The Top 10 Legal Challenges
What home-based travel agents have faced over the past decade in travel law

To celebrate the 10th anniversary of Agent@Home magazine, I thought it would be appropriate to briefly mention 10 legal challenges that home-based agents and the travel agency community as a whole have faced over the past decade.
Renaissance bankruptcy: When Renaissance Cruises technically shut down in late September 2011, the bankruptcy trustee lawyers began hounding travel agents throughout the country to return their commissions. In many cases, agents were forced to give back commissions that had been earned as the bankruptcy trustee tried to collect as much money as possible.
Supplier default: Supplier default has certainly impacted the travel agency community over the past 10 years and will continue to do so in the future, even though it appears that the number of defaults has declined dramatically. In the airline industry in particular, consolidation has eliminated most future risk for default.
Travel insurance: Clients have tended to sue travel agents who either do not recommend travel insurance or who allegedly advise them that travel insurance will cover certain types of claims when in fact it does not. As I have been writing for many years, travel insurance benefits both the consumer and the travel agent, but appropriate and factual information needs to be given to the client to avoid any liability issues.
Agent licensing: A related subject is licensing of travel agents to sell travel insurance, which is an ongoing and evolving issue. As I’ve written in previous columns, some states allow agents to sell insurance under the license of the insurance carrier, while others have significant and expensive licensing procedures. Most states also prohibit incorporating travel insurance into the cost of the program and having the client deduct the cost if they do not want the insurance.
Errors & Omissions: Over the past 10 years, agents have come to realize that errors and omissions (E&O) insurance generally covers only catastrophes, because most insurance carriers that issue such coverage have excluded the typical day-to-day liability problems that a travel agent might actually encounter. Things such as claims involving deposits, credit card issues, and missed or incorrect ticketing dates are generally excluded from E&O policies, which will provide no protection to the host agency or home-based agent.
Travel agent-host agency relations: This remains one of the most contentious legal issues and can involve such topics as liability when mishandling payments, whether the independent contractor is actually an employee, whether the agency’s name on the home-based agent’s business card indicates a different relationship, and whether the client belongs to the host agency or the home-based agent. The real challenge is when there is no written agreement between the parties.
Switching hosts: A related topic is the scenario in which a home-based agent moves to another host agency and tries to switch the booking in order to protect the commission. That agent may or may not have alerted the new host agency about any written agreement with the prior host. Many of these situations can be minimized or eliminated by a clear, concise and short written agreement between the host agency and the home-based agent.
Restrictive covenants: An employee can be subject to a restrictive covenant from the host agency, but most courts will try to make certain that it is not overly burdensome and does not prohibit the individual from making a living. Thus, a geographic restriction of the entire country or even the entire state would probably be struck down, while a one-year-and-six-month restriction within a set geographic region might be permitted. There can be no restrictive covenants involving independent contractors.
Confidentiality agreements: Confidentiality agreements or trade secrets are enforceable against both home-based agents and agency employees. These prohibit the individual from using trade secrets or proprietary information obtained from the host agency or the travel agency if it is used to compete with that business. These topics can be covered in either an employment manual and/or contract with an employee and in the independent contractor agreement.
Intentional fraud: This kind of fraud unfortunately still exists in the industry through the actions of some home-based agents or travel agency owners who may not start out with dishonest intention but financial pressures cause them to do engage in it. Mishandling of client’s funds, inappropriate use of credit cards and similar issues impact the travel agency community on a regular basis. I always recommend that the host agency process all payments from clients of their home-based agents. This provides some safeguards in order to protect the client and the host agency.
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