly the individuals who have the most to hide – perhaps they are the agencies who have sold these unauthorized products over and over again. It would be very beneficial to your readers, Chris is you would share the name of the travel agencies who have threatened you.

Q: What should travelers do to make sure they don’t get caught with a worthless policy?

Resnick: Travelers need to be smart consumers and should thoroughly investigate their travel agent. The BBB provides a rating for many travel agents and that is a good indication of their reliability.

Q: Do you think it’s still safe to do business with these three agencies, and any other agencies named in a future complaint?

Resnick: I would hope they have learned from this unfortunate experience and make good on all claims. There is a saying that lightening doesn’t strike twice, so one would assume these agencies would certainly not sell unauthorized products again. The question that remains: Is this the first time that these travel agencies were involved in such sales? We’ll leave that question to the state regulators or perhaps an investigative reporter. I do believe if any of these agencies are found to have sold such unauthorized plans in the past, criminal charges will be filed.

Q: What do you expect next?

Resnick: I expect the state of Florida is going to take a serious look into who has engaged in the sale of these types of products in the past and who currently sold through PTP. I also believe the results of Florida’s actions will dictate the role of any federal investigation.

Q: As a psychology professor, what has this experience taught you about human behavior?

Resnick: Just like those who invested with Bernard Madoff – greed can be a powerful aphrodisiac. Prior to 2006, with the companies that preceded Prime Travel Protection and currently, travel agents were provided huge incentives for selling these unauthorized plans. They were given overrides and signing bonuses and may have made more money selling unauthorized insurance than cruises and tours. I honestly believe that greed overruled common sense.

Legendary Journeys apologizes for selling Prime Travel Protection policies, plans lawsuit against Watson

The state of Florida notified three large travel agencies earlier this week that insurance offered by Prime Travel Protection might be illegal. What does its actions mean for agencies and their customers, particularly those with policies underwritten by Prime Travel Protection and other companies owned by Jerry Watson? For an insider’s view, I turned to Al Ferguson, a vice president at Legendary Journeys, one of the agencies named in the orders.

Q: An early version of last week’s story quoted a state official as saying there was an intent to order a cease and desist against three agencies, including yours, for selling unlicensed insurance and possibly also travel. But it turns out that the state was only notifying you, Palm Coast Travel and Vacation Superstore that selling unlicensed insurance was a possible violation of Florida statutes. What is your understanding of these orders? Do you intend to contest the state’s allegations?

Ferguson: We intend to completely acknowledge their intent on Prime Travel Protection. We also will explain this notice also affects hundreds of travel agencies in Florida that sold this insurance product, and two large travel agency software reservations systems — Revelex and Wincruise — that were booking engines for this insurance product.

Additionally, we will document that we discontinued selling this insurance product when we became concerned with them in September 2008. We stopped selling Prime Travel six months before this state notice was even issued.

Q: How many of your customers currently have insurance policies through Prime Travel Protection and companies related to it, such as Vacation Protection Services?

Ferguson: We have a very small number of clients affected, because we stopped selling this product last September. We have been selling Travelex insurance since.

On Jan. 26, everyone received a notice that Prime Travel Protection and Vacation Protection Services was liquidating and declaring bankruptcy, although it is unclear what they have actually done.

For all passengers that had this insurance product with close in travel, we re-purchased insurance for our clients through Travelex. This was done immediately and then new policy was issued to clients. We did this because we were concerned, especially about the need for emergency medical and transportation for our clients while traveling.

For all other passengers traveling later in the year — a very small number — we advised our clients of Prime Travel Protection and Vacation Protection Services and new Travelex protection with Legendary Journeys certificate for payment. Even before any state notice of Prime Travel Protection and Vacation Protection Services, Legendary Journeys spent approximately $100,000 to protect our clients.

Q: How many outstanding claims do you have, and roughly how much money is in dispute?

Ferguson: We have approximately 25 clients that have this situation and we have been in contact to try to satisfy their issues. If they have not been contacted, they should contact Stewart Carrier at [email protected].

Q: I think it’s important to note that just because someone had a policy and made a claim doesn’t mean their claim would have been honored, even if it was real insurance. At this point, how do you separate the claims that would be honored from the ones that normally would be denied?

It’s difficult. But Prime Travel Protection and Vacation Protection Services, and I believe any insurance product, has a mediation remedy.

Q: How long have you been working with Jerry Watson?

Ferguson: Legendary Journeys is filing legal action against Prime Travel Protection and Vacation Protection Services and Jerry Watson for fraud and misrepresentation and would prefer not to focus on the selling of a product we believed was insurance — including hundreds of agencies in the USA and the major travel agency reservation systems.

Q: How did Watson represent his policies to you? As insurance – or trip “protection” — or something else?

Ferguson: I believe Prime Travel Protection and Vacation Protection Services’ vague point is that they are not the insurance product but the selling company. However, it was always clear that regardless of what Prime Travel Protection and Vacation Protection Services said they did, the companies behind them were insurance. They have had multiple underwriters licensed to sell insurance in Florida and other states. If Prime Travel Protection and Vacation Protection Services did not have these underwriters, the issue is fraud. It is my understanding that there are many travel insurance products that are represented by companies that are not the actual underwriter.

Q: There’s been a lot of discussion about the unusually high commissions, bonuses and overrides paid by Watson to his travel agents. Some have suggested the money they were getting from Watson made them look the other way when problems started to surface with claims. Is that a legitimate criticism?

Ferguson: I do not believe so. First, most travel agencies are selling travel insurance by convenience. This insurance product was included, at various times, by major travel agency reservation software systems. One of the largest is Revelex, and there are others. This means, when making a reservation, you could add this insurance product in the booking seamlessly.

That had nothing to do with anything other than convenience.

Additionally, when we moved to our current insurance company, the commission amount is virtually identical. It was not a motivation in our selection of that insurance product. In fact, it was highly motivated because of our reservation system. Most insurance products are nearly the same commission — at least as to the commissions offered to Legendary Journeys.

Q: In reading some of the comments on this blog, it seems there are some current and former customers of Prime Travel Protection who are unwilling to believe anything you say. What is the most unfair thing that you’ve seen in the comments, and how would your respond to them?

Ferguson: It is why I do appreciate your blog. Forums need to try to stay fair and balanced. Often that is not the case.

I think the most obvious is that they don’t want resolution, but only want blood. First, we have travel agency competition that I suspect are some of the bloggers. They can effectively compete with another agency by being so negative yet be anonymous.

Others commenting are not affected at all and only have 25 percent of the facts — for example, assuming we were selling Prime Travel Protection and Vacation Protection Services to the end … again, we stopped in September.

Additionally, while this is a dramatic issue for a small number of our clients — and we will try to satisfy them — it is important to note that while a $5,000 loss is significant, Legendary Journeys had more than 20,000 clients in 2008. The number of affected clients is extremely small.

Some bloggers have difficulty looking at a big picture. We all have interest in resolving this for our small number of affected clients and that is really the only thing that matters. Legendary Journeys will.

Q: Can you give me a timeline of your company’s break-up with Watson? When did you do it, why did you do it, and what did you tell your customers who help policies underwritten by the company?

Ferguson: September 2008. First, our reservation system, as I explained before, made a change necessary as they were concerned, at the same time legendary journeys was, about valid claim payment schedules completed by Prime Travel Protection and Vacation Protection Services.

Second, you and others began to bring to our attention problems with claim payments by Prime Travel Protection and Vacation Protection Services. Both issues helped us make the right decision to change insurance products.

Prime Travel Protection and Vacation Protection Services has a legal requirement to pay valid claims. It was not until Jan. 26, when they declared bankruptcy and liquidation – it’s still unclear what they have done — hat previous clients with valid claims — again, approximately 25 clients — had an issue. Even now Prime Travel Protection and Vacation Protection Services says they are going to pay these claims.

Our actions to satisfy our clients effected is independent of their actions meaning our clients can continue to Prime Travel Protection and Vacation Protection Services in addition to what Legendary Journeys does for them.

Q: Have you had any contact with the two other travel agencies named in Florida’s intent to order a cease and desist since the bankruptcy of Prime Travel Protection?

Ferguson: I have not. Everyone is in the exact same boat and they can decide how they wish to satisfy their clients. Again, while Florida has started with the three big agencies in the state, this will affect hundreds of agencies in the same way. This will also affect the software reservation systems, the travel agency consortiums and so forth, that were selling Prime Travel Protection and Vacation Protection Services. This will affect a gigantic number of companies. Florida indicates in the notice on Prime Travel Protection and Vacation Protection Services that many agencies sold Prime Travel Protection and Vacation Protection Services policies.

Q: Legendary Journeys is the only travel agency named by the state of Florida earlier this week that hasn’t sent me a cease and desist letter from an attorney. I feel left out! Why have you decided to engage your critics on this blog and answer my questions, instead?

Ferguson: Great question. I hope our critics stop and re-read your question.

Legendary Journeys has 10 bricks-and-mortar offices in Florida. We have been around a very long time and will continue to do so. Your question gets to my point of making sure everyone has all the facts. I won’t be redundant again from above answers, but when you have 20,000 cruise and tour passengers a year … there is always, always going to be some unhappy people. I hope we can all agree that some of those complaints are going to be reasonable and some are not.

In this instance, I apologize to our clients that we sold this product. If Prime Travel Protection and Vacation Protection Services was not licensed to sell insurance via the underwriters of the product, then fraud has been committed against Legendary Journeys.

We have tried to be responsible in this situation. We made the changes when necessary, we protected our clients when necessary, we are going back to try to satisfy our clients that have not had valid claims paid.

And my communication with you and trying to silence you or anyone else would only fail. Others can make any business decisions they want, but Legendary Journeys wants to do the right thing and Legendary Journeys will.

Q: I have to tell you, my favorite lawyer letter to date accuses me of maliciously publishing falsehoods. I take it you wouldn’t be talking with me if you felt that way. Still, is there anything I could be doing to facilitate a more open and fair debate on these issues?

Ferguson: I think you have got it. Fairness and balance. You have two posters on Prime Travel Protection and Vacation Protection Services that have incredible knowledge on Jerry Watson and Prime Travel Protection and Vacation Protection Services. I am suspicious of their motives, who they really are and why they post over and over again — and by the way, it’s America, so they can.

The most important thing is that both sides be presented and then everyone makes their own decision. Information is power and information presented in forums like this are valuable for everyone … consumer and business alike.

Q: There’s been talk about a possible investigation of Prime Travel Protection by Colorado authorities, and a possible federal investigation. Have you been in touch with any other officials from Florida, Colorado, or the federal government, in regards to Prime Travel Protection?

Ferguson: I have not. We have been totally focused on our clients affected. To be completely honest, we have not even received the notice from Florida. As you are already aware — and again, I thank you for correcting your own blog — the first notice issued by Florida was sent to [your sources] before it was sent to us. And it was wrong. It had nothing to do with travel or even insurance. It only was a cease and desist on Prime Travel Protection and Vacation Protection Services — which again, we have not sold since September.

But regardless, we will cooperate in any investigation. I am willing to wait for all the facts. The very important one is: Did Prime Travel Protection and Vacation Protection Services have an underwriter and were they licensed to sell in Florida? If they did not, [then] in addition to the tragic issue of money loss, fraud has been committed.

In the short term, we can only satisfy our future travelers — and we have — and try to satisfy valid claims, which we will.