YOU ARE HERE: LAT HomeCollections

Travel Insider

Seller of Travel Law Wields Power If Buyer Knows Rules

Restitution: Consumers are safeguarded from scams as long as they buy from companies that register with the state. Look for that nine-digit number.


Somewhere in Grass Valley, there lives a placated pair of travelers to Mexico. Somewhere in Stockton, there's a seller of travel who has recently done time in San Joaquin County Jail. And in San Juan Capistrano, a tour operator is in receivership, accused of running a Ponzi scheme with depositors' money. For these developments, we can, and should, thank California's new Seller of Travel law, a first-of-its-kind program that may turn out to be a powerful tool for consumers in this state.

But there's a catch.

Unless consumers make active use of this 8-month-old legislation--by doing business only with travel agents, tour operators and airline ticket brokers who can show a nine-digit state registration number--they still run the risk of being scammed in broad daylight by shady operators. The last time I wrote about this law, in April, the state attorney general's office had counted about 5,000 registrants--well short of the 8,000 businesses that were expected to register. Now the figure has risen to 6,000, and the program's first restitution and prosecution have been made.

The couple from Grass Valley, working through a registered tour operator in Santa Clara County, booked a vacation in an all-inclusive Mexican resort, then found they'd been reassigned to another hotel, which was not all-inclusive and had fewer amenities. They filed a claim with the Travel Consumer Restitution Corp. (a nonprofit organization created under the new law), which fired off a letter to their tour operator. The tour operator made restitution of $1,258.

The Stockton man, Jerardo Banasihan, was one of the new law's first prosecutions, charged with failure to register his firm, Fortune in Motion, and failure to use a registration number in an advertisement. Banasihan pleaded guilty July 2 and drew a three-year suspended sentence, $1,000 fine and 10 days in jail.

The San Juan Capistrano tour operator, Modern Pilgrimages, was targeted July 22 by state authorities, who accused the firm of failing to safeguard clients' funds in a trust account as required under the law, and failing to deliver promised services to customers, many of whom were traveling to European sites. Citing the disarray of the company's records, state authorities also persuaded a Superior Court judge to place the company in temporary receivership.

Under the new Seller of Travel law, all travel agencies, tour operators and airline ticket brokers who do business with Californians must apply for state registration numbers, which will serve as affirmation that the company meets various state financial-stability and consumer-protection requirements.

Companies have been ordered to use their nine-digit registration numbers (often noted in small print as a "CST#" or simply "Reg.#") in all advertising, and officials in the attorney general's office say they are monitoring advertisements throughout the state in search of unregistered firms. Deputy Atty. Gen. Christopher Ames urged consumers not only to resist travel agents, tour operators and ticket consolidators who can't give evidence of registration, but to report those companies to law-enforcement authorities.

"There are still some [businesses] out there who I don't think are taking this law seriously," said Diane Embree, a Northridge-based travel agency manager and president of the Travel Consumer Restitution Corp.

State officials concede that paperwork snafus have slowed the program, but Senior Assistant Atty. Gen. Herschel Elkins in Los Angeles reported that "huge numbers" of letters have been sent out to unregistered travel sellers. Elkins said his office is also pursuing suspicions that some companies are using fictitious numbers.

(The Times' national sales manager for travel, Gail McFadden, said the newspaper has already sent out two waves of letters urging affected advertisers to register, and may take stronger action in the future.)

The other main element in the new program is the restitution fund. Each of the companies registered by the state has paid into a restitution fund that as of late May had reached $1,137,500. The fund will be used to compensate California consumers when registered California-based companies fail to deliver paid-for travel services. Each consumer who loses money that way can seek up to $15,000 in restitution from the fund, which is replenished by fees paid in by registered companies.

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

* To request a restitution claim form, call the Travel Consumer Restitution Corp. at (415) 461-9734, or write the TCRC at P.O. Box 6001, Larkspur, CA 94977-6001. Sellers of travel with questions about their legal obligations can contact either address.

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.

Los Angeles Times Articles