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.
