Say hello to IATA, the card mill


On Jan. 1, California's new Seller of Travel Law expanded the class of persons who must register with the state's attorney general's office. This revised law amounts to an additional bureaucratic layer of enforcement against financially secure travel agents.

Furthermore, it fails to take into account objective travel agency input illustrating how the law is not applicable to its intended purpose of protecting consumers. 

The new law includes sellers of land or water vessel transportation, but contrary to the original industry agreement, it exempts numerous charities that are directly competing against travel agents.

Now, if an entity wants to get out of the requirements of the law, it merely needs to set itself up as a charity. In the words of the statute, a seller of travel is an exempt charity if it "is both exempt from taxation under Section 5012(a) of the Internal Revenue Code and not a private foundation as defined in Section 509."

By demanding delivery of the ticket or voucher to a passenger within 72 hours, the new law ignores the custom and practice of the travel industry in relation to consolidator tickets and additional secondary sources of tickets.

For a new class of travel seller, a "seller of travel discount program," the law demands a $100,000 surety bond that, obviously, most agents cannot not afford or obtain in today's litigious market.

A "travel business discount program" is defined as a membership, benefit program, identification card, identification number or other arrangement that identifies the purchaser of the travel business discount as engaged in the travel business or otherwise qualified to received discounts or reduce prices made available to persons involved in the travel business.

This new classification ignores the trend in the industry to utilize host agencies and Internet sources of distribution that are seeking independent agent utilization.

The amusing part of the 2007 law is that IATA can be recognized under this to be probably the largest card mill operating in the U.S.

Who of you as agents would bother to send the millions of dollars that IATA has received for IATAN credentials if it was not for receiving the discounts? Are you buying an "identification card"? Of course you are.

Considering how benevolent it has been in the past towards agents, I don't think IATA plans to become a 501(c)(3) charity. Normally, I would be looking forward to seeing IATA register as a seller of travel in California or to see the state prosecute it for misdemeanors and/or felonies, thereby instilling in IATA the same fears that our other agents live with every day.

However, since the law added the "Big Boys" exemption, a $5 million net equity exemption specifically for companies and organizations like IATA, it is likely to make IATA the largest "legal" card mill in the world.

My advice to Travel Weekly readers is this: Don't allow additional harassment and dangerous state legislation to hinder your duty to service the consumer through the travel agent that is providing the only objective assistance to consumers.

Al Anolik is a lawyer specializing in travel law. E-mail him at[email protected].


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