In a jumbled mess of phony invoices, misappropriated trademarks, and concocted credentials, New York businessman Joseph Ehrenreich's elaborate scam has come crashing down over the course of the past year.
Like most intricate travel-related frauds, Ehrenreich's scheme began with a simple premise: heavily discounted vacations. Working from his home in Niagara County, N.Y., Ehrenreich would reach out to local businesses, offering them the chance to pay several thousand dollars a year in return for unlimited vouchers for cruise-line travel.
[See 10 Cities for Real Estate Steals.]
In peddling this product, Ehrenreich generously padded his résumé with a number of bogus accomplishments. He was, he told potential clients, a member of two international trade groups for travel professionals. And he was able to score exclusive deals, he would claim, because of the cozy relationship he had developed with cruise lines during his stint as a travel agent for Fortune 500 companies. To promote these close ties, he employed various tactics, including the unauthorized use of cruise line Royal Caribbean's trademark.
When businesses took the bait and bought the unlimited-voucher package, Ehrenreich would tell them that they could use the free trips to reward hardworking employees or even to donate to charity fundraisers. When the companies distributed the vouchers, Ehrenreich would charge recipients a booking fee and attempt to get them to pay thousands of dollars to upgrade their reservations.
The catch? Ehrenreich never booked the tickets. When customers complained, he would finally take action, but only by getting access to their credit card information and charging them a second time for a purchase they thought they had already made.
When Ehrenreich was indicted last year, the charges exposed a network of defrauded organizations scattered across western New York. His victims include a hospice, a magazine, and a local Meals on Wheels branch. Earlier this month, he pleaded guilty and agreed to pay $130,000 in restitution.
Ehrenreich's fraud is hardly an isolated case. As peak travel season approaches and millions of Americans contemplate vacations, con artists are lining up to cash in on what has become a massively profitable business. But it's not just outright fraud that has consumers concerned. Instead, more subtle maneuverings, such as terms buried in fine print or misleading advertisements, also have the potential to drain billions of dollars from consumers' pockets each year.
Here are some tips on how to weed out the specious offers as you plan your next vacation:
Read the fine print. Vacations are rarely, if ever, truly free of cost. "Chances are, if you're getting something free, there are strings attached to it and you're going to have to do something in order to prevent being charged in the future," says Alison Southwick, a spokesperson for the Council of Better Business Bureaus.
Travel clubs that offer gift certificates are a prime example. Often, when consumers cash in the certificates, they get locked into membership agreements.
To avoid situations like this, read the fine print carefully on all travel offers, and make sure that what you see matches up with what the salesperson told you. "If you have to take it home and sleep on it, that's fine," says Southwick. "But don't just take them at their word. You absolutely have to make sure what the salesperson said to you is represented in the contract."
Do some comparison shopping. Cheap vacations to exotic places do exist—at least at certain times of the year. But during peak travel periods, you should expect prices for hotels and airfare to be relatively high.
That means that when you hear from a company that offers to drastically undercut the competition's prices, you should look at the deal with added scrutiny, says Gabe Saglie, the senior editor at Travelzoo, a website that reviews and publishes travel deals. "So much of pricing is dictated by seasonality … that a lot of red flags come up merely from having an understanding of where prices should and should not be at different times of the year," he says.
Research the company offering the deal. Some scams are easy to spot, but even deals that have an aura of legitimacy can turn out to be fraudulent or misleading. "When you're offered $99 for a seven-day getaway to Mexico, I think common sense dictates that there is some kind of catch," says Saglie. "I think the consumer is perhaps more readily subjected to practices that on the surface may not be that obvious but … that do end up inflating the actual cost of the vacations above and beyond what companies are used to advertising."
To make sure the deal is sound, do some background research on the company that is offering it. "It never hurts to research even the well-known names, but if it's a company you've never heard of, definitely research them because you have no idea what kind of reputation it has until you do your research," says Southwick. To help consumers, local Better Business Bureaus maintain reliability reports on a wide range of companies.
With the rise of online travel promotions, it has become even more important for consumers to do their homework. "Some of the best opportunities exist online, but some of the major pitfalls live on the information superhighway as well," says Saglie.
Reader Comments Read all comments (2)
Bob of IL 9:00PM March 12, 2012
Joe of NJ 7:17AM June 07, 2010