Bill Assures Travel Agents They Have Paid Enough

After months of wrangling, the Legislature approved an emergency measure Thursday that will prevent travel agents from being slapped with an assessment to cover a shortfall in a fund to compensate consumers ripped off in travel scams.

The legislation amends a law that required the travel industry to finance the $1.6-million fund. The California Sellers of Travel Act went into effect Jan. 1, but thousands of travel agents failed to register under the new law and chip into the fund, causing a $500,000 shortfall.

Rather than penalize agents who complied, the Legislature on Thursday chose to scale back the minimum balance to $1.2 million, averting the need to hit registered agents with an additional assessment this year. The fund currently contains more than $1.1 million and is projected to top $1.2 million by year’s end.

Gov. Pete Wilson is expected to sign the bill over the weekend.

“It’s a good result for everybody,” said Susan Henrichsen, assistant attorney general in San Diego. “The fund should still be adequate enough to protect the public, but it won’t be unduly burdensome on the industry.”

The travel law has been beset with complications since it was enacted the first of the year. State travel agents complained about the cumbersome registration process and balked at the prospect of an additional assessment when it became clear that the fund would not reach the mandated $1.6 million.

Assemblyman Peter Frusetta (R-Tres Pinos) led an effort to have the entire law scrapped, contending it placed too heavy a regulatory and financial burden on California’s mom-and-pop travel agents. Instead, legislators reached a compromise that both the industry and state regulators support.

The California travel sellers law, the first of its kind in the nation, is the outgrowth of years of debate between industry leaders and legislators on how to clean up an industry rife with scams that cost consumers nationwide an estimated $12 billion every year.

The state law requires every travel agent, ticket broker, tour operator or any other travel intermediary that collects money from the public to register with the California attorney general’s office, spell out specific terms of travel packages and meet state requirements for handling customers’ funds.

Travel sellers also are required to pay $200 per sales location to finance the restitution fund, a $25 administrative fee and a $100 annual registration fee to the attorney general’s office.

Registered travel sellers had faced an additional $110 assessment this year before Thursday’s emergency legislation.