Thomas Carpenter, co-owner of Huckleberry Travel and founder and managing attorney of Carpenter Law Group, PC (Source: Meredith Zinner Photography)
We caught up with Thomas Carpenter, co-owner of Huckleberry Travel and founder and managing attorney of Carpenter Law Group, PC, which represents travel advisors, travel agencies and tour operators, to discuss how agents can protect their businesses from lawsuits. Here’s what he had to say.
What are the most pressing legal issues advisors should be paying attention to avoid damaging their businesses?
Right now, fraud and scams are running rampant. That’s the number one thing that’s hurting small businesses in the travel and tourism sector at the moment.
We’re seeing many agencies fall victim to chargeback scams, where travelers reverse the charges to avoid paying for a trip.
We’re also seeing phishing scams, where scammers are using fake conferencing links to steal login info or another type of phishing scam where they send fake wire transfer instructions to get advisors to wire their clients’ money to the wrong accounts. It’s worse than it’s ever been, and AI can make it really difficult to spot the scammers these days.
How can advisors protect themselves from these fraud and scams?
For chargeback scams, getting a credit card authorization for each and every charge is critically important. Your authorization needs to have clients agreeing to your Terms & Conditions (T&C) documents, and the T&C terms need to include reference to the supplier’s cancellation and refund policies and you need to specifically call your clients’ attention to those refund policies at the precise moment they authorize the charge.
I’d also recommend having a provision in your T&C document where your clients agree that they won’t reverse a charge, so that if you (or your supplier) loses the chargeback dispute, you can still go to court to recover your losses.
For phishing scams, never open attachments or click on links from people you’ve not worked with before. If a new client sends you a Zoom link and won’t meet with you in a good old-fashioned phone call, it’s a red flag that it could be a phishing link.
Enable multi-factor authentication on all of your accounts, set your software patches to update automatically, install anti-virus and anti-phishing software, and don’t engage with someone who’s obviously running a scam. Report. Block. Delete.
A lot of suppliers are encouraging people to pay with wire transfers, but if a scammer knows that you’re expecting wire transfer instructions, they can easily dummy up an email or payment link that looks legit.
My suggestion would be to start with a small transfer – maybe $100 – and make sure that that goes through. Don’t call the number on the email you received with transfer instructions. Don’t reply to that email. Call the number that you always use for that supplier and verify that they’ve received it. Once you know that the first $100 went to the right place, you can then transfer the balance, being reasonably assured that the money didn’t go to a scammer’s account.
Generally speaking, how can travel advisors protect their businesses from lawsuits?
I’d start with a really strong contract stack: T&Cs that are custom to your agency and the types of trips you book and clients you work with, a user-friendly client agreement to use as a vehicle to get your clients to actually agree to your terms and compliant credit card authorization language to protect you from chargebacks.
Those documents and policies are critically important to put in place, and I’ve got a strong view that you don’t want to rely on something that’s cookie-cutter or one-size-fits-all.
I see people selling templates that have all sorts of really problematic things in the terms. If someone’s selling you a legal document and then going out of their way to tell you that they’re not your lawyer, well, that should be a red flag that you might not be protected as well as you could be.
In your TravelPulse Travel Advisor Success Story, you mentioned that you’ve seen agents trying to “white-label” their groups. Why is that a problem?
In terms of whether you’re a tour operator, there’s a big grey area. If it’s only that you’re doing “come with me” trips where you’re hosting or escorting one of your groups –meaning, you take out the group space, market it to your clients and see how many people you can get to go – that’s maybe one toe in the tour operator lane, but you can still set yourself up to do those trips as a booking agent.
If you’re taking net rates and marking them up, if you’re handling client funds (i.e., the client pays you and you pay the supplier), if you’re bundling elements of a trip together and packaging it for sale at one price – doing those things in any combination starts to make you look more like a tour operator.
But the thing that will definitely turn you into a tour operator is if you fail to disclose the identity of the suppliers you’re using for the trip. If you don’t disclose who your suppliers are, a court will find that it’s reasonable for the client to assume that you are the supplier/tour operator, and that makes you responsible for everything and anything that goes wrong on a trip.
You have to give your clients a refund, even if the supplier isn't refunding you. If the motorcoach goes over the side of a cliff and everyone dies – that’s on you. If the client doesn’t get the trip the way you described it? You have to make good on that, whether or not it’s available.
So, there are very good reasons that you don’t want to be a tour operator.
Can you provide examples of advisors who take shortcuts regarding compliance issues — and what the resulting consequences could be?
In general, I think the problem is more serious than just cutting corners. The real issue is that there’s a very low bar to entry into the industry. People are answering Facebook ads, doing a few online training modules and then holding themselves out as travel advisors without really appreciating that this is a high-risk industry.
They don’t research host agencies before signing with one. They don’t realize that they need a business structure to protect their personal assets from their business liabilities. They aren’t told that they need to invest in documents and policies to protect themselves.
So, that’s a lot more than just taking a shortcut.
I’d encourage anyone who’s selling travel to remember that they’re running a business. It might be a part-time business. It might be a side-hustle. But it’s still a business, and you’ve really got to treat it as such.
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