Nevada Denies Effort to Change Agent Bonding

New Seller of Travel Law proposals make agents nervous

By: Kevin Brass

The Nevada attorney general’s office is assuring travel agents that proposed changes in the state’s seller-of-travel law would not require agency employees or independent contractors to post individual surety bonds.

Some agents are nervous about the proposals, which, if approved by the state Legislature, would change regulations adopted less than two years ago. The regulations were Nevada’s first attempt to monitor the travel agent industry. Under the guidelines approved in 2001, sellers of travel were required to pay an annual $25 fee to register with the state’s Consumer Affairs division, to post a $50,000 bond and to provide a letter of credit or certificate of deposit. However, agencies accredited with the Airline Reporting Corporation were exempt from the bond requirement.

The new proposals from the state’s Consumer Affairs office would end the ARC exemption; create a sliding scale that could lower the bond requirement to a little as $10,000 and cap it at a maximum of $25,000. The current maximum is $50,000.

A separate measure seeks to raise the registration fee from $25 to $100. Kathleen Delaney, deputy attorney general for the division of consumer protection, which developed the guidelines with the Consumer Affairs office, said that the new proposals were announced after travel industry groups complained that the ARC exemption was discriminatory and the bonding requirements too costly.

“Our decision to go back to the legislature is wholly being driven by what we feel the industry needs and wants,” Delaney said.

But several agents have responded angrily to the new proposals, which are due to be presented to the state legislature in coming months.

“They’re heaping a lot of stuff on people running legitimate businesses,” said Phil Rejholec, owner of Above All Travel in Henderson, Nev.

Some agents were particularly upset by the belief that individual agents would be required to arrange surety bonds, even if they were employed by agencies.

But Delaney of the attorney general’s office said there is nothing in the proposals that changes the existing exemption “for any seller of travel who is an employee, agent or independent contractor of a seller of travel already in compliance with the security requirement.”

However, a newsletter published by ASTA’s Nevada chapter said “each agent would have to be bonded, unless the Attorney General’s office rules that the agency could carry the surety for the agency’s employees and independent contractors.”

At a Feb. 26 meeting, members of the southern Nevada ASTA chapter discussed the proposals and decided to push for a clearer definition of the term “seller of travel,” as well as guidelines that would assure that a surety holder could cover the agency’s employees, contractors and alternatives to surety bonds.

“The cost of a surety bond is really expensive,” said Sharna Blumenfeld, immediate-past president of the and owner of Pro Travel in Las Vegas. “There are other ways to prove financial stability.”

In addition, several independent agencies in Nevada have formed a group to support alternate legislation that would retain the ARC exemption. It also is seeking an exemption for agencies that have been in business for at least two years. A similar proposal in Pennsylvania would waive bonding requirements for agencies that have been in business for at least three years.

Should the group’s alternate proposals be approved, only new agencies would face the bonding process, said Bonnie McDaniel of A Quick Trip in Las Vegas.

Delaney said the state’s overall goal is to provide the consumer with some immediate ability to recover money if a deal goes bad.

“The most common application is when a business closes its doors or goes bankrupt and the consumer is left with money out of pocket,” Delaney said.