Los Angeles
Times, December 28, 2003 Issue
Travel Section - Travel Insider
Protection widens as Seller of
Travel Act becomes state law
If the company you
booked a trip with defaults, you have twice as much time to collect.
People buying travel in California for the last eight years have
benefited from a little-known statute: the Seller of Travel Act, which
sets out ethics for travel agents, tour operators and other companies
that market travel and compensates customers if a company defaults.
California pioneered this law in 1996 and has renewed it on a temporary
basis since.
Come January 1st, 2004, the Seller of Travel Act will become a permanent
law, with expanded protections. That's good news for California
consumers, if we bear this in mind: We can still lose our shirts booking
travel if we're not careful — and even if we are.
Although most sellers are competent and honest, mismanagement and fraud
are risks in any industry that offers this deal: "Give me your money
now, and I'll give you the service later," as Deputy Atty. Gen. Michael
Hughes notes.
Here are two key benefits of the Seller of Travel law and two cautionary
tales:
• Registration: Any company that sells travel in California, even if
it's based in another state or does business on the Internet, must
register with the state and post its registration number in its ads. If
you don't see the number, don't use the company; it's operating
illegally here.
Make sure the registration, which must be renewed annually, is current.
The attorney general's website,
http://www.caag.state.ca.us/travel , has a "Seller Search" function
that reveals this information.
In registering, a company provides data on its ownership. It also agrees
to protect customers' money by, for instance, obtaining a surety bond or
putting it in trust accounts, and to promptly return unused funds, among
other provisions.
Hughes credits the Seller of Travel law with encouraging sound business
practices among legitimate operators and scaring away scam artists. But
registration itself is no guarantee of expertise, honesty or fiscal
soundness. "It's not a licensing program," Hughes says.
So if your travel purchase goes bad, the law provides:
• The Travel Consumer Restitution Fund: Many companies that sell travel
in California must contribute to this fund, which is maintained by a
private board, called the TCRC, and used to reimburse consumers if
services they bought aren't delivered. To apply for a refund, you fill
out a form at http://www.caag.state.ca.us/travel , pay a $35 fee and
mail it to TCRC, P.O. Box 6001, Larkspur, CA 94977-6001; for queries,
call (213) 897-8065.
In a change for 2004, you have one year, instead of six months, after
the scheduled completion of your travel to file your claim. There are
many other restrictions. Among them:
Caveat No. 1: You must have bought the travel in California. In another
2004 change, a passenger who was out of state at the time the travel was
purchased will be covered, providing the travel was purchased here.
Previously, the passenger had to be in California.
Caveat No. 2: The company must participate in this fund in order for you
to collect on a claim. You can ask the company or use the "Seller
Search" on the above website to find this out.
Caveat No. 3: You must first seek reimbursement from your credit-card
company and travel insurer, if you used either. Only if they deny your
claim can you collect from the state fund. Credit cards may give refunds
if you didn't receive services you bought. Trip cancellation insurance
may cover you too, unless you bought it from the travel supplier that
goes out of business, taking your funds with it; then you're almost
certainly not covered.
Sound complicated? It is. The safety net for travel consumers, with or
without the special California law, has lots of holes. Two recent cases
in point:
Many of the 21 companies that sold travel under the umbrella of Far &
Wide Travel Corp., which sought Chapter 11 bankruptcy protection in
September, were in California. It was one of the largest-ever filings by
a tour operator. You might think consumers here would be eligible for
state refunds on losses. But that may not be the case for many of them,
said Deputy Atty. Gen. Hughes.
That's because as Far & Wide gobbled up companies, some switched their
Seller of Travel registration to the parent. Because Far & Wide was
based in Florida and was not publicly traded, it didn't have to
participate in the consumer restitution fund here. So the fund may not
cover the losses.
Then there's the case of David Anderson, a Santa Barbara-based
photographer and businessman who was a principal in a safari operator
that closed in January 2000, allegedly taking more than $200,000 in trip
deposits with it. The TCRC paid at least $80,000 to customers in the
next year.
It took three years for the attorney general's office to file a case
against Anderson in Superior Court of California, Santa Barbara County.
After pleading not guilty in January and being jailed for 117 days
because he could not make bail, he changed his plea to no contest on two
Seller of Travel counts (involving failure to return about $50,000) and
was released, said Deputy Atty. Gen. Angela Rosenau.
Anderson has since asked to withdraw his plea, been rebuffed by the
court and plans to file an appeal, he said. He denies intending to
defraud anyone, saying he resigned from the safari operator before it
declared bankruptcy and that nearly all the customers "got their trips
without paying any more money."
Under terms of his plea bargain, Anderson is barred from obtaining a
Seller of Travel registration or handling travelers' funds. But he
continues in the business, designing African safaris that his clients
then book through another company, which has a Seller of Travel
registration. This arrangement conforms to his probation rules, Rosenau
said.
Anderson also has been selling an information package about the tours
for $15. On his website he promises "100% Money Back Guarantee if not
Completely Satisfied."
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