WASHINGTON -- ARC issued an alert to accredited travel agency
owners who sell their firms, warning them "to exercise extreme
caution and maintain full control" of the business until ARC
approves a change of ownership.
ARC said several agencies have been victimized by fraudulent
purchase schemes within the last year, outlined as follows:
The owner of record receives a generous purchase offer and sells
the agency without ARC's knowledge or approval.
The owner of record surrenders control of the agency to the
purchaser, providing the keys to the office and access to the CRS,
ticket stock, bank accounts and revenues. In effect, the owner of
record becomes an absentee owner.
The purchaser promises to (but rarely does) take care of the ARC
paperwork, rings up a lot of high-price sales without paying and
disappears when the debit memos start rolling in.
The owner of record is left holding the bag, liable for the
agency's default because no ownership change application was filed
and approved by ARC.
Even if ARC did approve an ownership change, "the original owner
is still responsible for transactions prior to the approval," ARC
said.
The losses will be applied against the agency's ARC bond or
letter of credit, and ARC may initiate litigation to recover losses
over and above the surety.
Indeed, a number of cases coming through the travel agent
arbiter in recent months have involved large defaults of agencies
that were sold without ARC's knowledge.
The arbiter has ordered the owners of record to pay. If no
response is forthcoming, ARC likely will ask a local court to
confirm the arbiter's order (courts are loathe to interfere with
such orders) and use the local sheriff's office to try to
collect.
The ARC alert told agents: "Do not turn over the operation and
control of your agency location and the blank ticket stock to any
third party...until you have received written notification from ARC
that your change of ownership is approved.
"Until that approval, the ARC owner of record is responsible for
all financial losses on ARC traffic documents supplied to the
location."
In order to help police identify and track perpetrators of an
ownership scam, ARC suggested that agency owners get color photos
of the purchaser and his or her representatives, and color replicas
of their passports or drivers licenses. "If [the] purchaser
objects, you should think twice about going forward with the sale,"
ARC said.
ARC also advised owners to note license plate numbers of all
cars driven by the purchaser and his or her representatives.
Owners should check periodically with ARC's accreditation
department to make sure that a change of ownership application has
been filed and that it is complete, it said.
Owners who believe they have been solicited by "insincere
purchasers" should notify ARC's fraud prevention department at fax
(703) 816-8138, it said.
The scam alert was posted on ARC's Web site at www.arccorp.com.