Q: A few months ago, our agency lost a major corporate account to a mega agency. The transition to the mega took place about a month ago. However, some of the travelers in one division have expressed the desire to continue to use our services, and we have obliged, charging tickets to the usual credit cards. Since the corporation no longer authorizes use of our services, could it dispute the credit card charges, thereby causing the airlines to send us debit memos for unauthorized credit card charges?
A: The corporation could possibly dispute the charges, depending on what kind of credit card system was used. Therefore, you may well be risking major losses from debit memos, which the corporation could refuse to cover.
If the corporation used a ghost card or corporate charge account system, where the corporation paid the credit card bills, the corporation has the right to dispute any charges, as far as the credit card company is concerned.
As you know, once an airline sends you a debit memo for an allegedly unauthorized charge, the only foolproof method of successfully disputing it is to produce a signed and manually imprinted Universal Credit Card Charge Form. Of course, if the corporation does not use physical cards, then such dispute is impossible, by definition.
So, as far as the airlines are concerned, you have no defense to the debit memos. If you turned to the corporation for reimbursement, you might well be told that, because your contract with the corporation had already been terminated by the time you issued the tickets, the corporation would have no obligation to reimburse you.
However, if you issued tickets for executives of the corporation or for other corporate travelers at the request of executives, you would be legally entitled to reimbursement because executives have the authority to bind the corporation to any order for services, whereas ordinary, traveling employees do not. So, you would still owe the debit memos, but you would not be without a remedy against the corporation.
If the corporation used a corporate card system that issued actual cards, you could try to get a signed and imprinted Universal Credit Card Charge Form from anyone authorized to sign for the corporation. If travelers used their own credit cards and were reimbursed by the corporation, then you could try to get signed and imprinted charge forms from the cardholder travelers for each ticket going forward.
If you are continuing to issue tickets, you could also cover yourself by getting a new agreement from an employee who is authorized to sign contracts for the corporation and wants to do the right thing for your agency.
The agreement can be a simple exchange of emails agreeing to pay for airline tickets issued after termination of your written contract, or agreeing to reimburse you for debit memos for ticket requested by the corporation's employees.
For the future, you could protect your agency by adding a clause to your standard corporate-account contract's termination clause that stated something like this: "Following termination, Client shall pay for airline tickets requested by authorized employees of Client, regardless of when such request is made."
Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at [email protected].