USA Today published a story on September 24, 2020, that claims to “expose the underbelly of the travel business.”

Vacations cancelled due to COVID-19.

© iStock/Getty Images Plus/Nuthawut Somsuk
Vacations cancelled due to COVID-19.

The story insinuates that travel agencies are running “Ponzi-style schemes” to pay bookings.

The American Society of Travel Advisors (ASTA) has responded to the sweeping claims in the USA Today piece and clarified how the majority of travel advisors really run their businesses.

In the article, the authors write: “Many travel agencies operate Ponzi-style schemes in which one traveler’s deposit pays for a previous traveler’s tickets and accommodations, and so on.”

ASTA’s statement notes that this is incorrect.

“To suggest that this is the business practice of all travel agencies is categorically false,” reads ASTA’s statement. “When travel agencies join ASTA, they pledge to abide by its 12-point code of ethics, which prohibits business practices like the ones described in this article. Members found to have violated the code can be (and have been) expelled from the association. That being said, the number of legitimate consumer complaints against ASTA member agencies warranting the imposition of discipline is extremely low.”

There are a number of other rules that travel agencies must abide by in addition to those of just the association.

“Travel agencies must also abide by U.S. Department of Transportation (DOT) consumer protection rules related to refunds for air tickets and Federal Trade Commission (FTC) rules against unfair and deceptive practices, as well as travel consumer protection laws that exist in many states.”

There is also a strict code of ethics that advisors and agencies follow.

“Any traveler who works with an ASTA member and has a problem has the option to file an official complaint with the association – and our consumer affairs team will investigate the matter and work with the consumer and the member to achieve an amicable resolution,” ASTA noted. “If the member company does not cooperate or it is discovered that it has engaged in dishonest or fraudulent conduct, ASTA will remove that member from the association.”

ASTA points to the hard work and the great lengths that most travel advisors went to to get clients home during canceled trips, get them refunds or rebook travel, often at no cost to their clients.

“As with any industry, a few bad apples are not reflective of the whole batch, and the actions taken by the agencies cited in the piece are anything but representative. Indeed, in the wake of the first wave of travel chaos caused by the pandemic, often we found travel advisors going above and beyond for their clients.”

The article goes on to discuss a “deposit shell game” that the authors broadly apply to all travel agencies. ASTA points out that this is not the case.

“To suggest that travel advisors are making money off the backs of their customers who cancel trips is simply false. To the contrary–while new business and any revenue associated with it has essentially come to a halt thanks to Covid, the work hasn’t,” said ASTA.

ASTA also details how the collapse in travel demand has made it necessary for advisors to work around the clock to accommodate clients whose plans have been disrupted or who are seeking refunds.

“A travel advisor who does not pass the payment to their vendors in an adequate amount of time isn’t doing their business any favor,” says the association. “But again, this is hardly the way of business for all travel agencies–as this article suggests.”

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