A family of Florida-based travel companies doing business in Austin and San Antonio are facing charges of deceptive trade practices and other business and commerce code violations from the Texas Attorney General’s office.
The defendants, Escapes Austin LLC and Escapes Midwest LLC, which do business under the names Global Escapes, Blue Water, Sun Tree and others, are accused of using false gift giveaways to entice customers to attend sales seminars that marketed worthless travel-related software programs, according to a news release from the attorney general’s office.
Attorney General Greg Abbott said his office is seeking restitution for some 5,000 Texas consumers who may have been deceived into purchasing the software. In response to the attorney general’s actions, the 73rd District Court of Bexar County issued an order freezing the defendants’ assets.
Phone numbers connected to the Global Escapes’ Austin and San Antonio offices were disconnected when dialed on Monday. A representative with the company’s reservation service said she was restricted from giving out any corporate phone numbers. A 1-800 number listed on the company’s Web site consistently rang busy on Monday morning.
Court documents filed by the state also name chief executive officer James Carey III and managing member Gwendolyn Carey. According to the state’s lawsuit, the defendants used direct mail and telemarketing calls to inform potential customers that they “won” free cruises, hotel stays, vehicles, flights or expensive watches. However, recipients were told that they must set up an appointment to attend a sales presentation in order to receive their prize.
Those chosen also were told they only needed to pay taxes due on the gifts. Recipients were not informed about restrictions, hidden costs, the prizes’ overall value or the prizes’ limited availability. According to state investigators, prizes were difficult to redeem, expensive to redeem, or unavailable during certain dates.
During the mandatory sales seminars, the defendants touted their “proprietary software search engine technology,” which they claimed would allow purchasers to locate and reserve bargain travel deals online. “The defendants then used high-pressure sales tactics to convince customers that their ‘software license’ opportunity surpassed all others in the industry,” the release states. “The defendants’ sales representatives often purported to ‘negotiate down’ from the software’s $12,000 retail price to $7,000, $4,000, or to a ‘one-time price reduction’ of $2,200.”
Customers who could not afford the purchase price were offered financing. Rather than retain the purchaser’s outstanding debt, the defendants frequently sold it to third-party debt collection or finance companies.
According to the documents, after purchasing the product, many customers were unable to log on to the Web site for at least two weeks. “When the defendants finally provided the necessary user IDs and passwords, many customers encountered technical problems. Customers who were able to fully access the system discovered that the bargain travel deals they were promised did not actually exist.”
During the sales negotiations, customers were told they could return the product for a refund if they were dissatisfied with their purchase. However, when customers attempted to cancel their contracts, the defendants claimed the sales contract was binding. Concerned that the debt collection agencies could ruin their credit ratings, many customers also paid annual support “software upgrade” fees, even when they could not or did not use the system.
Under the Texas Deceptive Trade Practices Act, the defendants face civil penalties of up to $20,000 per violation, as well as a $250,000 penalty if the conduct was designed to harm a person aged 65 or older. The enforcement action cites numerous violations of the Business and Commerce Code’s Texas Contest and Gift Giveaway Act. Additionally, the Attorney General charged the defendants with violating the Texas Disclosure and Privacy Act, commonly called the Texas No-Call law.