Class Action Alleges Carnival Cruise Lines Received Illegal Kickbacks from Purchases of ‘Vacation Protection Package’

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Six plaintiffs have put their names on a proposed class action lawsuit in which they allege consumers who bought “Vacation Protection Package” travel insurance policies from Carnival Cruise Lines unwittingly paid “concealed kickback[s]” to the company in the form of inflated premiums.

The lawsuit explains that extensive state- and industry regulator-driven investigations in recent years have targeted the insurance industry’s use of “distribution participants” to solicit travel insurance to consumers. From these inquires, the case says, investigators have uncovered a number of “unfair and deceptive” tactics used to sell travel insurance, chief among them the payment of undisclosed monetary kickbacks to said “distribution participants” that consumers ultimately foot the bill for in the form of inflated travel insurance premiums. According to the complaint, these undisclosed kickbacks are buried deep in the bundling of a particular company’s travel insurance product with “other, non-insurance products” for a single price. This tactic, the suit goes on, gives the impression that the travel insurance is being purchased by a consumer on a pass-through basis.

While travel insurance companies such as Transamerica Casualty Insurance Company and Nationwide Mutual Insurance Company have entered into regulatory agreements to curb their supposedly unfair practices, such deals, the lawsuit says, have afforded no relief whatsoever to consumers who have been victimized by companies’ arrangements with distribution participants. According to the plaintiffs, Carnival Cruise Lines “has engaged in precisely these unfair and deceptive practices on a nationwide basis” through the sale of its “Vacation Protection Package.”

The defendant’s website clearly states Carnival's Vacation Protection Package is underwritten by either of the aforementioned companies, the suit says. A reasonable consumer, according to the lawsuit, would thus believe he or she is contracting with Transamerica or Nationwide after purchasing a Vacation Protection Package from Carnival. In reality, however, Carnival Cruise Lines allegedly receives an undisclosed kickback from these third-party insurers for every Vacation Protection Package sold. From the lawsuit: 

“Carnival has never disclosed to [the plaintiff], or any of the class members, the true nature of its relationship with Transamerica or Nationwide. Specifically, Carnival never disclosed the fact that it received a substantial kickback on the Transamerica Policy that Carnival offered for sale with the [Vacation Protection Package]. Nor has Carnival ever disclosed that it is still receiving substantial kickbacks on every Travel Insurance Policy it sells.”