Mark Pestronk
Q: My agency keeps getting debit memos from Southwest Airlines for tickets that we did not write nor request. In some cases, the tickets were charged to credit cards that were nonexistent, expired or revoked. In other cases, the credit cards were good but the charges were unauthorized by the cardholder. Southwest's position was that we owe the money simply because our ARC number was used to make a telephone reservation and we did not reply after Southwest sent us a confirmation email to the email address it had on file. Do we owe this money?
A: You do not owe this money, but since Southwest does not agree with my position you need to do something with Southwest or risk losing your right to act as an agent for that carrier.
There is no ARC rule stating that you owe payment whenever your ARC number is used. ARC's rule is that you owe payment for tickets issued by your agency using the electronic ticket numbers assigned to your agency. Since that was not the case here, any alleged debt would have to be supported by something in a direct agreement between you and Southwest. Most agencies have entered into Southwest's agreement called "Southwest Airlines Certificate of Appointment," which is not a certificate but rather a 22-paragraph contract with lots of rules.
Four paragraphs are at least somewhat relevant to the issue of your agency's liability. Southwest has cited one or more of them to support its view over the years.
Section 1 of the agreement states, "Agency assumes full responsibility for its employees, outside agency or other parties selling tickets under the agency's number." Clearly, this clause would not apply here because the fraudster was not "selling tickets under the agency's number." The fraudster was buying tickets from Southwest using your number with no evidence of how or whether the fraudster was selling anything.
Section 3 states, "Credit card chargebacks shall be debited to agency." This cannot possibly mean all chargebacks that Southwest incurs systemwide, so it must refer to chargebacks that have some connection to your agency's activities. Section 8 states, "If confirmations are received that do not belong to the agency, agency must notify Southwest within 24 hours at [Southwest's phone number]." Southwest requires that an email address be filled in, and the carrier states, "[The] email address listed will be used to send Southwest Airlines ticketing fulfillment confirmations and important notices to the agency. [Southwest] allows one email address per ARC number."
The quoted clauses set up a procedure for spotting fraud: once a phone reservation is made by anyone using your ARC number, Southwest sends a confirmation email to the address provided in your agreement.
Assuming that you received the email, your agency has 24 hours to call (not email) Southwest and state that the confirmation does not belong to you. Southwest's position is that if you fail to call within the 24-hour period, you are liable for the chargeback. However, the agreement does not so specify, and holding you liable would be a penalty that is grossly disproportionate to failure to call. Finally, Section 12 states, "Please be aware the travel agency is responsible for credit card chargebacks and/or fraudulent credit card usage." As with Section 3, the intent here is obviously to cover chargebacks and fraud with a connection to your agency.
In my experience, if you contact Southwest now, explain that you had nothing to do with the charges and sign an affidavit to that effect, Southwest may drop the whole matter. For the future, you can instruct Southwest not to accept any further telephone reservations that purport to be from your agency.