Bankruptcy upsets travel plans Seniors lose $750 each in cruise line collapse

new rules proposed

February 27, 1996|By Suzanne Wooton | Suzanne Wooton,SUN STAFF

For Robert and Betty Ewing, it was to be a 39th anniversary celebration. They would fly to Tampa -- their first airline trip -- then sail to Cozumel, Mexico. But just before the scheduled departure last November, the cruise line went belly up, leaving the Ewings and a string of friends from a South Baltimore senior center empty-handed.

"We were called down to the Allen Center five days before the cruise," said Mr. Ewing, a retired Domino Sugar worker. "Everybody was excited, getting ready to go, and suddenly nobody was going anywhere."

The few who purchased $40 travel insurance policies have recovered their money. Others, like the Ewings, are still hoping that bankrupt Regency Cruises Inc. might someday make good on the five-day package that cost each person $750.

But the incident -- and a number of similar ones throughout the travel industry -- has prompted legislation in Annapolis this year requiring travel agencies in Maryland to be registered and bonded.

While some argue that travel agencies are merely caught in the middle, others say consumers are confused about who bears the responsibility.

"A lot of people, like senior citizens, assume a travel agency is acting on their behalf," said state Sen. George W. Della Jr., who represents the South Baltimore district where the Allen Center is located.

"But the fact is they are really just acting as agents for airlines, cruise lines and others," he said. "And people like the seniors at Allen Center have no recourse.

According to the Maryland attorney general's office, complaints about the travel industry have been high in recent years, with several large tour operators going out of business.

"The numbers vary from year to year depending on the health of the industry, but in four of the last five years, complaints about travel agencies have ranked among the top 10 industries," said Becky Bowman, an assistant attorney general in the Consumer Protection Division.

The bill (S.B. 292) sponsored by Mr. Della requires travel agencies to be registered with the Department of Labor, Licensing and Regulation. It requires agencies to purchase a surety bond worth the value of outstanding liabilities to clients. Currently, travel agencies must be bonded, but only to protect the airlines.

Many tour operators and cruise ship lines have surety bonds. Regency Cruises Inc. is bonded, according to Mr. Della, though it is not clear what the company's liabilities are or whether the bond could be attached in a bankruptcy proceeding by other creditors.

The move in Annapolis this year to regulate travel agents has elicited a strong lobbying effort by the state's travel industry, which says the legislation would be costly and not ferret out the fraudulent operators.

"There are a lot of scam mills out there, but this bill won't touch those out-of-state operators or people operating out of their kitchens," said Robert D. Vaughn, president of the Central Atlantic chapter of the American Society of Travel Agents, which represents 652 agencies in Maryland, Virginia and the District of Columbia.

"The incidents involving professional travel agents are very, very rare," he said.

Legally, a travel agent serves only as a link between the supplier and the consumer, and bears no liability with the consumer if he acts in good faith.

"We're not so much an agent for the consumer as we are a broker that brings cruise ships, airlines, and others together with the customer," said Fred Elburn, president of Charles Center Travel, the South Baltimore travel agency that sold the Ewings their cruise package. "We're not selling any product."

Nevertheless, Mr. Elburn said he and other responsible agents routinely warn consumers if they're being sold a package through a cruise line that they don't normally book. In fact, he said, he recommended that the Allen Center group consider insurance.

"[This legislation] is probably like requiring a real estate agent to guarantee how good the house is when that's really up to the owner," he said.

But Mr. Ewing says the agent needs to be more knowledgeable.

"I think it's up to them to know the reputable ones and which ones are not," said Mr. Ewing, 64, who set aside a part of his monthly Social Security disability check to pay for the trip. "I think they ought to look into it a little more before selling the tickets."

When the attorney general's office receives a complaint, the staff often contacts the cruise ship line, tour operator or travel agent involved to try to resolve the problem. It also advises consumers who pay by credit card to notify their card issuer to stop payment. In other instances, the attorney general's office may advise the consumer -- particularly those who pay with cash or check -- to pursue his case in small claims court.

"There's case law out there that supports holding the travel agent responsible," Ms. Bowman said. "But you can't say absolutely that the travel agent would have to make good."

In rare instances, when fraud or a deceptive practice is involved, the attorney general's office will file suit.

Ms. Bowman says that even requiring agencies to be registered could help consumers decide whether they want to book through a specific agent.

"It gives the consumer a way of thinking about who they want to do business with," she said. "It assures them that the company has a location and a presence in the state. It could help them eliminate the fly-by-night, cruise-in-cruise-out-of-the-state types."

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