THE LICENSING AND REGULATION OF TRAVEL AGENTS, TOUR OPERATORS AND OTHER TRAVEL SELLERS IN THE UNITED STATES, CANADA, AUSTRALIA, GREAT BRITAIN, JAPAN AND THE MEMBERS OF THE EUROPEAN COMMUNITY.
Travel sellers include tour operators2 and consolidators3 and retailers such as professional travel agents4, pseudo travel agents5, outside sales representatives6, telemarketing " boiler rooms "7, time share salesmen8, Internet web sites9, travel clubs10 and informal travel promoters11.
Travel scams continue to proliferate12. As a consequence there is an urgent need for uniform State licensing of Travel Sellers13. The necessary components are annual registration, proficiency testing, advertising standards and contractual disclosure rules, surety bonding, escrow accounts, errors and omissions insurance, consumer restitution funds and civil and criminal penalties.
Some or all of these components can be found in very few of the existing State statutes regulating Travel Sellers14 and in the Travel Seller statutes of Ontario15, Canada, Australia16, Israel17, Japan18 and members of the European Community19 to include Belgium20, Denmark21, Finland22, France23, Greece24, Ireland25, Italy26, Luxembourg27, The Netherlands28, Portugal29, Spain30 and the United Kingdom31.[A] Registration And Proficiency Testing
- United States
Travel Sellers should be registered and tested. For example, in California, registeredTravel Sellers are issued a registration number and must display it in their stores and on advertising and promotional materials32. To register the Travel Seller should pay a fee and file a form listing needed information. Californiarequires payment of a $100 annual fee together with a filing that includes the following information: (1) business name, (2) place of business, (3) names and addresses of all persons owning 10% or more of the business, (4) any orders or judgments entered in actions alleging violations of the Act, (5) copies of any travel certificates being sold or promoted;(6) the location and number of all trust accounts or copies of surety bonds maintained for the benefit of the public33 and (7) proof of compliance with the requirements of the CaliforniaConsumer Restitution Fund34.
Rhode Island35, Hawaii36, Florida37, Ohio38, Oregon39, Virginia40 and Washington41 also require registration, registration fees and the display of a registration number on advertising material. In addition, Rhode Island requires the applicant to have prior experience as a travel agent42 and to take a written test demonstrating familiarity with arranging travel reservations and governing statutes and regulations43.
- -Foreign Jurisdictions
Ontario, Canada requires registration44 and the operation of a travel agency by persons with experience and knowledge of the business45. In Australia travel agents must be " fit and proper ( persons )"46 and licensed47 while travel agent managers must have specific levels of experience and education depending upon what travel services are being sold48. In Japan travel agencies must be registered49 and appoint a Certified Travel Service Supervisor50 to operate each office. Israel requires proficiency examinations, three years' experience in a travel agency, certification and annual registration of travel agencies, travel experts and licensed clerks51. Registration, licensing, education and experience are also required in varying degrees in Belgium52, Denmark53, Finland54, France55, Greece56, Ireland57, Italy58, Luxembourg59, The Netherlands60, Portugal61 and the United Kingdom62.
- -United States
Travel Sellers should post surety bonds63, the beneficiaries of which are consumers64. Travel Sellers should deposit a substantial portion of each consumer's contract payment into a trust account65. Travel Sellers should obtain errors and omissions insurance66 covering a variety of consumer claims, particularly, those involving physical injuries incurred during tours abroad67. Travel Sellers should fund State administered consumer restitution funds.Surety bonds tend to serve different purposes, depending upon the State requiring them. In Illinois, for example, the posting of a single surety bond in the amount of $100,000 or more, to cover the contingency of bankruptcy, exempts the Travel Seller from establishing a trust account68. Californiagives travel promoters the choice of either posting an ` adequate bond ` covering each transportation service contracted for or establishing a trust account for each such service. In Class Action Litigationfornia69, an ` adequate bond ` is one
" executed by an admitted surety insurer in an amount at all times no less than at least equal to the amount required to be held in a trust account ...by any seller of travel in conjunction with such transportation, for the benefit of every passenger who sustains a monetary loss as a result of any violation of this ( statute ) ".Florida70, Iowa71, Ohio72, Rhode Island73, Virginia74 and Oregon75 also require surety bonding in varying amounts.
A common practice among Travel Sellers is to use consumer monies paid for the delivery of future travel services to pay on-going business expenses76. In order to protect consumers against loss of pre-paid funds due to this practice, a substantial portion of the consumer's payment should be deposited in a trust account77. Most states which require trust accounts agree that 90% of all sums received for consumer travel should be placed in an escrow account. In Hawaii78, Illinois79 and Oregon80 the travel promoter may withdraw the money from the account only to pay the suppliers of the services purchased by the consumer or to make refunds. In California, the Travel Seller is required to deposit 100% of all sums received for travel services in a trust account81. Washington requires the deposit of consumer monies into a trust account within five days of receipt82. Virginia requires travel clubs to deposit consumer payments into escrow accounts that are separate from other accounts83.
In 1995 Californiabecame the first State to require registered Travel Sellers to fund a Travel Consumer Restitution Fund84. Starting with an initial payment of $25.00 per location each Travel Seller may be assessed an annual amount of no more than $200 to keep the restitution fund at $1.2 million85. Consumers who have sustained a loss may file a claim against the fund86.
- Foreign Jurisdictions
Financial guarantee programs of various types are required in Ontario, Canada87, Australia88, Japan89 Israel90, Denmark91, Finland92, France93, Greece94, Ireland95, Italy96, Luxembourg97, The Netherlands98, Portugal99, Spain100 and The United Kingdom101.
Misrepresentations and hyperbolic overstatement are characteristic of sales pitches and advertising by Travel Sellers102. Failing to disclose material information103 and using overreaching, one sided disclaimers104 are characteristic of the contracts used by Travel Sellers.
-United States: Advertising Standards
Travel Sellers should be required to adhere to minimum advertising standards. Nearly every State has consumer protection statutes prohibiting misrepresentations and unfair and deceptive business practices105. Florida106, Virginia107, Hawaii108, Massachusetts109 and Washington110 have made an express tie-in between their Travel Seller statutes and their consumer protection statutes, giving consumers a private cause of action for violations of the Travel Seller statute. Any violation of Illinois' Travel Seller statute is also a violation of Illinois' Consumer Fraud and Deceptive Business Practices Act111.
A fewTravel Seller statutes impose minimum advertising standards. Class Action Litigationfornia112, Florida113, Illinois114, Massachusetts115, New York116 Oregon117, Virginia118 and Washington119 prohibit advertising the availability of air or sea transportation unless the services are actually available. States with this provision also treat any material misrepresentation regarding travel services as grounds for cancellation warranting a full refund120.
New York has two separate lists of prohibited practices depending upon whether the Travel Seller is a travel consultant121 or a travel promoter122. Florida prohibits the use of solicitation material in which credit card charges are sought unless that form of payment is necessary123. Virginia124 and Massachusetts125 set forth lengthy lists of specifically prohibited misrepresentations.
- United States: Disclosure Rules
Travel contracts with consumers should disclose basic information about the travel services being purchased. As a general rule Travel Sellers are under an ongoing obligation to discover readily available information which may have a negative impact on the travel contract and disclose that information to the consumer. Travel Sellers should disclose, at the very least, the following information126: (1) the financial instability of recommended suppliers, (2) the ability and willingness of recommended suppliers to deliver purchased travel services, (3) the riskiness of using charter air carriers and tour operators, (4) the need for travel documentation such as passports and visas, (5) the health hazards in the destination country, (6) the level and nature of crime and terrorism at the destination or at the hotel, (7) the need for travel insurance, (8) any itinerary changes, (9) the history of accidents at the destination or on the carrier selected, (10) restrictions on transportation tickets and (11) restrictions on refunds.
Class Action Litigationfornia127, Hawaii128, Illinois129, Massachusetts130, New York131, Oregon132, Virginia133 and Washington134 require that travel contracts disclose (1) the identity and location of the travel promoter, (2) a detailed statement of payments to be made and their purpose, (3) the location of any required surety bonds and trust accounts and how to file a claim, (4) the name of the carrier with which the seller of the travel service has contracted to provide transportation, the type of equipment to be used, and the date, time and place of each departure, (5) the cancellation rights of the parties, (6) a statement in conspicuous ( e.g., eight-point bold face135 ) type that upon cancellation of the transportation through no fault of the passenger, all sums paid will be promptly refunded, (7) in Californiaa statement on how to file a claim with the " Travel Consumer Restitution Plan " and (8) in New York a statement that the consumer may cancel the travel contract within three days of receipt of the disclosure notice136
In addition Illinois137 and New York138 require a description of any other travel services to be provided. Hawaii requires travel agencies to reveal that airline frequent flyer mileage awards may not be honored139. Hawaii also requires travel agencies to inform consumers of their statutory rights140. Virginia requires each travel contract to inform consumers that they may cancel within seven days of the execution of the contract141.
California's Educational Travel Organization Act requires disclosure142 of a 24-hour emergency telephone number or " 24-hour emergency contact by pager, voice mail..." and an itemized list of services including the educational program to be provided, whether insurance coverage is maintained for student injuries, experience and training of staff and their qualifications, number of similar prior student programs conducted by the organization and its length of time in business and a list of any judgments entered against it.
Massachusetts requires disclosure of
- -Foreign Jurisdictions
Advertising standards and disclosure rules are also required in Ontario, Canada145, Australia146, Japan147, the European Community148 and its members including Belgium149, Denmark150, Finland151, France152, Greece153, Ireland154, Italy155, Luxembourg156, The Netherlands157, Portugal158, Spain159 and The United Kingdom160.
[D] Consumer Remedies & Penalties
- -United States
Any violation of a Travel Seller statute should, as it does in Florida161, Hawaii162, Illinois163, Massachusetts164, Virginia165 and Washington166, constitute a violation the each State's Consumer Protection Act167 giving rise to a private right of action and entitling the consumer to treble damages, attorneys fees and costs. Any violation of the Travel Seller statute should, as it does in Class Action Litigationfornia168, Hawaii169, Florida170, Illinois171, Iowa172, New York173, Ohio174, Oregon175 Rhode Island176 and Washington177, allow the Attorney General to seek criminal or civil penalties including restitution on behalf of consumers.
Should the Travel Seller violate any provision of a Travel Sellerstatute he should forfeit the right to enforce a travel contract against a consumer178. Any violation of the Travel Seller statute should, as it does in Ohio179, allow the consumer to void the travel contract and obtain a full refund. Should the consumer suffer damages from the breach of a travel contract and should the Travel Seller have violated any provision of the Travel Seller statute, then the Travel Sellerwill be liable for the consumer's damages including those otherwise attributable to the default of a third party supplier.180
- Foreign Jurisdictions
Civil remedies are provided for in the Travel Seller statutes in Ontario, Canada181, Australia182, Japan183, the European Community184 and its members including Belgium185, Denmark186, Finland187, France188, Greece189, Ireland190, Italy191, Luxembourg192, The Netherlands193, Portugal194, Spain195 and The United Kingdom196.
The uniform and comprehensive licensing of Travel Sellers in the United States is long overdue. It is in the best interests of consumers and professional travel agents to encourage the legislators of each State to enact a uniform licensing statute containing provisions for registration and testing, financial responsibility, advertising standards, disclosure rules, consumer remedies and penalties.
1. Thomas A. Dickerson is a Judge on the Westchester County Court, New York State, USA. Judge Dickerson's Web Page is at http://members.aol.com/judgetad/index.html. Judge Dickerson is the author of Travel Law, Law Journal Press, New York, 1981-2000, updated biennially, http://members.aol.com/travellaw/index.htmlClass Actions: The Law of 50 States, Law Journal Press, 1988-2000, updated annually, http://members.aol.com/class50/index.htmland over 170 articles on consumer law issues.3 . See Travel Law, § 5.02, supra.See also, Wade,"Who's Afraid of Consolidators?", Practical Traveler, N.Y. Times, Travel Section, April 22, 1998, p. 4
( " air consolidators...are companies that sell tickets, usually for trips overseas, at prices below those the airlines advertise. There is indeed nothing illegal about them, but there are perils to be aware of. Most problems can be avoided with three rules: work through a travel agent, use a credit card and, if the price is preposterously low, go elsewhere " ).6. For a discussion of outside sales agents see Fee and Anolik, The Official Outside Sales Travel Agent Manual ( Travel Support Systems, Inc., Jupiter, Florida, 1996 )
( " Until now, ` outside sales ` has been the standard industry expression attached to those who sell travel ` outside ` the agency's premises " ).7. See e.g., F.T.C. v. Commonwealth Marketing Group, Inc., 1999 WL 816726 ( W.D. Pa. 1999 )( injunction obtained against telemarketing boiler room selling bogus travel services ); Cogswell, "FTC and State Attorneys General Target Purported Travel Fraud," Travel Agent, June 8, 1998, p. 112
( " On May 28 ( 1998 ), the Federal Trade Commission (FTC) announced that a federal judge had frozen the assets of CMG...on the grounds that (it was ) misleading thousands of consumers with false promises of free vacations...CMG used TV personalities Robin Leach and Ricardo Montalban to sell vacation cruises " ).
( " Travelers booked $827 million worth of reservations over the Internet last year...by 2002, on-line bookings of air fares, hotel rooms, rental cars and vacation packages will jump more than tenfold to $8.9 billion ( per year ) " );Internet "Gains Grounds As Travel-Scam Channel," Consumer Reports Travel Letter, July 1998, p. 145
( " Scams continue to proliferate...and the Internet has now joined traditional mail and telemarketing as a channel for them " );Edelson, "ASTA Travel Scam Conference: Beware Of Fraud on the Web", Travel Agent, May 18, 1998, p. 119
( " ` The Internet is also the perfect medium for criminals. Anyone can put up a great-looking web site, and buying on the Internet is essentially sight unseen " ).10 . See e.g., Plutchok v. European American Bank, 143 Misc. 2d 149, 540 N.Y.S. 2d 135, 136 ( 1989 )
( " the plaintiff received a postcard from Holiday Magic Travel Club, Inc...stating that he had been selected to receive a pre-paid luxury cruise plus hotel accommodations...");see also " Pros and Cons of Travel Clubs ", Consumer Reports Travel Letter, Vol. 13, No. 7, July 1997, pp. 153-155
( " Those clubs sell some travel services directly; with other services, they resell some other organization's program...or provide ID that gets members a special price when they buy directly from some other supplier...Whether they promote by snail mail or the Internet, shady operators can easily assemble the ingredients of a conventional travel club. Half- price hotel directories are available at very lost cost. Any agency can find a source of consolidator air tickets, and any agency can set up a lowcost telephone based operation that rebates a portion of its commission " ).11 . See Travel Law, § 5.05, supra.
( "...consumers need to be protected from increasingly complex, misleading and deceptive travel scams. Recently, the Federal Trade Commission [FTC] and the Attorneys General of California, Connecticut, Florida, Illinois, Massachusetts, Michigan, New York, North Carolina, Ohio, Vermont, Washington and Wisconsin took legal action against a variety of travel scam operators. ` Travel has long been a fertile field for flimflam, but what had been a cottage industry has lately mushroomed into a growth industry...the FTC and the attorneys general of 12 states estimated the cost of travel related fraud at more than $12 billion a year...Travel fraud comes in many more packages than it used to ` " ).
15 . See Travel Industry Act, Rev. Stat. Ontario, 1990, Ch. T.19, Ontario Reg. 806/93. The regulation of travel sellers in Ontario is administered by the Travel Industry Council of Ontario, 1200 May Street, Suite 1100, Toronto, Ontario, M5R 2A5, Canada.
( " From late 1986, all travel agents in New South Wales, Victoria, South Australia became licensed under a Travel Agents Act passed by their respective State Parliaments... Tasmania introduced a Travel Agents Act in 1987, Queensland introduced a Travel Agents Act in 1988...The Acts are similar in each State...( the Acts have three purposes ) 1. To set standards of experience and qualifications for members of the travel industry, in licensing requirements for travel agents and tour operators, and to set professional standards in management and marketing for travel agents. 2. To set continuing financial requirements for travel agents in conducting their business as travel agencies. 3. To protect the public's money by setting up a Travel Compensation Fund to compensate the public where the public's moneys has been lost through the default of a travel agent or tour operator." );Atherton & Atherton, Tourism, Travel and Hospitality Law, LBC Information Services 1998, p. 265
( " Australian travel agents are governed by the general law of agency as well as a special Australian-wide regulatory arrangement called the Cooperative Scheme for the Uniform Regulation of Travel Agents ( the Scheme ). The Scheme is designed to protect consumers by ensuring the competence, integrity, financial standing and business practices of travel agents and by compensating those consumers who nevertheless lose. There are two limbs to the Scheme: Licensing system for travel agents under uniform State and Territory legislation; Travel Compensation Fund..under the industry sponsored traveller compensation scheme " )...
(" In Japan travel agencies are regulated under the Travel Agency Law amended in 1995...The purposes of this Law are to maintain fair practices in the travel agency business, to promote security in travel and to increase travelers' convenience, by implementing a system of registration of persons operating a travel agency, ensuring their fair practices in business and encouraging proper activities of their organizations" ).
19 . See Travel Law, § 5.02, supra, for a discussion of the E.C. Package Holiday Travel Directive of 1990. See also Grant and Mason, Holiday Law, 2d Edition ( Sweet & Maxwell 1998 )( discussion of tour operators and travel agents in the United Kingdom ); Yaqub and Bedford, European Travel Law ( John Wiley & Sons, Chichester, 1997 )( discussion of suppliers, tour operators and travel agents in the European Community ).
21 . Id. Chapter 7. See also Storm and Hvelplund," Tourism And Travel Organiser Bankruptcy- The Danish Travel Guarantee Fund Act, Part One," The International Travel Law Journal, Issue Three 1998, p. 137
( " The proposed legislation was intended to ensure that customers were guaranteed not only transport back to their home from the place of destination but also a refund of any money paid in advance " ).
35 . R.I. Rev. L. Ann. Section 5-52.4. Travel agents and their travel agent employees are required to be licensed with the license conspicuously posted at the place of business. Licenses are subject to age requirements and a " reputation for honesty, truthfulness and fair dealing ".
37 . Fla. Stat. Ann. Section 559.927(2)(a). Florida requires annual registration with the certificate of registration prominently displayed in the store and on all advertising material. The registration fee varies but shall not exceed $300. As of July 1, 1997
" The Florida Division of Consumer Services said it will vigorously enforce an amendment to the state's Sellers of Travel Law that requires the registration of independent sales agents...The legislation defines an independent agent as anyone who has a written contract to represent a seller of travel; who does not receive a fee directly from the consumer on behalf of the seller of travel and who does not issue tickets or possess ticket stock. "[ Blum," Fla. Takes Hard Line on Seller Law," Travel Weekly, June 12, 1997, p. 25 ].
38 . Ohio Rev. Code Ann Section 1333.961(B). Ohio's program requires a one time registration with payment of a $10 fee for travel agencies and travel promoters. The legend " registered Ohio travel agency " along with a registration number must appear on all advertising material.
39 . Ore. Rev. Stat. Section 646.214. Travel Sellers are required to file a registration form containing a variety of information, pay a $100 annual registration fee and display their registration number in their place of business and on advertising material. After two years of opposition Oregon travel agents successfully lobbied to have the registration requirement repealed. See Del Rosso, Oregon Repeals Seller of Travel Law Registration Provision, Travel Weekly, June 23, 1997, p. 5
(" Oregon agents had fought the provision since it was passed in 1995, claiming that the $100 annual registration fee was ineffectual for enforcement and that the law penalized legitimate agents and did not stop scam artists. " ).
41 . Wash. Rev. Code Section 19.138.110-.130. Washington requires registration,
the submission of a registration form, a registration fee of $234.00,
a renewal fee of $234.00 and the use of a registration number
on advertising material. Much like their
neighbors in Oregon Washington travel agents are trying to amend Washington's Sellers of Travel law " to make it less burdensome on travel agents and tour operators " [ Del Rosso, "Wash. Lawmaker Reintroduces Amended Sellers of Travel Bill," Travel Weekly, March 17, 1997, p. 83 ].
" to show the applicant's knowledge of reading, writing, spelling, elementary arithmetic, geography and in general the means and methods of domestic and foreign travel by air, rail, ship, bus or other medium of transportation, or hotel or other lodging accommodations and of the state and federal statutes and regulations relating to the same ".
44 . Travel Industry Act, Rev. Stat. Ontario, 1990, Ch. T-19; Ontario Regulation 806/93, Part II Registration. Ontario requires annual registration, the submission of a registration form and the payment of an annual fee of $350.
( " A travel agent shall ensure that each office...is managed...by an individual who has, in the Registrar's opinion, sufficient experience with and knowledge of the business of selling travel services..." ).
47 . Id at Chapter 2, § 2 ( " A person shall not carry on business as a travel agent otherwise than...by a travel agent's license " ). However, those persons " conducting the business of a travel agent with receipts of less than $30,000...so long as the travel arranged is domestic " are not required to be obtain a license.
" The types of travel that can be arranged by a licensed travel agent depend entirely upon the experience and qualifications of the manager...There are four categories applicable...
(1) World wide travel including air travel: The manager must have either five years experience in making air and other travel arrangements to and from places outside Australia; or two years of this experience and qualifications consisting of the successful completion of an approved travel course.
(2) Worldwide travel excluding air travel: The manager must have two years experience making travel arrangements to and from a place outside Australia or any approved travel course qualification.
(3) Australia-wide travel including air travel: The manager must have one year's experience in making travel arrangements within Australia including air travel arrangements or any approved travel course qualification.
(4) Australia-wide travel excluding air travel: The manager need have no experience or qualifications whatsoever. "
50 . Id. at § 5 ( " A travel agent shall...assign one or more Certified General or Domestic Travel Service Supervisors...who have passed the examination administered by the Ministry of Transportation " ).
( " A party wishing to open a tourist office in Israel must ...(submit) an application...to the Ministry of Tourism, the applicant must be a travel expert...To receive a travel expert certificate, the applicant must adhere to several requirements ...possession of a licensed clerk certification, three year's experience and successful completion of the travel expert exams
...To obtain a licensed clerk certificate...graduation certificate from a recognized school of tourism..." ).
( "...travel agents or tour operators...must register with the Travel Guarantee Foundation...The Danish Companies Act does not contain any special provisions for companies which operate in the travel and tourist industry. " )
" must be over 25 years of age...have a solid financial status, be known as respectable and dependable person and have at least three years of practical experience...and possess an adequate professional competence..." ).
55 . Id. Chapter 9, France,Sections 9.9-9.14 ( travel agents and tour operators must obtain a license from the " local Prefet "; the applicant must have no criminal record and a professional aptitude " must be an experienced professional... three years experience at managerial level, or a university degree in tourism and two years experience in tourism...".
" six years experience as...manager...or a combination of three years' experience and three years' education in a tourist school; or six years experience as an employee of a tourist enterprise, in combination with two years of education..." ).
"(I) knowledge of the administration and organization of travel agencies, (II) technical, legislative and geographical knowledge of tourism- related matters and (III) knowledge of at least two foreign languages ".In addition, Italy authorizes its regional licensing authorities to limit the number of travel agencies in the region ( " The purpose of this `plan' is to ensure a uniform spread of agencies throughout the region. " ).
" granted after an inquiry by the authorities. The applicant will have to furnish proof of his professional qualifications and his honorable character. " ).
( " a license is required in order to operate a travel business. To be eligible for a license, certain criteria on commercial knowledge and on professional knowledge had to be satisfied " ).
62 . Id. Chapter 18,United Kingdom, Sections 18.13-18.32 ( travel agencies that sell air transportation must be licensed and must meet minimum standards of " integrity and competence "; travel agencies selling other travel services are not required to be licensed ); Holiday Law,supra, at pp. 11-12.
64 . See § 5.08[d], infra. Retail travel agents selling domestic airline tickets must be accredited by the Airlines Reporting Corporation (ARC) and obtain a performance bond with the airlines as the beneficiaries, not victimized consumers.
67 . The most difficult travel cases are those involving physical injuries caused by the negligence of a foreign ground operator [ bus company, parasailing operator, horse riding stable ] over whom local courts have no jurisdiction. Under these circumstances legal theories are available to find local tour operators and travel agents liable. See § 5.02[c], supra. See also Dickerson, "Tour Operators And Air Carriers: Modern Theories of Liability", The Aviation Quarterly [ 1996-1997 ] TAQ 87-155, 1996. See e.g., Wong Mee Wan v. Kwan Kin Travel Services Ltd.  4 All ER 745 [ tourist drowns in Chinese lake after speedboat accident; tour operator had duty to select speedboat driver of reasonable competence and experience ).
70 . Fla. Stat. Ann. Section 559.929. Registered Travel Sellers are required to obtain surety bonding or an equivalent letter of credit of no less that $25,000 or up to $50,000 if travel certificates are being sold.
71 . Iowa Stat. Section 120.3. Iowa requires that each travel agency registration form be accompanied by a surety or cash performance bond in the amount of $10,000 for the benefit of defrauded consumers. This requirement may be waived if the travel agency has $1 million in errors and omissions insurance.
74 . Va. Stat. Section 59.1-447. Virginia requires travel clubs to maintain a surety bond or letter of credit in an amount reflecting the number of consumer contracts [ $60,000 for up to 1500 contracts; $70,000 for up to 1750 contracts; $80,000 for up to 2000 contracts; $100,000 for 2001 or more contracts ].
75 . Ore. Rev. Stat. 646.200. Oregon requires Travel Sellers in business less than three years to post a $100,000 bond or a bond equal to 10 percent of the total revenue of the two highest consecutive months of business in Oregon in the prior calendar year, whichever is greater, up to maximum of $500,000.
84 . Evidently, non-residents of Californiaare not covered by the Travel Consumer Restitution Fund. See Stewart v. Travel Consumer Restitution Corp., No: 971719, Marin County Court ( Nevada resident challenges constitutionality of California's Travel Seller statute for excluding claims by non-residents even travel services were purchased from a Californiabased tour operator ).86 . Cal. Bus. & Prof. Code Sections 17550.14(b), 17550.37.
87 . Travel Industry Act, Rev. Stat. Ontario, 1990, Ch. T.19; Ontario Regulation 806/93, Part II, Registration ( working capital or bonding requirements; trust accounts ); Part III, Compensation Fund ( consumer restitution fund ).
( " Concurrently with the application for a license...a separate application has to be lodged with the trustees of the Travel Compensation Fund to (be) accepted as a contributor to the fund...An application fee of $75 plus an administration fee $75 plus $600 fund contribution..." );§ 6(f)
( " There is no requirement to keep a separate trust account" ); Chapter 13, Travel Compensation ( discussion of how to file consumer claims against the Travel Compensation Fund ).
( " (a) registered travel agency shall...either deposit a Business Guarantee Bond...or join a Travel Agents Association and pay their due part of the Compensation Security Bond to the Association...The amount of the Business Guarantee Bond shall be fixed according to each type of travel agency and their annual turnover with travelers. The amount of their due part of the Compensation Security Bond is one fifth of the amount of the Business Guaranty Bond " ).
" upon acceptance of the application...the applicant must...submit to the Ministry a bank guarantee in the amount of $180,000 which will be held...for the agency's first three years of operations...")
91 . European Travel Law, supra, Chapter 7, Denmark,Sections 7.8-7.13 ( Denmark has a consumer restitution fund known as the " Travel Guarantee Foundation Act " which is funded by travel agencies/tour operators in the sum of DKK 200,000 for each agency or operator. See also Storm & Hvelplund, supra, at p. 7 ( " The task of the Fund is to assist travel customers...the purpose of the legislation is consumer protection " ).
" present a guarantee...whose amount will be determined depending on the type, extent and financial status of the business...The guarantor must accept liability for the compensation obligations which the travel agency may have towards its clients for the tours and travel services organized.. ." ).
"obligations of the travel agent to its customers, to bring them back to their point of departure and to be able to refund the monies held on their behalf. The minimum guarantee is 5% of the agent's turnover, or 350,000FF. " ).In addition, travel agencies must take " out insurance (to) cover their worldwide liability to customers, other professionals and third parties, for substantial or nominal damages " ).
94 . Id. Chapter 11, Greece, Section 11.17 ( travel agencies must deposit with the licensing authority the sum of Drs 300,000 to cover among other things " claims of third parties deriving from debts and transactions of a tourist character".
95 . Id. Chapter 12, Ireland, Section 12.32 ( " tour operator is required to furnish a bond equivalent to 10% of the operator's annual licensable turnover, and an agent is required to furnish a bond equivalent to 4% of the agent's annual licensable turnover ". In addition, a " Travellers' Protection Fund " protects consumers from agencies whose licenses have been revoked.
( " the travel agent must provide evidence of sufficient financial guarantee...to ensure the reimbursement to the client of monies received for the services...in the case of bankruptcy...The financial guarantee must include repatriation expenses...The Law of 1994 also provides for mandatory insurance for travel agents " )
98 . Id. Chapter 15, The Netherlands, Sections 15.7-15.8, 15.30-15.37 ( Tour operators and travel agents who are members of a trade association, ANVR Federation, are required to post security to guarantee the performance of their obligations. Travel agents must post NLG 5,000 and tour operators must post NLG 10,000. In addition, the government administers The Travel Fare Guarantee Fund Foundation, the object of which
" is to refund consumers should they suffer financial loss, or to repatriate them in cases where the tour operator, travel agent, carrier or supplier of accommodation fails to perform owing to financial incapacity " ).
( " travel and tourism agencies are bound to post a bond and to obtain civil liability insurance. It is obligatory to insure: (I) the reimbursement of the amount received from clients, (II) the reimbursement of extra expenses incurred by the clients due to services that were not provided...(III) the recovery of damages caused to clients...(iv) repatriation and assistance to clients...the bond must be 5% of the annual turnover of the agency, but it can not be less than PTE 5,000,000 nor higher than PTE 50,000,000").
100 . Id. Chapter 17, Spain, Section 17.8, 17.10-17.14 ( travel agencies must have minimum capital ( retail agency Pta 10 million; wholesale agency Pta 20 million; wholesale-retail agency Pta 30 million ); must obtain insurance; and must obtain a guarantee which " covers liabilities which could be incurred by a travel agency when rendering services to the final user or consumer " ).
101 . Id. Chapter 18, United Kingdom, Sections 18.2-18.3, 18.6-18.7, 18.26-18.27 ( depending upon whether the travel agency or tour operator is selling air transportation the agency must have bonding and/or use trust accounts and/or have insurance ); Holiday Law, supra, at Chapter 16, pp. 355-361.
New York: Meachum v. Outdoor World Corp.,235 A.D. 2d 462, 652 N.Y.S. 2d 749 ( 1997 )( misrepresentations in the marketing of vacation club camp grounds; deceptive and misleading business practices ); Pelligrini v. Landmark Travel Group, 165 Misc. 2d 589, 628 N.Y.S. 2d 1003 ( 1995 )( travel agent negligently misrepresents that tour operator's vouchers were refundable when, in fact, they were not ); Marcus v. Zenith Travel, Inc., New York Law Journal, November 19, 1990, p. 25, col. 3 ( N.Y. Sup. ), aff'd178 A.D., 2d 372, 577 N.Y.S. 2d 820 ( 1991 )( travel agent negligently misrepresents financial stability of tour operator ); Vallery v. Bermuda Star Line,141 Misc. 2d 395, 532 N.Y.S. 2d 965 ( 1988 )( cruise ship age and facilities misrepresented; consumer protection statute violated ).
Ohio: Gelfand v. Action Travel Service, Ltd., 55 Ohio App. 3d 193, 563 N.E. 2d 317 (1988)( travel agent negligently misrepresents that cruise ship can meet the needs of tourist with physical limitations ).
Canada, British Columbia: Litner v. Delta Charters, Inc., Docket: C945571, B.C. Sup. Ct. April 16, 1997 ( cruise aboard the Motor Vessel " Skeena " misrepresented ).
Great Britain : Richards v. Tricolors Coaches[ 1996 ] 12 CL 150 ( size of motor coach to carry families to football tournament misrepresented ); Clarke and Greenwood v. Airtours[ 1995 ] 4 CL 32 ( 3 star hotel in Tenerife misrepresented; dirty rooms infested with cockroaches, wild dogs on hotel grounds, graffiti ); Stewart v. Trans Air International[ 1994 ] CLY 1523 hotel misrepresented; no air conditioning; children slept on balcony; TV had only two Spanish language channels ).
Second Circuit: Das v. Royal Jordanian Airlines,766 F. Supp. 169 ( S.D.N.Y. 1991 )( travel agent failed to inform consumer that flight was waited listed ).
Third Circuit: Loretti v. Holiday Inns, Inc., 1986 WL 5339
( E.D. Pa. 1986 )( travel agent may have failed to reveal incidence of crime in Bahamas ).
New Jersey: Rodriquez v. Cardona Travel Bureau, 216 N.J. Super. 226, 523 A. 2d 281, 282 ( 1986 )( travel agent failed to advise consumer of the need for travel insurance ).
New York: Levin v. Kasmir World Travel, Inc., 143 Misc. 2d 245, 540 N.Y.S. 2d 639 ( 1989 )( travel agent failed to advise of the need for a visa to enter China );Trip Tours, Inc. V. Zamani, 22 CCH Aviation Cases 17,425 ( N.Y. Civ. 1989 )( travel agent fails to reveal riskiness of using tour wholesalers for definitive travel plans ).
Ohio: Gribsby v. O.K. Travel, 118 Ohio App. 3d 671, 693 N.E. 2d 1142 ( 1997 )( travel agent liable for failing to investigate and determine that tour operator had failed to register as travel seller in the State ).
Oklahoma: Douglas v. Steele, 816 P. 2d 586 ( Okla. App. 1991 )( travel agent failed to reveal information regarding the financial instability of tour operator ).
Great Britain: Wong Mee Wan v. Kwan Kin Travel Services Ltd.,  All ER 735 ( spped boat accident; tour operator liable for failing to insure that " speedboats...operated by persons of reasonable competence and experience " ).
Second Circuit: Passero v. DHC Hotels and Resorts, Inc., 1996 WL 931767 ( D. Conn. )( slip and fall on floatation mat at hotel; tour operator disclaimer enforced ); Irving Trust Co. V. Nationwide Leisure Corp.,562 F. Supp. 960 ( S.D.N.Y. 1982 )( tour operator in hotel ` bait and switch ` scheme; disclaimer not enforced ).
Fifth Circuit: Brooks v. Timberline Tours, Inc.,1997 WL 686011 ( 10th Cir. 1997 )( accident during snoemobile tour; disclaimer enforced ); Lavine v. General Mills, Inc., 519 F. Supp. 32 ( N.D. Ga. 1981 )( slip and fall on a rock during tour of Fiji; disclaimer enforced ).
Sixth Circuit: Sova v. Apple Vacations,984 F. Supp. 1136
( S.D. Ohio 1997 )( snorkeling accident; tour operator disclaimer enforced );Shannon v. Taesa Airlines, 25 CCH Aviation Cases 17,134, 17,135 ( S.D. Ohio 1995 )( tour participant assaulted in cockpit of charter air carrier; disclaimer enforced ).
Ninth Circuit: Chan v. Society Expeditions, Inc., 1997 WL 530531 ( 9th Cir. 1997 )( accident during shore excursion; tour operator disclaimer not enforced ); Ramage v. Forbes International Inc., 1997 WL 785613 ( C.D. Cal. 1997 )( accident during motorcoach tour of Scotland; tour operator disclaimer enforced).
Minnesota: Walton v. Fujita Tourist Enterprises Co., 380 N.W. 2d 198 ( Minn. App. 1986 )( slip and fall in Japanese hotel; disclaimer not enforced ).
New York: Elsis v. Trans World Airlines, Inc.,22 CCH Aviation Cases 17,805 ( N.Y. Sup. 1989 )( escape from burning Nile River boat; disclaimer not enforced ).
Arizona: Maurer v. Cerkvenik-Anderson Travel, Inc., 181 Ariz. 294, 890 P. 2d 69 ( 1994 )( failure to reveal prior deaths on tour operator's party train; violation of consumer fraud act ).
California:People v. Western Airlines, Inc.,18 CCH Aviation Cases 18,051 ( Cal. App. 1984 )( fare misrepresented ).
Illinois: McCoy v. MTI Vacations, Inc., 272 Ill. App. 3d 494, 208 Ill. Dec. 911, 650 N.E. 2d 605 ( 1995 )( travel agent failed to notify consumers of flight changes; violation of Consumer Fraud Act ).
New York: Pelegrini v. Landmark Travel Group,165 Misc. 2d 589, 628 N.Y.S. 2d 1003 ( 1995 )( travel agent misrepresents refundability of tour vouchers; violation of consumer protection act ).
Pennsylvania: Brunwasser v. Trans World Airlines, Inc., 17 CCH Aviation Cases 17,723 ( W.D. Pa. 1982 )( air fares misrepresented ).
Vermont: State v. Stedman, 547 A. 2d 1333 ( Vt. Sup. 1988 ) ( resort time share fraud violates Vermont Consumer Fraud Act ).
111 . Ill. Stat. Ann., Ch. 121 ½ , Section 1857. See also: McCoy v. MTI Vacations, Inc., 272 Ill. App. 3d 494, 208 Ill. Dec. 911, 650 N.E. 2d 605, 607 ( 1995 )( travel agent failed to notify consumers of flight changes; violation of Illinois Travel Promoter Act is violation of Consumer Protection Act ).113 . Fla. Stat. Ann. Section 559.927(3)(a).
121 . N.Y. General Business Law Section 158 ( The prohibited practices include knowing misrepresentations of the quality of the travel service and of the transportation charges, selling transportation at lower than tariff rates, misrepresenting special priorities for reservations, selling charters without a binding commitment from the carrier, issuing transportation tickets that will not be honored and misrepresenting charter group qualifications ).
122 . N.Y. General Business Law Section 158-a ( The prohibited practices include (1) offering free travel services to one member of a group when the total of the group's travel services include the " free " services; (2) using a merchant account number other than the travel promoter's for credit card transactions, (3) misrepresenting the quality and availability of travel services, (4) misrepresenting fares, (5) selling transportation at below tariff rates, (6) misrepresenting special reservation's priorities, (7) selling charters without binding carrier commitments, (8) issuing tickets that will not be honored and (9) misrepresenting charter qualifications.
124 . Va. Stat. Sections 59.1-449(1)-(9). Virginia prohibited practices include: (1) selling travel services at prices greater than available without " travel club membership ", (2)misrepresenting any of the descriptive features of the travel services offered unless based upon a reasonable belief, (3) misrepresenting the fares and charges for transportation and services, (4) misrepresenting the availability of priority reservations that are otherwise available to the general public, (5) selling tickets that can not be honored by carriers, (6) misrepresenting charter tour requirements and (7) using the terms " time share " and " vacation ownership " which are otherwise regulated by the Virginia Real Estate Time-Share Act.
125 . Mass. Gen. L. Ch. 93A Section 2(c), 940 CMR 15.03. In Massachusetts Travel Sellers may not misrepresent (1) the total price of any travel service, (2) the scheduled date, time or location of any departure or arrival time, (3) the planned modes of transportation, (4) the planned provider(s) of transportation, (5) the name, location or amenities of any lodging, (6) the terms of any substitution policy that may apply, (7) the terms of any insurance policy offered by or through any seller of travel, (8) the terms of any cancellation or refund policy, and (9) the billing practices of the seller of travel.127 . Cal. Bus. & Prof. Code Section 17540.8(g).
135 . Compare Lerner v. Karageorgis Lines, Inc., 66 N.Y. 2d 479, 497 N.Y.S. 2d 894, 488 N.E. 2d 824 ( 1985 )( New York's consumer protection rule that consumer contracts must be in 8 point type preempted by maritime law which allows passenger tickets to be in 4 point type.
140 . Hawaii Rev. L. Sections 468L-7(1)-(7). The statutory rights which must be disclosed are (1) the right to proper disclosure, (2) the right to rely on the travel agent's guarantees and promises, (3) the right to have the travel agency fulfill its contracts and honor its guarantees, (4) the right to be informed of cancellation provisions, (5) the right to obtain all tickets upon full payment and (6) the right to have a full refund within fourteen days of a request.
Travel Industry Act, Rev. Stat. Ontario, 1990, Ch. T.19, Ontario
Regulation 806/93, Part II, Registration.
Advertising Standards : Section 38-42 ( advertising material shall include " A brief description of the advertised travel services "; the brochure shall contain
" deposit requirements, (2) final payment requirements, (3) cancellation terms and ...(4) availability of cost of trip cancellation insurance, (5) The refund policy, including...penalty provisions, (6) If the travel services include travel by cruise ship, the name, country of registration and gross tonnage of the shipDisclosure Rules : Section 21-23 ( before travel services are purchased the travel agent must disclose
, (7) A description of the travel services...details of transportation ... of the accommodations, (8) The date...of commencement of any construction or renovation ( which may interfere with the consumer's enjoyment ), (9) ( if the price is raised more than 7% then the consumer may cancel ), (10) The date of the issue of the brochure....( Any photograph or artist's rendering shall be an accurate representation ) ".
" (a)...the price and the terms and conditions...(b)...limitations...(of) transfer or cancellation...(c) availability of trip cancellation insurance, (d)...information and documents that will be needed";upon selling the travel services the consumer is to receive an invoice with the booking date and date of first payment, the amount of the payment and taxes, the name of travel agent and a description of the travel services, and whether the consumer wished to purchase travel insurance.
( " The New South Wales Commissioner then lays down standards of conduct as follows.(i) Full disclosure should be made to the traveller of all costs, schedules, conditions and cancellation fees. Use plain language in explanation of special conditions. Give detailed information including...written quotations when requested.(ii) Fare cancellation fees: These should reflect true costs rather than be so high as to be punitive.(iii) Accurate representations: It is essential that all representations whether in brochures or advertisements showing a standard of holiday or prices charged give an accurate overall impression of the holiday.(iv) Adequate notice of variations should be given to the traveller as soon as they become known to the agent, not delayed until the handing over of the tickets, for example.(v) Documentation should be adequate and contain details of all transactions. Confirmation in writing to the traveller of all important points is recommended. "
( " 1... A travel agent shall set his handling fees ( except those for package tours ) and display them where travelers can easily read them...2....A travel agent shall display or keep the Standard Terms and Conditions for Travel Contracts...where travelers can easily read them...3. A travel agent shall deliver to the travelers the travel documents explaining the conditions and contents of his travel contract and specifying the itinerary, the particulars of the travel services as well as other tour conditions, and their liabilities...5...In the advertisements of package tours the travel agent shall indicate the organizer's name and address, the registration number, the destinations and itineraries, the contents of transportation and accommodation and meal services, the fees, availability of a tour conductor, the minimum participants and the provisions of the explanation of the travel contract. When making advertisements of travel services, a travel agent shall neither make statements grossly different from the truth nor make misleading statements that would let the public believe the services to be excessively better or more favorable than those actually offered. ").
148 . On June 13, 1990 the Council of the European Communities [ EC ] enacted Council Directive of 13 June 1990 on Package Travel, Package Holidays and Package Tours[ the EC Directive ]. The EC Directive required each of the thirteen member nations of the EC to enact statutes similar to this model regulation.
Contents Of Travel Brochure: Travel brochure shall not be misleading and shall contain clear and accurate information about the price and (a) the destination and the means of transport, (b) the nature of the accommodations, © the meal plan, (d) the itinerary, (e) information regarding visa requirements and heal formalities for the journey and the stay, (f) the amount to be paid as a deposit and the timetable for paying the balance, (g) and whether a minimum number of persons is needed for the package to take place.
Additional Pre-Contract Information: Prior to the travel contract being entered into the tour organizer is required to obtain information on passport and visa requirements and health formalities. Before the start of the tour the consumer must be provided with information regarding (a) the times and places of intermediate stops, connections and details of the accommodations, (b) the name, address and phone number of the tour organizer's local representative and © optional insurance policies to provide for cancellation by the consumer or the cost of assistance, including repatriation, in the event of an accident.
Contents of Travel Contract: The travel contract shall contain (a) travel destinations and period of stay, (b) means, dates and characteristics of transport, © identification of accommodations by tourist category, main features and meal plan, (d) deadlines for cancellations, (e) the itinerary, (f)visits, excursions and other services, (g)name and address of tour organizer, retailer and insurer, (h) price of the package, price revisions and extra fees, (I) payment method and schedule and (J) time limitations for filing a claim.
Price Changes: The price may not change unless expressly provided for in the travel contract and only to allow for variations in transportation costs, including fuel costs, dues, taxes and fees charged for landing or embarkation. There can be no price increase twenty days before departure.
See § 5.02, supra; European Travel Law, supra, Chapter 2, The Package Travel Directive.
163 . Ill. Stat. Ann., Ch. 121 ½ , Section 1857. See also McCoy v. MTI Vacations, Inc., 272 Ill. App. 3d 494, 208 Ill. Dec. 911, 850 N.E. 2d 605, 607 ( 1995 )( violation of Illinois Travel Promoter Act is violation of Consumer Protection Act ).
168 . Cal. Bus. & Prof. Code Section 17550.19. See Del Rosso,"Class Action Litigationf. Charges Operator, Agents Under Seller Law," Travel Weekly,July 10, 1997, p. 27 ( " The Californiaattorney general's office made good on its promise to crack down on travel firms that violate the Seller of Travel Law...The office assessed Sun Trips, a major West Coast Mexico and Hawaii wholesaler, $100,000 in fines and $34,000 in investigating fees for not depositing credit card transactions into a trust account..." ).
178 . In New York the failure of a travel agency to obtain a license prevented the agency from enforcing a contract against a consumer. See Ungar v. Travel Arrangements, Inc., 25 A.D. 2d 40, 266 N.Y.S. 2d 715 ( 1966 ). In Washington this rule has been codified in Wash. Rev. Code Section 19.138.260 ( " In order to maintain or defend a lawsuit, a seller of travel must be registered..." ).
( " A contract for transportation or land arrangements between the purchaser of the arrangements and a tour promoter doing business in this State in violation of this section is voidable at the option of the purchaser "). California[ Cal. Bus. & Prof. Code Section 157550.14(b) ] and Illinois [ Ill Ann. Stat. Ch. 121 1/2, Section 1855 ] authorize full refunds if the Travel Seller cancels the consumer's reservation for any reason, and even more salutary, provide that any ` misrepresentation ` with respect to the date, time, place of all departures or arrivals or the type of equipment being used is a cancellation requiring a full refund. In Washington [ Wash. Rev. Code. Section 19.138.050(2) ] " Any material misrepresentation with regard to the transportation and other services offered shall be deemed to be a cancellation necessitating the refund...".
180 . The marketing of travel services involves several levels including suppliers, tour operators, travel agents and other Travel Sellers. Often the consumer is injured or suffers monetary damages due to the tortious misconduct of foreign suppliers who may not be subject to local jurisdiction, may be insolvent, uninsured or irresponsible [ See § 5.01, supra ]. For consumers to be successful in travel litigation arising from such misconduct they must establish that local tour operators and travel agents may be held liable for the defaults of foreign suppliers. This can be accomplished in one of three ways.
First, by statute as is done in the European Community in the E.C. Directive, Article 5(10)[ See § 5.02[h], supra( " The tour organizer or retailer shall be liable to the consumer for proper performance regardless of whether a supplier hotel or air carrier is responsible " ); see also European Travel Law, supra, at Chapter 2, pp. 54-55 ].
Second,tour operators and travel agents have a duty to investigate the reliability of suppliers and a failure to do so generates liability [ See §§ 5.02,; 5.03[c],[d], supra ].
Third,there are several liability shifting legal theories [ assumed duty, breach of warranty, estoppel, apparent authority ] available for imposing liability upon tour operators and cooperating air carrier for the misconduct of foreign suppliers [ see § 5.02[c][iv], supra; see also Dickerson," Tour Operators and Air Carriers: Modern Theories of Liability," The Aviation Quarterly [ 1996-97 ] TAQ 87-155, 1996 ].
184 . The E.C. Directive Article 5(10) makes the tour operator strictly liable for the defaults of third party suppliers unless " the consumer is responsible for performance failure, if the non performance is attributable to an unconnected third party, or if such failures are due to force majeure or an unforeseeable event " [ Travel Law, supra, at 5.02[h] ].