Bill Would Ground New Travel-Scam Fund

A new state fund to compensate consumers ripped off in travel scams would be eliminated under a Republican bill making its way through the Assembly.

Assemblyman Peter Frusetta (R-Tres Pinos) is sponsoring the measure to repeal the industry- financed fund, contending that it places too heavy a regulatory and financial burden on small travel agencies operating in California.

The fund is the centerpiece of the California Sellers of Travel Act, a travel-related consumer protection law that went into effect Jan. 1. The new law requires all California travel agents and other intermediaries who collect money from the public to register with the state attorney general’s office and pay $200 per sales location to finance the $1.6-million restitution fund.

“Honest, law-abiding agents who haven’t broken the law shouldn’t be penalized for the acts of swindlers,” said Devin Brown, an administrative aide to Frusetta. “This measure is about getting government off the backs of small business and preserving jobs in California.”

The repeal effort is backed by the Assn. of Retail Travel Agents, a national trade group with 900 members in California.

But the attorney general’s office, consumer groups and a statewide coalition of travel trade organizations are opposing what they see as an attempt to gut legislation designed to protect consumers and rebuild confidence in an industry rocked by a number of high-profile scams in recent years.

“This legislation has to make sense for consumers as well as travel agents,” said Susan Kaplan, president of the California Coalition of Travel Organizations, which helped to craft the California Sellers of Travel Act. Under Frusetta’s proposed bill, “there will be little consumer protection left.”

The travel sellers law, the first of its kind in the nation, was the outgrowth of years of wrangling between industry leaders and legislators on how to clean up an industry tarred by shady operators.

Barely 4 months old, the law has sparked considerable confusion among California travel agents, many of whom haven’t bothered to register with the attorney general’s office or pay into the restitution fund. That has created a major shortfall in the $1.6-million fund, which is the subject of another proposed piece of legislation.

Assemblywoman Jackie Speier (D-Burlingame), sponsor of the existing law, is working on emergency legislation to scale back the restitution fund to $1.2 million to prevent agents who have already registered from being hit with an additional $110 assessment to make up the shortfall.

Frusetta’s bill to eliminate the restitution fund will be heard April 9 by the Assembly’s Consumer Protection Committee.