When Tours Go Bust, State Restitution Fund May Help

The consumer’s battle against dubious travel deals is far from won, but there is encouraging news from Sacramento.

After more than a year of legislative dickering and industry coalition-building, the California attorney general’s office and a group of travel industry leaders have assembled a new part-public, part-private program aimed at weeding out dubious businesses and better protecting consumers. It depends mostly upon two elements:

* First, legitimate travel agencies, tour operators and brokers of airline tickets have newly issued state registration numbers to affirm their ability to meet state financial stability and consumer-protection requirements.

* Second, consumers who use such a properly registered California-based travel agency, tour operator or airline ticket broker can now be protected by a new restitution fund against losses up to $15,000 each if a business failure blocks delivery of services that have already been paid for.

These are welcome measures for California consumers, who for decades have been navigating a travel marketplace in which a majority of legitimate businesses are joined by a dangerous minority of scam artists who promise impossible bargains, then don’t deliver. But until many of the fledgling program’s drawbacks, disputes, exceptions and complications are resolved, it’s difficult to say how much effect it will have on most travelers’ lives.

The registration requirement works this way: If you encounter an advertisement placed in California by a travel agency, tour operator or airline ticket broker--no matter where the company is based--the ad should include a nine-digit registration number. That number means the business has satisfied new state requirements for financial stability and the protection of consumer payments.

If a company doing business with Californians meets the state’s definition of a “seller of travel” but has no registration number, state officials say consumers should beware.

Unfortunately, there’s a drawback to the registration-number requirement right now. Though this law took effect Jan. 1, 1996, and about 5,000 businesses and branch locations have been issued registration numbers, Deputy Atty. Gen. Christopher Ames acknowledges that “a couple of hundred” of legitimate businesses with applications pending have not yet been issued registration numbers.

If you’re considering doing business with a company that isn’t displaying a registration number, the company should be able to show or send you evidence of an application in process. If not, state officials say, consumers should take their business elsewhere.

The new restitution fund, which industry leaders say is the first program of its kind, is managed by the nongovernmental Travel Consumer Restitution Corp. (TCRC), which issues receipts to all member companies.

The corporation is to be run by four travel-industry professionals, who are elected by California industry members; one consumer representative, and one nonvoting representative of the state attorney general. California-based companies bankroll the restitution fund by paying $200 when first enrolling; fees in following years will vary, depending on amounts needed to replenish the fund.

If this program works, it will give its members a strong selling point, and one that’s rare in the industry. The new program does, however, suffer from uncertainties. For instance, though any business selling to Californians is required to register with the state, the restitution-fund coverage applies only to businesses headquartered in California. So if you make a payment to an East Coast tour operator and the company vanishes, the state restitution fund won’t help you.

On another front, the architects of the fund aimed for a balance of $1.6 million, based on expectations that 8,000 companies would enroll. Instead, about 5,000 have enrolled, putting the fund at almost $1.2 million. At press time Wednesday, Assemblywoman Jackie Speier (D-Burlingame) was expected to introduce a bill to modify the funding requirement to $1.2 million.

Meanwhile, Assemblyman Peter Frusetta (R-Tres Pinos), had introduced a bill, pending at press time, that would eliminate the restitution fund but leave the registration portion of the law intact.

Another confusing point: Though the law targets all “sellers of travel” to Californians, airlines are excluded (largely because of previous federal court decisions protecting carriers against regulation at the state level), as are cruise lines, bus companies, rail-travel companies and lodgings.

To alert state officials of an unregistered agency, tour operator or airline ticket broker, consumers can write the Office of the California Attorney General, Sellers of Travel Program, 300 S. Spring St., Los Angeles, CA 90013.

Travelers seeking to make a claim with the Travel Consumer Restitution Corp., with respect to travel purchased in 1996, can write TCRC, P.O. Box 6001, Larkspur, CA 94977-6001.

Reynolds travels anonymously at the newspaper’s expense, accepting no special discounts or subsidized trips. To reach him, write Travel Insider, Los Angeles Times, Times Mirror Square, Los Angeles 90053; telephone (213) 237-7845.