Free You Can't Cheat an Honest Man by James Walsh Page A

is because we are so successful. We believe we’ll be the Wal-Mart of the travel industry. We have our critics, but they’d love to have our bottom line.
    In January 1995, the Pennsylvania state attorney general announced his office was investigating Nu-Concepts. Joseph Goldberg, a deputy attorney general in the Bureau of Consumer Protection, said the program resembled a pyramid scheme—although he warned that his investigation was “very preliminary.” Goldberg’s office had received complaints from consumers who bought Nu-Concepts cards but couldn’t get discounts.
    On the other coast, regulators were still investigating. “[Outside agent programs] are sprouting like mushrooms in California and the rest of the country,” said Jerry Smilowitz, a state deputy attorney general in Los Angeles. “We’re still trying to get a handle on them.”
    Later in 1995, Nu-Concepts settled a legal dispute with IATAN by paying some money and agreeing not to use the IATAN logo on its agent ID cards. But the company’s problems reached a new level in November 1995 after an unfavorable judgment in a New York municipal court case, Elizabeth Brown v. James E. Hambric .
    Long Island resident Elizabeth Brown wanted to be a travel agent. She asked James Hambric for his advise on how to become one. Hambric, an “independent travel consultant” working for Nu-Concepts, convinced Brown that the Nu-Concepts “fast start plan” would provide her with the kind of training and education necessary to follow her dream.
    Hambric gave Brown the Nu-Concepts “Passport To Success” manual, which promised that Nu-Concepts would provide support, education and training.Relying upon the manual and Hambric, Brown purchased the Nu-Concepts travel agent package for $537.75.
    Then, everything started going wrong. Neither Nu-Concepts nor Hambric provided the promised training and supervision. Hambric refused to attend scheduled training sessions and didn’t stay current with Nu-Concepts information. As a result, Brown felt it necessary to purchase additional educational programs at a cost of $490.08. But even this didn't get her where she wanted to be.
    Brown sued Nu-Concepts and Hambric. The New York court came down hard on Nu-Concepts, finding for Brown on charges of breach of contract and state General Business Law sections prohibiting pyramid schemes and unfair business practices. The court went even further, writing:
    There is nothing “new” about Nu-Concepts. It is an old scheme, simply repackaged for a new audience of gullible consumers mesmerized by the glamour of the travel industry and hungry for free or reduced cost travel services. Stripped of its clever disguise as a recruiter and educator of outside travel agents, Nu-Concepts is nothing more than a pyramid scheme.
    The court ordered Hambric to pay Brown the maximum damages allowed under state law, which totaled nearly $1,500.
    The Brown decision was the first time a judge ruled that a card mill was an illegal pyramid scheme. However, ASTA legal counsel Paul Ruden predicted it wouldn’t be the last.
    In May 1996, ASTA sued Nu-Concepts in federal court, alleging unfair competition and trademark infringement. In December 1994, the company had agreed to stop using the ASTA logo on its agent ID cards. In May 1995, a Nu-Concepts attorney had told ASTA that all cards with its logo had been recalled and destroyed. But Ruden said that “recent evidence” had been found proving that Nu-Concepts was still distributing cards with the ASTA logo.
    Nu-Concepts insisted it was abiding by the agreement and that any ID cards with the ASTA logo had been destroyed more than a year before. Still, the tide of opinion seemed to be turning against NuConcepts. In October 1996, Hertz Car Rentals announced it would not pay commissions to travel agencies that booked a disproportionate amount of business in agent rates. “We will not only cut them off, we will refuse to pay commissions on any business,” said