When Online Bargains Turn Sour - deals found on the Internet

Kiplinger's Personal Finance Magazine,  July, 1999  by Lynn Woods

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Travel deals on the Internet aren't always what they seem.

Last fall, when Donna Copeland of Brighton, Colo., was planning a trip to Hawaii with her husband and another couple, she headed straight for the Internet and found what she thought was a great deal on the Sunscapes Travel Web site. After contacting the Bellevue, Wash., travel agency by phone, Copeland plunked down $4,500 for round-trip airfare and hotel accommodations for seven nights on Maui.

Although the trip wasn't scheduled to take place until May, Sunscapes demanded payment in full at the time of booking--a requirement she should have recognized as a red flag, says Copeland, especially when she didn't receive the airline tickets and confirmation numbers for the hotel and car rental until December, two months after she had paid for them. But Copeland wasn't seriously concerned until early January, when she e-mailed Sunscapes a question about her accommodations and never got a reply. When she went on the Internet, she was shocked to discover that the Sunscapes Web site had disappeared.

In 1998 consumers spent $2.1 billion on travel services bought via the Internet--the number-one consumer-spending category on the Net, according to Jupiter Communications, a market-research firm. And as the number of online bookings has increased, so has the number of travel scams. "We're getting more and more complaints," says Bob Whitley, president of the United States Tour Operators Association (USTOA), a nonprofit organization based in New York City. "They're the same type of offers you get on the phone and in the mail. My concern is that scammers are finding ways on the Internet to appear more legitimate."

Even travelers who normally hang up on telemarketers and toss postcards proclaiming that "you have won a free trip" seem likely to be taken in by phony offers on the Internet. Net shoppers intent on finding bargains tend to forget that "just about anyone can create a nice-looking Web site," says Phillip McKee, Internet fraud watch coordinator at the National Consumers League.

For the relatively insignificant cost of a mass-mailing program and an Internet-access account, a scam artist can reach thousands of e-mail addresses. Just because an organization advertises on the Web and registers its Web site with a search engine doesn't mean it's on the up and up. "Search engines give you a list of Web sites," says McKee. "They're not endorsing any site on the list. It's your job to read the site and figure out if you want to do business there." If something does go wrong, a travel company on the Internet may be difficult to track down because it could be located literally anywhere in the world.

When Sunscapes disappeared, Copeland called the resort in Maui only to find that there was no reservation in her name. She then called her credit card company to dispute the $2,100 hotel charge, even though the 60-day period during which you can have a disputed charge credited back to your account had already passed. Copeland also lodged complaints with the Better Business Bureau, the state attorney general's office and other government agencies. In February she received a form letter from Sunscapes explaining that the company had ceased operations and advising customers whose payments hadn't been honored to contact their own attorneys.

Copeland's persistence paid off. After she sent documentation to her credit card company proving that Sunscapes had gone out of business, the $2,100 charge was credited to her account. She was even able to book two rooms at the same Maui resort for the same dates at a rate that was actually slightly lower than the one Sunscapes had quoted. But other customers haven't been so lucky. Sandra and Frederick Corlis of Maple Valley, Wash., are still out $839 for payments they made for a condo and car rental they never received. And Ohio resident Sally Trocchio sent Sunscapes a $1,600 check for two airline tickets that never arrived. In February the attorney general's office in Washington State filed a lawsuit against Sunscapes for failing to deliver more than $67,000 worth of travel services.

What to watch out for

In addition to disappearing Web sites, travelers are vulnerable to a number of other online scams:

* Travel mills, which sell fake travel-agent credentials under the premise that you can earn commissions on travel packages and take advantage of courtesy fares and hotel stays. Agent "kits" cost anywhere from a few hundred to several thousand dollars, says McKee, but you can't actually sell airline tickets or make travel arrangements unless you're affiliated with a formally accredited agency. One indication that an agency has been accredited is that it carries an identification number issued by a group such as the International Airlines Travel Agency Network (IATAN) or the Airlines Reporting Corp. (ARC).

* Offers of free or discounted travel for an up-front fee. In California the state attorney general's office has filed suit against the Student Summer Abroad Program, which used the Internet to offer free trips to students who submitted an autobiographical essay and paid a fee of $50 to $100. The trips never panned out.