Protection widens as Seller of Travel Act becomes state law

People buying travel in California for the last eight years have benefited from a little-known statute: the Seller of Travel Act, which sets out ethics for travel agents, tour operators and other companies that market travel and compensates customers if a company defaults. California pioneered this law in 1996 and has renewed it on a temporary basis since.

Come Thursday the Seller of Travel Act will become a permanent law, with expanded protections. That’s good news for California consumers, if we bear this in mind: We can still lose our shirts booking travel if we’re not careful -- and even if we are.

Although most sellers are competent and honest, mismanagement and fraud are risks in any industry that offers this deal: “Give me your money now, and I’ll give you the service later,” as Deputy Atty. Gen. Michael Hughes notes.

Here are two key benefits of the Seller of Travel law and two cautionary tales:

* Registration: Any company that sells travel in California, even if it’s based in another state or does business on the Internet, must register with the state and post its registration number in its ads. If you don’t see the number, don’t use the company; it’s operating illegally here.

Make sure the registration, which must be renewed annually, is current. The attorney general’s website, www.caag.state.ca.us/travel, has a “Seller Search” function that reveals this information.

In registering, a company provides data on its ownership. It also agrees to protect customers’ money by, for instance, obtaining a surety bond or putting it in trust accounts, and to promptly return unused funds, among other provisions.

Hughes credits the Seller of Travel law with encouraging sound business practices among legitimate operators and scaring away scam artists. But registration itself is no guarantee of expertise, honesty or fiscal soundness. “It’s not a licensing program,” Hughes says.

So if your travel purchase goes bad, the law provides:

* The Travel Consumer Restitution Fund: Many companies that sell travel in California must contribute to this fund, which is maintained by a private board, called the TCRC, and used to reimburse consumers if services they bought aren’t delivered. To apply for a refund, you fill out a form at www.caag.state.ca.us/travel, pay a $35 fee and mail it to TCRC, P.O. Box 6001, Larkspur, CA 94977-6001; for queries, call (213) 897-8065.

In a change for 2004, you have one year, instead of six months, after the scheduled completion of your travel to file your claim. There are many other restrictions. Among them:

Caveat No. 1: You must have bought the travel in California. In another 2004 change, a passenger who was out of state at the time the travel was purchased will be covered, providing the travel was purchased here. Previously, the passenger had to be in California.

Caveat No. 2: The company must participate in this fund in order for you to collect on a claim. You can ask the company or use the “Seller Search” on the above website to find this out.

Caveat No. 3: You must first seek reimbursement from your credit-card company and travel insurer, if you used either. Only if they deny your claim can you collect from the state fund. Credit cards may give refunds if you didn’t receive services you bought. Trip cancellation insurance may cover you too, unless you bought it from the travel supplier that goes out of business, taking your funds with it; then you’re almost certainly not covered.

Sound complicated? It is. The safety net for travel consumers, with or without the special California law, has lots of holes. Two recent cases in point:

Many of the 21 companies that sold travel under the umbrella of Far & Wide Travel Corp., which sought Chapter 11 bankruptcy protection in September, were in California. It was one of the largest-ever filings by a tour operator. You might think consumers here would be eligible for state refunds on losses. But that may not be the case for many of them, said Deputy Atty. Gen. Hughes.

That’s because as Far & Wide gobbled up companies, some switched their Seller of Travel registration to the parent. Because Far & Wide was based in Florida and was not publicly traded, it didn’t have to participate in the consumer restitution fund here. So the fund may not cover the losses.

Then there’s the case of David Anderson, a Santa Barbara-based photographer and businessman who was a principal in a safari operator that closed in January 2000, allegedly taking more than $200,000 in trip deposits with it. The TCRC paid at least $80,000 to customers in the next year.

It took three years for the attorney general’s office to file a case against Anderson in Superior Court of California, Santa Barbara County. After pleading not guilty in January and being jailed for 117 days because he could not make bail, he changed his plea to no contest on two Seller of Travel counts (involving failure to return about $50,000) and was released, said Deputy Atty. Gen. Angela Rosenau.

Anderson has since asked to withdraw his plea, been rebuffed by the court and plans to file an appeal, he said. He denies intending to defraud anyone, saying he resigned from the safari operator before it declared bankruptcy and that nearly all the customers “got their trips without paying any more money.”

Under terms of his plea bargain, Anderson is barred from obtaining a Seller of Travel registration or handling travelers’ funds. But he continues in the business, designing African safaris that his clients then book through another company, which has a Seller of Travel registration. This arrangement conforms to his probation rules, Rosenau said.

Anderson also has been selling an information package about the tours for $15. On his website he promises “100% Money Back Guarantee if not Completely Satisfied.”

Jane Engle welcomes comments and suggestions but cannot respond individually to letters and calls. Write Travel Insider, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012, or e-mail jane.engle@latimes.com.