The state Consumer Affairs Division is working to revise an
ineffective law designed to protect the public from getting
ripped off by fly-by-night travel agents. But if the law is
changed as promised, some in the travel industry say it will
make matters worse, not better.
The law, commonly known as the Sellers of Travel law, was
passed in 2001 as a last-minute amendment to a bill on deceptive
trade practices. It regulates travel agents and came about
after a number of high-profile cases involving travel agent fraud
in the state.
The travel industry has been complaining ever since the law
was passed that not only does it place onerous restrictions on
travel agents, it does nothing to protect the consumer.
Now it looks as if the Nevada Consumer Affairs Division agrees.
"We are responding to the industry's concerns, though our
first concern is for the consumer," said Patricia Jarman-
Manning, commissioner of the Nevada Consumer Affairs
Division in Las Vegas.
The division is considering two main revisions to the law
and drafting language for the upcoming 2003 Legislature, said
Jarman-Manning. The division plans to propose dropping one
provision of the bill and revising another to ease the requirements
for smaller travel agencies.
The law currently requires that travel agents that have
accreditation with the Airline Reporting Corp., which is a
clearinghouse between agents and air carriers that requires a
bond for affiliated agents, need only to register with the state
for a $25 fee. Agents that are not ARC-affiliated must register
with the state and secure their own $50,000 bond.
Travel agents say there are problems with both the ARC-affiliation
and the $50,000 bond. The bond posted through ARC, says
the industry, doesn't do what the law assumes it does.
"You have to post a bond with ARC, but that bond doesn't
do anything but protect ARC," said George Weeks, who, with
his wife Kyung-Un, runs Un's Travel in Carson City. "So even if
you're affiliated with ARC, it doesn't protect the consumer."
Smaller, often home-based, agencies make up nearly half the
industry now, and many are not ARC-affiliated, according to
Sharna Blumenfeld, president of the Southern Nevada chapter
of the American Society of Travel Agents in Las Vegas. For
them, a $50,000 bond is too burdensome. "I don't have numbers,
but anecdotally, I know there are many agents who,
between 9/11 and the bond, have gone out of business," said
Blumenfeld.
So the Consumer Affairs Division is proposing the provision
about ARC-affiliation be dropped and a sliding scale, based on
agencies' income, be instituted, said Jarman-Manning. All agencies,
whether ARC-affiliated or not, would have to post a bond,
but the amount of the bond would start at $10,000 for the
smallest agencies. At the high end, the largest agencies would
be required to post a $50,000 bond.
ASTA's Blumenfeld said it's premature to comment on the
proposed changes because they may not even be passed into law
by the legislature. But Un's Travel's Weeks says the revisions wil
only exacerbate the situation. "Putting a bond on everyone in
the travel industry will have the impact of driving more agents
out of the business," he said.
Weeks said that since the law was passed he's been able to
find only one firm that would provide a $50,000 bond. And no
firm posts a bond that covered bankruptcy. "Even if the bond is
on a sliding scale that an agent could afford, it serves no purpose,"
said Weeks. "Someone could still set up a storefront and
steal consumers' money."
ASTA's Blumenfeld said there are numerous ways to change
the law so that it would protect the consumer. California law,
for example, requires that agents create a trust account.When a
consumer pays for a trip, the agent deducts his or her commission
and places the remainder the cost of the trip into a
trust account that is used solely to pay the service provider.
Another solution is requiring agents to carry errors and
omission insurance. ASTA members must carry $1 million in
such insurance, which compensates the consumer if the agent
makes a mistake, innocently or deliberately.
Another idea, said Blumenfeld, is professional certification
based on the number of years an agent has been operating. That
would deny certification to illegitimate agents who set up shop
overnight for a quick score against a few naive consumers.
