Q: According to the ARC handbook, the way to avoid having to pay airline debit memos for credit card chargebacks is to obtain a signed and imprinted Universal Credit Card Charge Form (UCCCF). However, our host agency has many independent contractors (ICs) who do not come into our office. Is it legal under the ARC agreement for us to distribute blank UCCCFs and manual imprinters to our contractors, so that they can obtain signed and imprinted forms at their home-based offices? If so, does requiring those procedures create a risk that our ICs might be classified by taxing authorities as employees?
A: ARC's rule, which is found in Section 8.4 of ARC's Industry Agents' Handbook, actually states: "Absent evidence of negligence or fraud on the part of travel agencies ... travel agents will be relieved of liability for debit memos that are issued as a result of a credit card chargeback, provided the credit card acceptance procedures described below are followed. ... Obtain and enter on the credit card charge form a complete and legible manual imprint of the credit card, as well as the cardholder's signature."
Note that ARC's rule does not require you to use the UCCCF found in the section of the handbook that shows you how to complete such a form. That form has spaces for the agency and carrier codes and other ticket-related data.
Instead of a UCCCF, you can use any paper credit card charge form that you obtain from any issuer of such forms, and you can use any manual imprinter that matches the paper forms. For example, at Amazon.com you can find imprinters for as little as $15, and you can order forms in packs of 100 for about $10 per pack.
However, if you want to supply your independent contractors with ARC UCCCFs, there is no ARC prohibition against doing so. The rule against writing up and validating ARC Traffic Documents outside the agency does not apply to UCCCFs, and there is no rule about where imprinters can be used.
Debit memos that arise from IC transactions are a huge problem for all agencies that host ICs. Therefore, it certainly pays to try to get your ICs to follow the quoted rule in order to be "relieved of liability" when it is feasible to get a card imprint and signature.
Even for local telephone sales, it often makes sense to require the client to come in with his credit card and photo ID before you issue the ticket. If it is not feasible to wait before issuing the ticket, you can always issue it and then void it if the client does not show up within a day.
Incidentally, obtaining a signed and imprinted charge form is not the only way to shield against debit memos. Both the Universal Air Travel Plan and American Express allow you to obtain signed and notarized powers of attorney using one of the two forms in Section 8.4 of the handbook. However, for in-person, noncorporate charges, it is much simpler to get a signed and imprinted charge form.
By imposing this requirement, you probably do increase the risk that your ICs will be reclassified as employees, so you need to weigh the benefits against that risk. For most agencies, the benefits probably outweigh the risks.
Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at mark@pestronk.com.