Royal Caribbean Cruises, Ltd. and its subsidiary brand, Celebrity Cruises, Inc., were sued for fraud on Friday, May 16, 2003 in a lawsuit filed in Miami-Dade County Florida. The lawsuit seeks to prevent the cruise lines from continuing the fraud, and seeks class action status for the million of passengers defrauded to date.  

Faced with decreased tickets sales in a competitive business dominated by cross-town rival Carnival Cruise Lines, Royal Caribbean and Celebrity schemed to increase their profitability by charging excessive or illegal taxes to passengers, according to the lawsuit.  The cruise lines continue to charge the fraudulent taxes to date.  

The scheme is based on a legitimate IRS tax which requires the cruise lines to charge $3 to passengers who embark or disembark at ports in the United States.   Starting in April or May 2001, Royal Caribbean began to overcharge the passengers an additional $15 to $25 in "taxes." Rather than paying these amounts to the IRS, the companies kept the money.  The cruise lines also charged passengers taxes on foreign cruises where no such tax was due.

Royal Caribbean and Celebrity was accused in the late 1990's of engaging in a similar scheme by overcharging passengers port charges. After an investigation by the Florida Attorney General, the cruise lines were barred from charging any fees in addition to the advertised ticket price except those fees actually passed on by the companies to the U.S. government.

Royal Caribbean registered it business in Liberia and flags its vessels in foreign countries in order to avoid paying most U.S. taxes.  Yet, the lawsuit alleges that for the past two years Royal Caribbean charged its own brand of illegal taxes - approximating $90,000,000. An estimated 5.7 million passengers (mostly U.S. citizens) were affected by the charges. Including future bookings, the cruise line over-charged its customers approximately $150,000,000.

Counsel for the plaintiffs are James Walker, and the law firm of Tew, Cardenas, Rebak, Kellogg, Lehman, DeMario, Tague, Raymond, & Levine.  Lead counsel for the passengers is Tom Tew. 

Read the article in the Miami Herald.