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Too good to be true? Maybe it was.

 
Too good to be true? Maybe it was.
Travelers said they paid $900 to $1,000 each for tickets. Officials are looking into whether an agency took the money and ran.

LA TIMES
By Laurie Berger
Special to The Times
October 2, 2005

CALIFORNIA, New York and Illinois authorities are investigating a travel agency that advertised low fares in several U.S. newspapers, promised to make bookings for its customers, then disappeared with more than $100,000 of their money.

The agency, New York-based Galaxy Tours & Travel, ran ads in the spring in newspapers including the Los Angeles Times, Washington Post and Chicago Tribune, touting "unbelievable summer specials" on international flights from a "recognized name in the world of travel."

FOR THE RECORD:
Galaxy Travel -- An Oct. 2 article in the Travel section on a travel agency under question incorrectly reported that California Seller of Travel registration is free. It is not. There is a $100 filing fee for each location from which the seller does business.
 
At least 100 travelers nationwide responded to the ad, plunking down an average of $900 to $1,000 for international tickets on reputable carriers. When customers checked their reservations, however, they discovered they had none. Some didn't find out until they arrived at the airport.

New York officials say Galaxy, whose name is nearly identical to a reputable New York travel agency called Galaxy Tours & Travels that is in no way related, was a front for operators who took travelers' money and ran.

"There's every indication that Galaxy was not legit," said Sgt. Michael Loughran of the New York Police Department, which has launched a fraud investigation.

Galaxy Tours & Travel could not be reached for comment.

Authorities expect consumers' losses to climb beyond $100,000 as travelers discover that their tickets are worthless.

"This is just the tip of the iceberg," Loughran said.

Leigh Podgorski of Van Nuys booked with Galaxy because it seemed legitimate, and its fares to Poland beat all others, she told authorities.

Although the Galaxy ad said "all major cards accepted," the agency honored only American Express, a card she didn't have. She paid for three seats on Lufthansa with a check for $2,995.

When her tickets didn't arrive, Podgorski said she contacted Galaxy but didn't get a clear answer from representatives there.

Upon calling Lufthansa, she discovered that the agency made reservations but never paid for them.

By that time, Galaxy had already cashed her check and stopped answering the phone, she said.

Although it's not clear who's liable for these losses, the alleged victims are blaming themselves for chasing "too-good-to-be-true" deals.

"I feel so stupid," Podgorski said. "I took my family's money and threw it down a black hole."

Ticket losses

EACH year, legions of travelers fall victim to dishonest operators, authorities say

Although there are no national statistics on airline ticket fraud, the International Air Transport Assn. estimates that carriers lose at least $1.5 billion annually on phony or stolen tickets.

"And that's what we know from our accredited travel agencies," the most frequent victims of ticket thefts and scams, said David Mitchell, director of legal and compliance for the Arlington, Va.-based Airlines Reporting Corp., or ARC, which licenses agencies to sell tickets on behalf of the airlines.

"If you add consumer losses on top of that, it's even worse."

Galaxy's alleged scheme targeted out-of-town newspapers and kept readers in the dark until it was too late. Here's how it worked, according to authorities:

Galaxy ran ads on consecutive Sundays in February, March and April, in some of the country's largest daily newspapers. The Sunday editions reached a combined circulation of more than 3.2 million.

"These operators prey on out-of-towners, knowing that people won't come to New York City to track them down," said Det. Henry Balbin of NYPD's Fraud Squad.

Victims don't know how or where to report the problem. New York's police department, for example, "is massive," said Dave Donofrio, an ARC fraud investigator working on the Galaxy case for the NYPD.

By the time anyone realizes what's going on or how to get in touch with authorities, the scam is well underway, he said.

The Galaxy ad that ran in the Los Angeles Times looked similar to 35 others in the newspaper's Sunday Travel Agent Directory those weeks. The ad contained a toll-free number, and its name was almost identical to an established, 20-year-old agency in the same neighborhood called Galaxy Tours & Travels  ... a difference of only the letter "s" on "Travels."

Authorities say it's not unusual for scam artists to take the name of a real agency. "They'll just change one letter so people think it's the reputable one," said Tom Joyce of the Chicago Better Business Bureau, which received several complaints about the now-defunct Galaxy.

The agency in question also managed to acquire an airline reservations system, which is easy to do, said Mitchell of ARC. "And anyone who's halfway handy with a computer can [forge] e-tickets," he said.
 
According to authorities, Galaxy made bookings but did not issue tickets until customers called. The tickets it then sent out were allegedly bogus.

"The idea is to keep customers thinking their reservations are OK and to keep the wolves away from the door as long as possible," said ARC fraud expert Donofrio. "They'll often do that by putting fictitious ticket numbers into a reservation to keep it alive until the passenger gets to the airport.

"Once someone discovers something's not right, the scam's over."

The first complaints began trickling into individual newspapers in April, more than a month after Galaxy's ad started to run, according to alleged victims and authorities. But the NYPD didn't receive a mass of complaints until mid-May, about the time that Galaxy stopped answering its phones, alleged victims said.

As late as June, a "chunk of complaints" sent by the New York Better Business Bureau to Galaxy's office were returned and stamped "moved, left no forwarding address."

"That's usually code for 'they skipped town,' " said Tony Barbera, a spokesman for the New York BBB.

As of the Travel section's Tuesday deadline, more than 100 grievances against Galaxy had been filed with the NYPD, various offices of state attorneys general and the New York BBB. All authorities are investigating and would not comment.

Misplaced trust

HOW did scores of consumers get tangled in this travel transaction? Fraud experts say they were taken in through a time-honored tactic: misplaced trust.

The agency advertised in reputable publications, ran ads alongside those of legitimate discount sellers and picked an address where other well-known ticket shops were based. The Manhattan phone directory lists 34 such companies, most of which do business in the neighborhood where Galaxy was allegedly located.

Times' readers interviewed for this story agreed that nothing about the company initially aroused suspicion.

"I'm very cautious and aware," said Jerry Saros of Fountain Valley, who told authorities he purchased a $985 ticket to Poland on Lufthansa through Galaxy. "Nothing gave me an indication that anything was wrong."

But there were red flags, authorities say. Galaxy advertised that it accepted all major credit cards, but it honored only American Express, the one held by fewest consumers. So, some clients ended up paying by check or money order.

This stripped them of any fraud protection afforded by the Fair Credit Billing Act, which allows consumers to dispute charges ... and even sue a creditor ...for services not delivered.

At least one alleged victim said even this didn't set off alarms.

"We didn't think it was weird because we had paid cash before with another L.A. travel agent and all was fine," said Bilena Brafman of Santa Maria, Calif. She and her husband, Allan, told authorities they lost about $2,100 for flights to Brazil.

Furthermore, Galaxy was neither accredited by ARC nor a member of the American Society of Travel Agents, which enforces a code of ethics among members.

Another sign of potential trouble: fine print on Galaxy's ad that said "CST pending."

CST stands for "California Seller of Travel," a law that requires companies that sell travel in California to register with the attorney general and prove they have a consumer protection plan. The registration is free and must be completed before they can lawfully operate in California.

They're then issued a CST number, which must be clearly and conspicuously displayed on all advertising materials, including newspaper ads.

The number isn't a stamp of approval, but it does show that the company is complying with state laws. If a registered company goes out of business or doesn't deliver on an airline ticket, a CST number can help track itdown.

Travel sellers are permitted to put "CST pending" on their ads until applications are processed, but Galaxy never submitted a registration, said California Deputy Atty. Gen. Michael Hughes. "That's a false representation."

Who is responsible?

NOT surprisingly, fingers are now pointing in all directions. Alleged victims say it's the newspapers' fault for accepting such ads in the first place. But consumer and legal experts contend that it's the buyers' responsibility to beware.

Although most metropolitan newspapers, including the Los Angeles Times, have advertising policies and standards intended to prevent suspicious ads from getting into print, "it's almost impossible to monitor all the ads in advance," said John Kimball, chief marketing officer of the Newspaper Assn. of America, based in suburban Washington, D.C.

The Times, the Tribune and the Post took action after they received complaints, and all stopped running the ads.

But Kimball thinks that the media should be held more accountable to customers. "We have a lot to lose if readers feel they can't trust newspaper advertising," he said. "We may need stricter oversight."

Two years ago, the Federal Trade Commission, in cooperation with the newspaper association, established a "red flag" campaign to educate and assist the media in screening out bogus ads. The focus was false weight-loss claims, but the guidelines also apply to travel, a trickier category to police because the ads are not as deceptive on their face, said Eileen Harrington, director of marketing practices for the FTC, which has prosecuted many fraudulent travel companies.

Consumers, however, must also be vigilant, experts say. "People need to be on their guard when giving large sums of money to companies they don't normally do business with," said Joyce of Chicago's BBB.

Paying by credit card is your best protection, said John Pittman, director of industry and consumer affairs for the American Society of Travel Agents. "Be wary of any company that only accepts cash; it's a warning sign that your money will not be protected," he said.

Saros, who bought a ticket to Poland from Galaxy, was one of the few who had paid with an American Express card. He disputed the charges and got his money back.

But others were not that lucky.

"You'll almost always lose by paying cash," said Harrington of the FTC, which, along with other consumer agencies, routinely warns travelers to check a company's track record before doing business with it.

Many of the alleged victims learned this lesson the hard way.

Elizabeth and Cedric Ebiner of San Dimas told authorities they are now out $4,125 for Air France tickets to Switzerland. Jay Golden of Los Angeles also told authorities he lost $825 on a Lufthansa ticket he bought for his wife.

Steve Jackson answered Galaxy's ad in the Washington Post and is out $8,000 on 10 United tickets to London, the paper reported.

And a Chicago-based dance troupe told authorities that it responded to the agency's Chicago Tribune ad and lost $15,000 on fake Air France tickets to Portugal. The dancers eventually rebooked all 17 seats --- but at twice the original price. "We ended up spending $30,000," said Lee Daniels, assistant director of Dance 2XS, which held a series of benefits to raise the extra cash.

For Bilena Brafman, this was going to be the family's last trip before a new baby this fall. She was counting on the "savings" from her Galaxy purchase to provide financial relief during maternity leave.

But because she discovered the ticket problem two weeks before her trip, she said the $2,100 deal ended up costing her $5,000.

*

Uncovering the signs of a possible scam

Here's what to look for when you're seeking travel deals ... and what you should be wary of.

Rock-bottom prices in high season. In the case of Galaxy Tours & Travel, the advertised prices were 50% lower than those offered by other discounters. A London fare from Galaxy, for example was $189; others ranged from $319 to $420.

"If one company is way out of line, they're probably flaky," said Al Anolik, travel attorney and author of "The Frequent Traveler's Guide."

Ads that say "travel seller number pending." Companies doing business in the state must register with the state attorney general's office as a California Seller of Travel (CST) and display that number on all advertisements.

If an ad says "CST pending," it's sometimes a red flag. If the ad doesn't have a number, it's breaking the law.

But just because an ad isn't numbered doesn't mean it's shady. "Every week I see one to four of those ads without numbers in newspapers," said Deputy Atty. Gen. Michael Hughes. "These are often legit companies that don't know they have to register with us. Or they might be travel companies operated by a government, and they're exempt."

A valid registration doesn't mean a business is reputable, but it does indicate it has followed the law. Before doing business with any travel company, check it out at ag.ca.gov/travel/index.htm. (Click on "Seller Search.")

Offers of cash discounts. It's a common tactic among discounters: Pay cash, get a better fare. Your credit card is the best protection against fraud or other problems.

Limited kinds of credit cards accepted. An ad that says "major credit cards accepted" may sound consumer-friendly. But you may not find out which cards are really accepted until you're ready to buy. Don't cave in and send a personal check.

Ads that lack a seal of approval. Before buying travel from anyone, check to see whether the agency is a member in good standing of the American Society of Travel Agents (www.asta.org) or United States Tour Operators Assn. (www.ustoa.com). Also, look for a Better Business Bureau seal of approval.

Spotty track record. Check a company's complaint history through the BBB's online search at http://www.bbb.org , or call the office in the state where it is located. The report may indicate whether the company is doing business under other names.

Finally, if you think you've been scammed, speak out. Many victims of travel fraud don't file complaints because they're embarrassed. Don't be. Report the scam to the police department's fraud division in the city where the company is based, as well as to your state attorney general's office (in California, that's http://www.caag.state.ca.us ), the BBB and the newspaper where the ad ran.

- Laurie Berger