More than 80,000 Minnesotans who were automatically enrolled in air travel insurance plans through Travelocity.com will share nearly $2.5 million in refunds, the Minnesota Department of Commerce said Tuesday.
Under state law, signing consumers up for insurance plans without their affirmative consent is "an unfair method of competition and deceptive practice," the Commerce Department said in a statement.
Consumers who booked flights originating in Minnesota on Travelocity.com between June 1, 2009, and Jan. 24 of this year were automatically enrolled in optional travel insurance policies by New York-based National Union Fire Insurance Co. of Pittsburgh and Wisconsin-based Travel Guard Group Inc., the Commerce Department said. To avoid the cost, consumers had to opt out of the insurance plans, which typically cost $25 to $45 per traveler.
Minnesota consumers who think they are eligible for reimbursement for travel insurance costs can contact the Commerce Department's consumer help line at 651-296-2488.
"Tens of thousands of Minnesota travelers were allegedly enrolled automatically in travel insurance policies when they purchased their airline tickets online," said Commerce Commissioner Mike Rothman. "These allegations show a clear violation of state law and represent a breach of consumer trust. We ordered the companies involved to stop these deceptive practices and properly reimburse all affected consumers."
In addition to paying refunds, National Union Fire Insurance also must pay the state a $250,000 civil penalty for alleged market misconduct, the commerce department said.
Travel Guard Group, based in Stevens Point, Wis., is "pleased to have resolved the matter with the state of Minnesota," said spokeswoman Carol Mueller.
National Union Fire Insurance, which is owned by insurance giant AIG, is "pleased to have resolved this matter with the state of Minnesota. We look forward to continuing to serve our valued clients," said spokesman Mark Herr.
Travelocity, based in Southlake, Texas, isn't a party to the settlement between Minnesota and the two insurance companies, and thus can't comment on it, said spokesman Joel Frey.
Because Minnesota was the only state involved in the settlement announced Tuesday, the agreement affects only consumers whose air travel originated in the state, said Commerce Department spokesman Matt Swenson. While there are similar laws in all 50 states, Minnesota is the first to take such action, he said.
Under Rothman, 49, who took the commerce job last year, the pace of the department's investigations and enforcement actions has picked up, and the agency's profile has been raised. Rothman has appointed a new head of day-to-day operations for the department, and new heads of divisions overseeing securities, insurance, and energy and telecommunications.
Steve Alexander • 612-673-4553