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Not All Card-Carrying Travel Agents Can Get the Discounts

Credentials: Some companies are selling IDs to consumers, touting industry perks. But the benefits don't always materialize.

November 10, 1996|CHRISTOPHER REYNOLDS | TIMES TRAVEL WRITER

There is, of course, no such thing as a free lunch. But thousands of consumers are still learning that there is also no easy path to rapid riches as a travel agent. Nor are there 75% discounts waiting for anyone who claims to be an agent.

These are some of the benefits touted by a new breed of companies that describe themselves as travel agencies recruiting home-based "outside agents." But critics say many of these enterprises are merely card mills.

Frequently asking upfront enrollment fees of just under $500--higher fees might require registration with state officials--these firms woo consumers by offering ID cards said to bring industry discounts from airlines, cruise lines, hotels and others.

Often the companies also offer rich rewards to new recruits if they can turn around and sign up more recruits. Not surprisingly, these programs attract many consumers who think they've found a way to make big money and get agent perks without really working as a travel agent.

Legal authorities, industry veterans and consumer advocates agree that card mills are a risky business. Jerry Smilowitz, a state deputy attorney general in Los Angeles, estimates that there are about 10 such companies in California, and says he's heard "a significant number" of complaints from customers who believe they've been shortchanged. (Smilowitz declines to name any specific firm as a target of investigation.)

Experts note that plenty of legitimate companies use work-at-home agents and that many training programs are reputable. But several firms have been linked to troubles over the last two years. Earlier this year, amid complaints from customers, the Laguna Hills-based Travel Partners filed for Chapter 7 liquidation. (That company has no connection with Travel Partners of Costa Mesa, which remains in business.) And on Sept. 20, ruling in a class-action suit against Irvine-based World Class Network, a Hawaii Circuit Court judge found the firm's practices violated that state's "endless chain scheme" statute.

Another reason for consumers to be wary of ID card offers: The travel industry has begun to close ranks to block nonprofessionals from collecting perks and joining trade groups. Big industry names such as Hertz and Ritz-Carlton are among those that have announced efforts to toughen their travel-agent ID requirements, and the International Airlines Travel Agent Network agent identification-card program, born six years ago, has signed on more than 18,500 hotels, airlines, cruise lines, car-rental firms and tour operators, who look for IATAN cards in deciding when to grant agent discounts.

The American Society of Travel Agents has stepped into the controversy as well. After ASTA filed a lawsuit, Irvine-based Nu-Concepts in Travel last month agreed not to use ASTA's logo on its business cards. Nu-Concepts claims more than 35,000 outside agents (who pay $495 to sign on) and reports $20 million to $25 million in travel sold by the company last year. A spokesman says Nu-Concepts is not a card mill but an innovative travel-based company whose reputation has suffered because of the misdeeds of copycats.

Two years ago, ASTA sued World View International of La Jolla, making the same charge of unauthorized logo use. The company settled, then closed its doors. But its assets were sold in 1995 to InteleTravel International, also of La Jolla, which has mushroomed into one of the largest outside-agent companies in the U.S.

InteleTravel charges members $495 to join and advertises discounts of 25% to 75%, a spokeswoman says. The company claims 50,000 outside agents and travel sales of $100 million last year. Drawing a distinction between InteleTravel and card mills, the spokeswoman says her firm delivers more sales training, better commissions, more support services and more company-negotiated discounts to its members.

All this is complicated by the lack of any industrywide accreditation program for agents and a casual approach to agent credentials that hotels, cruise lines and other travel suppliers took for many years. But IATAN cards may change that.

To get an IATAN card, an agent must have earned $4,080 or more in commissions or salary over the last 12 months. (That figure will rise when the federal minimum wage climbs to $5.15 in September.) Agents also must work at least 20 hours weekly and be included on an agency list approved by IATAN and accredited by the Airline Reporting Corp., which oversees ticket distribution. As of Oct. 1, IATAN had 239,247 cards in circulation.

IATAN's standards are imperfect--insiders say some agencies hand out cards to favored customers--but experts say that, aside from checking an individual agent's sales figures, there's no better way of assessing professionalism.

What benefits do traditional travel agents get? Most earn less than $30,000 yearly. They do get discounts as deep as 75%. But those cut rates are frequently available only when suppliers don't expect to be able to fill that seat or bed with a customer paying full price.

The bottom line: Just because someone wants to sell you a travel agent identification card, there's no guarantee it'll get you where you want to go. Consumers need to resist pressure tactics and question multilevel marketing structures. Unless you really want to train and work as a travel agent, trying to collect benefits intended for them is a bad idea.

Reynolds travels anonymously at the newspaper's expense, accepting no special discounts or subsidized trips. He welcomes comments and suggestions, but cannot respond individually to letters and calls. Write Travel Insider, Los Angeles Times, Times Mirror Square, Los Angeles 90053 or e-mail chris.reynolds@latimes.com.

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