The following is part of a series of articles that provides an
in-depth look at state laws governing travel agents and the impact
of those laws on the trade. See a sidebar story below on the high
costs of satisfying certain state laws.
By Nadine Godwin
ravel agents provide
information to clients, and even to strangers, all the time. It is
perhaps ironic, therefore, that legal requirements to tell clients
things can turn out to be something of a problem.
Six states (California, Hawaii, Illinois, Massachusetts, Rhode
Island and Washington) impose a number of fairly specific rules on
agents that require disclosure of certain details of trips about to
be purchased, cancellation terms, consumer rights under various
circumstances and notice of post-booking changes to trip
details.
Most rules stipulate that disclosure be made in writing,
sometimes supplemented with oral disclosure. California's list of
required disclosures is the longest.
In addition, California, Florida, Rhode Island and Washington
require registered agencies to display their registration numbers
in advertising and that they post their registration certificates
or registration information in a visible spot in their offices.
Ohio wants to see the numbers in advertising, and Nevada requires
display of proof of registration where the public can see it.
Most of these disclosures are the kind the trade would want to
provide to the public, even without laws on the subject.
Nevertheless, agents aren't always satisfying their states'
rules.
A spokesman for the California attorney general's office was
dismayed that agents don't always provide full disclosure, saying
that "since sellers need only make these disclosures in writing,
not an onerous task, it is surprising that so many sellers fail to
do so."
California attorney Alexander Anolik has said agents can't meet
all of that state's standards all of the time. Disclosures are
meant to cover numerous trip details and all a of consumer's
rights, and the trip elements and terms of sale are different every
time. A few disclosures also must be made orally.
Other states' rules are shorter but, even so, there are
violations.
In Hawaii, for example, agents must disclose in writing all trip
details, names of suppliers, pricing and payment information,
cancellation and other terms of the purchase, plus details on the
agency's trust account and the consumer's rights as outlined in the
law.
Laureen Kai, executive officer od Hawaii's travel agency
program, said the state, based on complaints, occasionally takes
enforcement action in cases where proper disclosures were not
made.
As for publicizing registration numbers in all the right places,
that seems easy to Stan Jones, manager of a AAA Travel outlet in
Van Nuys, Calif. "You remember that along with remembering to use
the agency name."
Nevertheless, something that sounds easy has tripped up many an
agent because the concept has not become ingrained, yet. As if
state-level enforcement weren't bad enough, more than 250 agencies
were sued by the so-called Consumer Action League in California
over failure to post their numbers at their Web sites.
The rule in California may seem a little quirky though. Agents
find it easiest to refer to the number as the CST (California
Seller of Travel) number, something your average reader would not
understand. If agents choose to use words like "registered seller
of travel," they must also use a clunky disclaimer along the lines
that "registration as a seller of travel does not constitute
approval by the state of California."
Thousands of agents use Web support services to launch and help
maintain their sites, but their vendors don't automatically include
places for registration numbers (or disclaimers) in templates.
Jude Samson, board member of Austin, Texas-based Online Agency,
said Online's 3,000 customers have "complete freedom" to position
registration details themselves.
The same holds at TAedge.com in Chicago, but marketing manager
Jodi Fitzner said this issue is "not a bad thing to mention in our
literature."
Big bonds cost more, send some agents
underground
very time a state requires any
paperwork and fees, there are costs that are generally considered
minimal.
When a state requires errors and omissions insurance or trust
accounts, there are also some costs and maybe some hassles to put
appropriate systems in place.
But the requirement that knocks people out of the business or
causes a sometimes wrenching change in direction is the bond,
meaning the big bond, the $50,000 variety required of non-ARC
outlets in Nevada and Ohio.
Linda Bourgeois, an agent at International Sureties in New
Orleans, said the travel bonds required by state laws tend to be
higher risk than the average bond because they are written in favor
of the consumer, "and there are so many consumers [per agency] and
so many people who could make claims."
Beyond that, she said, the bonds across the country are of a
similar type, and bond size is the key indicator of cost.
She said her company has written the most bonds for agencies in
California (where it is an alternative to a trust account rule) and
Florida, and the bond amounts fluctuate between $10,000 and
$30,000, but are mostly at the lower end.
Some agents have dealt with this challenge by going underground
to sell without a bond, by relocating (most practical in the
Cincinnati area which is near Kentucky) and by aligning with a host
agency although they otherwise have no need to do so and would earn
full commissions without the affiliation. One source reported there
are cases of agents who have pretended an affiliation and continued
to do business as in the past.
Ohio reports 214 registered tour promoters (meaning non-ARC),
but Vicki Fasick, owner of Travel Time in Fairfield, Ohio, said, "I
am the only person I know who has the bond. Period." The bond costs
her between $450 and $500 a year.
She said she knows "lots and lots" of agents who work without a
host most of the time and who are not registered or bonded.
Nevada reports only 30 registrants that are non-ARC and thus had
to satisfy the surety requirement. Las Vegas agent Bonnie McDaniel,
owner of A Quick Trip, estimated that as many as 60 to 75 non-ARC
agencies are out of business due to the bonding law.
Or, they are underground, and she does not know about it.