ASSOCIATION OF ATOL COMPANIES
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LEGAL FAQS
If life wasn’t difficult enough with "cheques in the post" and customers who expect first class service at third class prices, just trying to keep up with the rules can be a full time job. For those who want to reassure themselves without spending an hour on the phone with the CAA (and possibly be more confused than they were) we offer the most frequently asked questions and their answers. These will be updated and changed as necessary.
If you a specific problem and nothing below seems to fit, then e-mail us and Alan
Bowen will get back to you as soon as possible, all part of the AAC service!
Click
here, legaladvice@aac-uk.org
Do I need to have agency agreements with all my agents?
It makes sense to have as much in writing as possible in these days of growing threats of litigation. However there is no legal requirement to have any form of written agreement for a valid agency agreement to exist and this can be a problem. If you accept bookings from an agent and pay commission to them, they are your agents whether you like it or not. An agency agreement can help define each side responsibilities and particularly if you discover they have been queuing bookings without your knowledge, an agency agreement may help to avoid potential problems if the agent defaults.
The AAC proposed a standard agreement some years ago and all ABTA agents at the time were offered the opportunity of accepting the terms and returning a copy to us. You can check to see if a particular agent has signed up. If you have special terms for a few of your agents, it makes sense to make sure the terms of the agreement match what happens in reality.
The CAA may well write and ask you to confirm that you have appointed a specific agent, (who may be under investigation at the time) make sure you are happy to confirm the situation before replying to the CAA. If you do, it may be very difficult to deny the situation later.
If you chose to stop dealing with an agent, for whatever reason, it is sensible to send a letter confirming that the appointment as an agent has been terminated and that they have no authority to represent you in the future.
I sell to many ABTA agents in the belief that if they fail, I will be protected by ABTA's financial protection scheme. What is the real position?
Not as simple as you might think. Generally ABTA agents are a relatively good risk because of the tight financial monitoring exercised by ABTA. However, in legal terms, all travel agents, whether ABTA or not, are your responsibility and any bookings or options in the system will be at your risk if they fail owing you money.
If you are an ABTA member then the protection provided to ABTA by the failed agent will be used to protect your net loss. However if you are not an ABTA member, ABTA provides no protection whatsoever, on the basis that they should only protect those that pay into their own system in the first place. Some consolidators have joined ABTA simply to enjoy the benefits of financial protection, whether the costs are worth it may depend on the risk you believe exists.
Can I refuse to issue tickets when an agent refuses to pay money outstanding?
CAA regulations state that the clients contract is with you, not your agent, and if the client has paid your agent, and you are entitled to ask for proof, then the client must not be denied travel. However, you may wish to delay issuing tickets, which should cause the client to give the agent grief and possibly pay you, a little quicker. It is a commercial decision as to whether you want to deal with agents who always pay late.
It makes sense to fix a limit of outstanding tickets acceptable before you stop accepting further bookings. However so long as you accept bookings, you remain potentially liable for the full value if the client pays and your agent defaults.
What is "Ticket Providing"?
The current CAA Regulations make allowance in the level of bonding required where you can show you act as a "ticket provider" To meet the requirements you must be dealing direct with the client, not through an intermediary, and issue tickets within 24 hours of receiving payment. Once tickets have been issued, airlines will normally carry the passengers and the CAA see this business as less risky from their point of view. You need to weigh up the advantages of a reduction in costs as against the possible loss of cash flow by having to pay through BSP earlier than might otherwise be the case.
Can I refuse to do business with an agent, even if they are a member of a recognised trade association?
The simple answer is that you can do business or refuse to do business with whomever you wish.
What benefit is there in requesting a faxed copy of a cheque for payment?
Probably none at all. Cheques that are written but not received are worthless. If you do not trust the agent why are you doing business with them?
We have misquoted by a £100 but called the passenger/agent immediately and did not issue an invoice. Are we liable to honour the quote?
In strictly legal terms, there is no confirmed contract until you issue a confirmation invoice and if you take action immediately and apologise for the error, you may get away with it. An incorrect price indication may constitute a criminal offence under the Consumer protection Act but Trading Standards Officers are unlikely to take action over one mistake. If you make enough of them however, you may expect a knock on the door!
If you issue a confirmation invoice and accept payment, then you may have to honour the deal. Make sure you have a system that reduces the possibility of errors!
Generally if the customer could walk away without penalty if they changed their mind, so can you.
We are developing sales by the Internet. What dangers are there?
Lots! The Internet can be assessed all over the world, you may wish to control sales from certain risky countries to avoid losses. You must ensure your prices are up to date, Virgin Atlantic was prosecuted in the US for having out of date prices still displayed.
The point of contract needs to be carefully considered. If you enter a contract through the web and allow passengers to print off a "confirmation" of booking, you may be bound to honour the booking even if by some error the sale price missed a few noughts off the real price. The first cases to be heard in the UK are just a few months away from those who thought they had bought colour TV’s from Argos on the web at £2.99 instead of £299!
It is possible to limit risks by having a human confirm all requests for bookings but this means that the system cannot operate on its own. The costs of this need to be weighed against the risks of the system giving away your livelihood by error. As computers get better, or we lose our fear of them, we may be prepared to take more risks. After all where did the Millennium Bug go?
I have continued to allow sub agents make their own reservations in the CRS and then queue the bookings for ticketing. Are there any risks in doing so?
Yes is the simple answer. The rules appear clear; you are likely to be held responsible for the booking and any money collected on your behalf if they were acting as your agent. This applies even if the booking was only at the option stage when the agent ceased to trade. Of course, if you are a member of ABTA and so were they, you are likely to be able to claim on the agents bond or if they were a member of the Travel Trust Association and you were an 'approved supplier' you should also be protected The problem is deciding if he was acting as your agent or not. If you have issued a confirmation invoice and the client was given a receipt with your ATOL details, there is no dispute at all. If on the other hand, you had received few bookings in the past and had given no authority for them to act in this manner, the mere possession of an ATOL Receipt held by the client may not be enough to make you liable. The greatest risk is to have a written policy of not accepting queued bookings but evidence of a track record of accepting them from a failed agent. Here you are likely to find the CAA taking a very clear view that you are liable. The agent themselves may be in breach of your agency agreement and may indeed have broken the law by accepting payment in circumstances where an agency agreement may have been broken, but neither of these excuses is likely to avoid your liability. If you continue to allow agents to act this way, be aware of the risks and if these are substantial consider insuring the risk. The best policy although perhaps not the most practical is simply to refuse to deal with agents this way. You have been warned!
I have sold tickets to a sub-agent on an ATOL to ATOL basis. Who is responsible for providing SAFI?
The official CAA view in relation to SAFI on ATOL to ATOL sales is that it is the ATOL holder selling to the client who should provide the insurance, not the ATOL holder from whom the ticket is bought.
I gather the rules for Travel Agents selling insurance are about to change? (Updated December 2004)
From January 2005 the sale of travel insurance may become subject to FSA control and this note is intended to act as an update to previous information. There is a general exemption for the sale of travel insurance with a cost of less than 500 euros and this exemption has been widened from its original definition to include any travel arrangements, including the sale of car rental or "accommodation only" bookings.
It is also clear that the sale of SAFI whether you act as the insured or where the customer has an individual cover note, is also within the exemption.
The real area of concern exists with the sale of Supplementary Liability Insurance linked to car rental in the US and Canada. The FSA consider this is not 'travel insurance' nor a necessary 'linked transaction' and have not been prepared to accept the sale of SLI as being within the travel insurance exemption. Accordingly, at the time of preparing this note, you should be aware that this may no longer be possible in the New Year unless you have FSA approval. It appears car rental companies and brokers have both been taken by surprise but at the present time, there is no sign of any change from the FSA.
For those AAC members who are also ABTA members, we should advise that ABTA has now made it part of its code of conduct that all staff selling insurance must have passed level 1 of the ABTA insurance examination and every office must have one member of staff who has reached level 2 by September 2005. Latest figures from ABTA suggest that only around 20% of all staff have so far qualified and with a deadline of 9 months. Those who are affected need to start taking action soon. For those of you are outside ABTA, there is no similar requirement and the FSA exemption is not dependent on passing any examinations whatsoever.
For all businesses, we expect to see considerable media interest in the New Year and the possibility that journalists will seek to show that the travel industry is failing in its responsibilities to members of the public. It is vital that within the first few months of the year particular care is taken when selling insurance as the current exemption is only valid to the end of 2006 and, as those who have already attempted to deal with the FSA have discovered, the FSA are not the easiest of organisations to deal with!
I am now starting to sell more product electronically via the Internet. Do I need to keep hard copy invoices?
The CAA have agreed to "e-invoicing" with a number of members providing certain safeguards, including the ability to create paper documents if necessary, can be provided. If this would help your business, contact the CAA ATOL Section.
I am concerned over Credit Card Fraud - is there anything I can do to protect my business?
We thought it worthwhile to share some advice as issued by Newmont Travel to its staff (September 2005). Please note that the advice is issued at face value only.
A VERY BRIEF GUIDE ON HOW TO AVOID BEING HIT BY CREDIT CARD FRAUD OVER THE PHONE/INTERNET.
Company’s efforts to cover against being the victims of credit card fraud from telephone and internet transactions are without doubt going to vary from one company to another and can largely depend on the make up of their customer base.
The first and most important thing to remember is that every single payment you take over the phone or internet is at your own risk. In the main the credit card company’s work for the consumer and not for the merchant and will invariably give the benefit of the doubt to the cardholder when a dispute arises. We have found that Lloyds Cardnet have been about the best in protecting the merchant but it is difficult to get them to take any new travel agent accounts on.
The other important point is that when using electronic merchant services as a means to verify the card the one item you cannot check is the card holder’s name.
Their are a number of addressing systems at the moment (QAS, Postcode Anywhere) that do bring up the addressees name, when known, when their postcode and house number is inserted. Unfortunately, these are quite expensive.
While each company must make their own policy an important rule to follow is to adhere and bring all bookings in to the policy and to only allow certain members of your team to overrule the policy.
Newmont Travel has had the following policy in place for a number of years:
When booking a repeat passenger we always try to add the booking to their existing client file. This allows your senior members of staff to make an informed decision by seeing an historical record of that client if they need to over rule the policy.
Decide on a lead time and ensure all bookings made within that time are referred to a supervisor. Newmont Travel has chosen all bookings that are departing within 2 weeks. Within this period our internet site will not accept a payment and it advises the customer to phone. We have chosen 2 weeks on the assumption that in the main this would mean that after posting the documents to the verified address it would allow the recipient/cardholder at that address time to receive and query it if they knew nothing about the transaction.
We have developed some useful programs that have been written into our system:
Historical data:
Past booking history by the use of client files.
If a card is being used to pay within 2 weeks of departure an on screen pop up verification is displayed detailing whether the card details given have been used before and on what files.
Payment barring:
Automatic payment barring and referral when payment attempted within policy deadline.
Overrule only by supervisory PIN.
There are a number of other safeguards worth bearing in mind when taking cards from ‘unknowns’.
DON’T TAKE THE PAYMENT BY PHONE IF IT FALLS WITHIN THE DEADLINE POLICY YOU HAVE SET.
DON’T BE TEMPTED BY THE ‘TASTY’ BOOKING.
Be extra weary of late bookings, especially if being paid for by third party cards (Especially, last thing before closing on XMAS eve, New Years Eve, Bank holidays, passengers going to a funeral or to visit a dying relative etc etc).
Always post the receipt and travel documents to the billing address of the card holder and NOT to the traveller if different. NEVER, ONLY email the e-ticket and receipt.
Ask the cardholder to fax a copy of both sides of the card to you along with their signature approving the debit. This may be an old and antiquated measure but still a good one.
If offering to pay over the phone but wanting to collect in person at the shop advise that the cardholder must collect and be in possession of the payment card.
Do not take cards registered with overseas addresses.
Make the taking of information very formal as this will unnerve many ‘on the spur of the moment fraudsters’.
Make them aware (or at least make them think) the call is being recorded.
If in any doubt, advise the client that for their security you need to carry out a number of checks and insist on a land line to phone back on.
Further points are made by the GTMC CEO...
He emphasised the benefit of unnerving
the fraudster. Two tricks are to ask the name of the issuing bank and to ask for
the security code. It is possible to get a list of the first, but one needs to have
the full security system to have access to the second.
As an aside, on raiding one
cc cloning factory, they found a script of how to bamboozle the agent. One suggestion
was to refuse to go through a full check 'as agents are used to aggressive business
travellers and will often cave into their impatience'!!
REMEMBER!! There is ALWAYS another way for payment to be received.
What could be done to help?
Force all the merchant services to include cardholder’s names into the verification process.
At the moment, airlines who operate self service and online check in allow a choice for booking retrieval, Vendor locator, passport, airline exec card and credit card. If an entry was used so that the agent could determine the FOI needed for ticket collection then the release could be restricted to the card used as FOP.
Of course, members could always invest in a management system that has an integrated on screen credit card verification facility and in built and user defined facilities to combat credit card fraud. I would be pleased to put any member in touch with New Travel Solutions who would be more than happy to offer a substantial discount to AAC members.
New Travel Solutions are able to offer a fully integrated front, mid and back office system with a comprehensive fares database, transparent GDS functionality and a high speed revolutionary IBE (Internet Booking Engine).
Lindsay Ingram, General Manager Newmont Travel
Head Office:
2nd Floor, 55-57 Chase
Side Southgate London N14 5DB
Direct Line: 020 8920 1175 Direct Fax: 020 8920 1145
E-Mail:Lindsay@newmont.co.
uk