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Order Bars Student Tour Operator from Future Travel Fraud

May 2, 2001
The Federal Trade Commission reached a settlement that would bar Cerkvenik-Anderson Travel, Inc. ("CATI") from misrepresenting a wide range of products and services when advertising, promoting or selling any travel-related packages. The company, which was based in Phoenix, marketed student tours to sites in Mexico until declaring bankruptcy last year.

Under the proposed settlement, CATI and its president Andy Anderson would also be required to keep records detailing their compliance with the settlement terms and would be subject to significant civil penalties for future violations.

According to the Commission, Anderson and CATI, doing business as Student Tours, College Tours and Mexico Tours, marketed, sold and operated vacation tours to Mexico for students in high school and college. The defendants violated Section 5 of the FTC Act, the complaint alleges, by misrepresenting to the students and their parents the nature of the vacations they offered, including the quality of hotel accommodations students would receive, the cost and value of various benefits and activities included, and the amount of help they would provide to create a safe environment once the students arrived in Mexico.

On December 28, 1999, the District Court in which the complaint was filed entered an agreement between the FTC, CATI and Anderson that was, in effect, a stipulated preliminary injunction that required the defendants to cease making misrepresentations to consumers about their vacation packages and to provide the Commission with a monthly accounting statement demonstrating that the money consumers paid for Spring Break 2000 trips was, in fact, being used to pay for those trips.

Many of the Spring Break 2000 trips were eventually cancelled, leaving some students without trips or refunds. In June of that year, the company filed for Chapter 11 bankruptcy protection, which was later converted into a liquidation under Chapter 7.

Under the terms of the settlement, which must be approved by the Court, CATI and Anderson would be prohibited from misrepresenting, with regard to the advertising, promotion or sale of any type of travel-related product or service, that: 1) consumers will stay at the hotel of their choice or will be placed in a hotel of equal or better quality; 2) the defendants will arrange for consumers to receive certain special benefits and entertainment; and 3) the defendants will provide support, assistance and a safe environment for consumers while in Mexico.

Because CATI has filed for bankruptcy and is no longer operating, the order will not require that the defendants pay consumer redress or disgorgement. However, if in the future CATI or Anderson are found to have misstated their financial condition, the Commission reserves the right to reopen the case and seek such compensation. Finally, the order contains standard monitoring and record-keeping provisions to ensure the defendants' compliance with its terms.

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