TRAVEL INSIDER : Clash Over Travel Law Could Bring Better One : Consumers: Attorney general’s office and travel agents wrangle over who’s ‘travel promoter’. Meanwhile, new legislation waits in the wings.

For more than six months, a nasty bureaucratic battle has been building between the state attorney general’s office and thousands of California travel agents. And as a result, travelers from California could be missing out on potentially valuable protection from travel-related rip-offs.

That’s the bad news. The good--which is far less certain--is that the dispute is at last coming to a head. One result could be a new state law that would establish a landmark system for travel consumer protection in California.

But even if the new law doesn’t materialize and the dispute lingers on, the affair should serve as warning to anyone putting up money in advance for a trip: Always ask your travel agent about the reputation and longevity of the company you’re writing your check to. And ask how customers are protected if something goes amiss.

Now, about the current mess.

Some 23 years ago, the California Legislature passed the Travel Promoters Act. The idea was to require that travel promoters post a bond or maintain trust accounts to hold customers’ payments until they were passed along to airlines or cruise lines. That way, the thinking went, a customer could recover his or her money if a trip fell apart, a promoter went broke, or someone suddenly dropped out of sight. These things did, and do, happen often: The Federal Trade Commission has estimated that Americans lose $40 billion a year to travel scams.

But not everyone agreed on the law’s definition of “travel promoter.” The state’s definition included tour operators--companies that assemble packages combining accommodations, guide services and transportation--and many other travel professionals, but excluded the appointed agents of air carriers. Since any travel agent who sells airline tickets must be “appointed” by the Airline Reporting Corp., many traditional agents presumed that the Travel Promoter Act didn’t apply to them.

The state attorney general’s office says it presumed no such thing. Officials there argue that the travel promoter law has always applied to the many travel agents who do more than book flights directly through airlines--those who buy from airline ticket “consolidators,” for instance, or handle reservations and money for cruises or other land-air packages. The state even amended the law’s language in 1986 to make that clear, representatives of the attorney general said.

So is your travel agent now toeing the attorney general’s line? Maybe not.

For years, the travel agent/ travel promoter question remained a low-profile issue, and the state never compiled a list of all the companies it wanted to put up bonds or establish trust accounts.

In 1988, the legislature seemed to close that loop by passing another new law. This one required travel promoters to register with the state attorney general’s office, pay a $50 fee and disclose their bond or trust accounts.

Still, not much happened, and the majority of the state’s travel-related companies remained unregistered. The American Society of Travel Agents counts more than 5,000 travel agency headquarters and branch offices in California; the attorney general’s office reports that it has registered just 300 “travel promoters.”

“I don’t know anything about it. I’ve never gotten an indication that I owe anybody $50,” says Amaris Bryer, owner and manager of Travel Ticket Inc. in Encino. “I’ll happily comply,” she adds. “But they have no way of enforcing it, and legitimate people like me just have another expense, and another form to fill out.”

Ada Brown, owner and manager of Seaside Travel in Long Beach, says she’s never had any notification, either. Brown says she already has a trust account, the better to reassure her clients. Other travel agents, however, have assumed that their accounts with the Airline Reporting Corp. fill the same role (supervising deputy Atty. Gen. Chris Ames says it doesn’t). And still others, travel agents say, “play the float” with customers’ money, paying off other bills or making short-term investments before passing the payment along to its ultimate destination.

Herschel T. Elkins, senior assistant to Atty. Gen. Daniel E. Lungren, acknowledges that the number of travel-related businesses registered with his office is “obviously nowhere near” the number that it should be under current interpretation of the law. The state hasn’t had the staff or budget to send out thousands of notifications, he says, and as a result, “we can’t tell (whom to regulate) until somebody complains . . . But we have been contacting companies continually and people have been registering.”

The issue flamed into full-fledged controversy last July, when a San Joaquin Valley travel agent, having been contacted by the attorney general to register and pay the fee, asked why several of his competitors hadn’t been targeted as well. The attorney general’s office sent out several registration forms to his competitors and soon the American Society of Travel Agents was voicing its opposition and travel agent trade publications were carrying news of a new interpretation of state law.

“Our position is that it is unacceptable for the attorney general to take a statute that’s been on the books for 23 years, and change his interpretation of it,” says Linda High, the American Society of Travel Agents’ assistant director for state legislative affairs. “All of a sudden he woke up in July, 1992, and decided (that travel agents should be required to register). What, did it come to him in a dream?”

Travel agents argue that the attorney general’s troops should be concentrating their efforts on miscreant tour operators, who, they charge, are responsible for the most failures and rip-offs. Though the state has prosecuted tour operators for failing to comply with its consumer protection laws, some travel professionals have been angered by other cases that did not bring prosecutions. When the giant Encino-based Hemphill Harris Travel Corp. found itself in dire financial straits in 1989, scores of travelers around the world discovered that their prepaid hotel vouchers were now worthless.

“There were dozens of consumer complaints to the attorney general’s office,” says Jim Murphy, Los Angeles-based president of Brendan Tours and chairman of the U.S. Tour Operators Assn. “And nothing ever happened.”

So what should a consumer hope for amid all these arguments? A new law, perhaps.

The California Coalition of Travel Organizations, which includes tour operators and travel agents, has rallied behind a proposal to register all agents and tour operators, and require them to pay annual fees of $50-100 to the state Consumer Affairs Department.

Under the proposed law, which may be introduced to the legislature this month, travel businesses would also be required to make a one-time start-up contribution of $100 each to a statewide “recovery fund.” The fund would reimburse customer losses up to $15,000 per person, excluding airfares, when registered tour operators and travel agents fail or flee.

Susan Tanzman-Kaplan, a Marina del Rey travel agency owner and attorney who is president of the coalition, estimates that the fund would start paying out two years after passage of the law, having reached a reserve of $600,000 or more. If the proposal is adopted, supporters say, it would be the broadest travel consumer protection law in the United States, surpassing existing measures in Florida, Hawaii and Illinois.

But the odds on this are uncertain. Coalition members acknowledge that a similar bill was proposed and withdrawn last year, and that opposition from the governor and the attorney general’s office is possible. In the attorney general’s San Francisco office, Chris Ames warns that the proposed fund “falls far short of the potential losses” and that other provisions “water down our ability to prosecute the real bad guys.”

In the meantime, travel industry leaders and officials in the attorney general’s office have agreed to pause in the registration battle until at least Jan. 30.

A few words from them for consumers:

* Travelers should listen carefully to recommendations from an experienced travel agent before choosing a tour operator. After choosing, travelers should get their hands on their tickets as soon as possible after handing over money.

* As is often the case with travel expenses, paying by credit card often offers additional protection.

* Chris Ames of the attorney general’s offices suggests that consumers insist that their travel agent have a trust account and, if the agent is working with a tour operator, that the operator also have a trust account. If consumers write checks, Ames adds, they should address them specifically to the trust account of the agent, and ask that when the money is forwarded, that the agent forward it specifically to the tour operator’s trust account.