September 24, 2020
ASTA Responds to a USA Today Article Claiming Travel Agencies are Running Ponzi-Style Schemes
Alexandria, VA., September 29, 2020 – The American Society of Travel Advisors (ASTA) issues the following statement in response to a recent article in USA Today entitled “Coronavirus has exposed a secret underbelly of the travel business: Ponzi-style schemes to pay bookings.”
The article states that: “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.”
To suggest that this is the business practice of all travel agencies is categorically false. 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. (Consumers can find a local ASTA member travel advisor at TravelSense.org.)
At the same time, 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.
As noted, ASTA members must adhere to a strict code of ethics. 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. 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.
Unsurprisingly, the travel companies referenced in this article are not ASTA members.
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. You can see more here.
The article goes on to suggest that there is a widespread “deposit shell game” that is “part of modern travel.” Then the authors continue to make sweeping statements that travel agencies hold on to deposits for long periods of time before releasing those funds to the suppliers.
Again, this is a sweeping claim and by no means is this the standard of business practice for travel agencies. Many states hold agents to a “fiduciary” standard – that is, they must put the clients’ interests ahead of their own and can be sued if they don’t.
Travel advisors of all kinds provide refunds in accordance with the travel vendors’ policies and government regulations. 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.
At the same time, they are dealing with an unprecedented collapse of travel demand, travel advisors are working around the clock to accommodate clients whose plans have been disrupted or who, due to coronavirus concerns, are seeking refunds in connection with future trips. This is the situation most of our members find themselves in – working harder than ever before but essentially without pay.
A travel advisor who does not pass the payment to their vendors' inadequate time isn’t doing their business any favor. But again, this is hardly the way of business for all travel agencies – as this article suggests.
Travelers are reminded to always look for the ASTA logo when engaging with a travel advisor. Our association holds our members to the highest standard of ethics.
Rebranded in 2018 as the American Society of Travel Advisors, ASTA is the leading global advocate for travel advisors, the travel industry and the traveling public. Its members represent 80 percent of all travel sold in the United States through the travel agency distribution channel. Together with hundreds of internationally-based members, ASTA’s history of industry advocacy traces back to its founding in 1931 when it launched with the mission to facilitate the business of selling travel through effective representation, shared knowledge and the enhancement of professionalism. For more information about the Society, visit ASTA.org. Consumers can connect with an ASTA travel advisor at TravelSense.org.