PRIOR PRINTER'S NO. 127 PRINTER'S NO. 3590
No. 143 Session of 1999
INTRODUCED BY GODSHALL, SATHER, NAILOR, ARGALL, BARD, BELARDI, BELFANTI, BUNT, M. COHEN, CURRY, DEMPSEY, GEIST, HALUSKA, HARHAI, HENNESSEY, KAISER, KENNEY, LEDERER, LUCYK, MICHLOVIC, MICOZZIE, PESCI, RAMOS, ROBINSON, STABACK, E. Z. TAYLOR, THOMAS, TRELLO, WALKO, WOGAN, WOJNAROSKI, YOUNGBLOOD, ZUG, SERAFINI AND ORIE, JANUARY 26, 1999
AS REPORTED FROM COMMITTEE ON TOURISM AND RECREATIONAL DEVELOPMENT, HOUSE OF REPRESENTATIVES, AS AMENDED, MAY 16, 2000
AN ACT 1 Providing for the regulation of sellers of travel; requiring 2 that certain bonds be secured for the benefit of customers; 3 requiring bank deposits; and providing penalties. 4 TABLE OF CONTENTS 5 Section 1. Short title. 6 Section 2. Definitions. 7 Section 3. Legislative findings. 8 Section 4. Construction and nonapplicability. 9 Section 5. Advertisements. 10 Section 6. Information required. 11 Section 7. Cancellation and refunds. 12 Section 8. Evidence of financial security. 13 Section 9. School purchases of travel or tour services. 14 Section 10. Registration. 15 Section 11. Prohibited practices by sellers of travel.
1 Section 12. Offenses. 2 Section 13. Burden of proof. 3 Section 14. Investigation. 4 Section 15. Authority. 5 Section 16. Venue. 6 Section 17. Regulations. 7 Section 18. Effective date. 8 The General Assembly of the Commonwealth of Pennsylvania 9 hereby enacts as follows: 10 Section 1. Short title. 11 This act shall be known and may be cited as the Sellers of 12 Travel Act. 13 Section 2. Definitions. 14 The following words and phrases when used in this act shall 15 have the meanings given to them in this section unless the 16 context clearly indicates otherwise: 17 "Accommodations." Any hotel or motel room, condominium or 18 cooperative unit, cabin, lodge or apartment; any other 19 commercial structure designed for occupancy by one or more 20 individuals; or any lodging establishment as provided by law. 21 "Adequate bond." A corporate bond of an amount at least 22 equal to the amount required under the contract between the 23 seller of travel and the travel or tour services carrier or 24 company or person providing other services in conjunction with 25 travel or tour services. 26 "Advertise." To make a representation in the solicitation of 27 travel or tour services. The term includes communication with 28 other members of the same partnership, corporation, joint 29 venture, association, organization, group or other entity. 30 "Air carrier." A transporter of persons by air which is 19990H0143B3590 - 2 -
1 subject to regulation as such by a governmental agency. 2 "Broker." Any person or corporation not included in the term 3 "motor carrier" and not a bona fide employee or agent of any 4 such carrier, or group of such carriers, who or which, as 5 principal or agent, sells or offers for sale any transportation 6 by a motor carrier, or the furnishing, providing, or procuring 7 of facilities therefor, or negotiates for, or holds out by 8 solicitation, advertisement, or otherwise, as one who sells, 9 provides, furnishes, contracts, or arranges for such 10 transportation, or the furnishing, providing, or procuring of 11 facilities therefor, other than as a motor carrier directly or 12 jointly, or by arrangement with another motor carrier, and who 13 does not assume custody as a carrier. 14 "Bureau." The Bureau of Consumer Protection. 15 "Charitable organization." Any nonprofit organization. 16 "Commission." The Pennsylvania Public Utility Commission. 17 "Contract." Any agreement, certificate, reservation request 18 or confirmation form, membership application or use agreement, 19 license or reservation confirmation whereby the purchaser 20 obtains the right to benefits and privileges of the prearranged 21 travel or tourist service, or to a vacation form committing the 22 seller of travel to provide transportation pertaining to 23 reservations, tour or travel arrangements and accommodations. 24 "Land carrier." A transporter of persons by land which is 25 subject to regulation as such by a governmental agency. 26 "Motor carrier." A common carrier by motor vehicle, and a 27 contract carrier by motor vehicle. 28 "Offer for sale." Any direct or indirect representation, 29 claim or statement or undertaking by any means or method to 30 arrange for, provide or acquire travel reservations or 19990H0143B3590 - 3 -
1 accommodations, tickets for domestic or foreign travel by air, 2 rail, ship or any other medium of transportation or hotel and 3 motel accommodations or sightseeing tours. 4 "Seller of travel." Any resident or nonresident person, 5 firm, corporation, business entity or charitable organization 6 who offers for sale, directly or indirectly, at wholesale or 7 retail travel or tour services in exchange for a fee, commission 8 or other consideration. 9 "Subrogation." The substitution of one person in the place 10 of another with reference to a lawful claim, demand or right, so 11 that he who is substituted succeeds to the rights of the other 12 in relation to the debt or claim. 13 "Travel or tour services." Any arrangement for individuals 14 or groups, including: 15 (1) vacation or travel packages, sightseeing tours, 16 prearranged travel services, travel reservations or 17 accommodations, tickets for domestic or foreign travel by 18 air, rail, ship, bus or other medium of transportation or 19 hotel or other accommodations; 20 (2) travel-related prizes or awards for which the 21 traveler must pay a fee or, in connection with the prize or 22 award, expend moneys for the direct or indirect monetary 23 benefits of the person or business entity making the award in 24 order for the traveler to collect or enjoy the benefits of 25 the prize or award; 26 (3) travel-related services provided in conjunction with 27 solicitations for the sale of any investments, goods, 28 products or services or in conjunction with promotional 29 opportunities, including, but not limited to, land and 30 interest in land, timeshare plans, housing, commodities or 19990H0143B3590 - 4 -
1 securities; and 2 (4) vacation certificates and travel clubs. 3 "Traveler." The purchaser of travel or tour services, person 4 otherwise entitled to receive travel or tour services for a fee 5 or commission, person who has received a travel-related prize or 6 award or person who has been provided travel-related services in 7 conjunction with solicitations of the sale of any investments, 8 goods, products or services, or in conjunction with promotional 9 opportunities, including, but not limited to, land and interest 10 in land, time-share plans, housing commodities or securities. 11 "Vacation certificate." Any arrangement, plan, program or 12 vacation package that promotes, discusses or discloses a 13 destination or itinerary or type of travel whereby a purchaser 14 for consideration paid in advance is entitled to the use of 15 travel, accommodations or facilities for any number of days, 16 whether certain or uncertain, during the period in which the 17 certificate can be exercised and no specific date or dates for 18 its use are designated. A vacation certificate does not include 19 prearranged travel, tourist-related services or tour-guide 20 services when a seller of travel remits full payment for the 21 cost of such services to the provider or supplier within ten 22 business days of the purchaser's initial payment to the seller 23 of travel. 24 Section 3. Legislative findings. 25 The General Assembly finds and declares as follows: 26 (1) Certain advertising, sales and business practices of 27 sellers of travel have worked financial hardship upon the 28 people of this Commonwealth. 29 (2) The travel business has a significant impact upon 30 the economy and well-being of this Commonwealth and its 19990H0143B3590 - 5 -
1 people. 2 (3) Problems have arisen which are peculiar to the 3 seller of travel business. 4 (4) The public welfare requires regulation of sellers of 5 travel in order to eliminate unfair advertising, sales and 6 business practices. 7 (5) Standards are needed which will safeguard the people 8 against financial hardship and to encourage competition, fair 9 dealing and prosperity in the travel business. 10 Section 4. Construction and nonapplicability. 11 (a) Construction.--The provisions of this act insofar as 12 they are in conflict with any statutory law or common law 13 relating to agency shall, FOR THE PURPOSES OF THIS ACT, <-- 14 supercede the conflicting provisions and principles. 15 (b) Nonapplicability.--This act does not apply to: 16 (1) Any direct common carrier of travelers or property 17 regulated by an agency of the Federal Government or employees 18 of such carrier when engaged solely in the transportation 19 business of the carrier. 20 (2) An interstate or intrastate common carrier of 21 travelers selling only transportation or employees of such 22 carrier when engaged solely in the transportation business of 23 the carrier. 24 (3) Hotels, motels or other places of public 25 accommodation selling public accommodations or employees of 26 such hotels, motels or other places of public accommodations 27 when engaged solely in making arrangements for 28 accommodations. 29 (4) Any resident or nonresident person, firm, 30 corporation or business entity maintaining or purporting to 19990H0143B3590 - 6 -
1 maintain a business location or branch office in this 2 Commonwealth involved solely in the rental, leasing or sale 3 of transportation vehicles. 4 (5) Any resident or nonresident person, firm, 5 corporation or business entity maintaining or purporting to 6 maintain a business location or branch office in this 7 Commonwealth who makes travel arrangements only for 8 themselves, for their employees or agents, for the 9 distributors, franchisees or dealers of the person's products 10 or services or for the employees or agents of the 11 distributor, franchise, dealer or financially related entity. 12 Section 5. Advertisements. 13 All price-related advertisements placed by a seller of travel 14 shall display or contain the registration number of the seller 15 of travel assigned by the bureau under section 10. 16 Section 6. Information required. 17 A seller of travel shall not deposit money or other valuable 18 consideration in payment for travel or tour services unless, 19 within five days of the time after the traveler's payment is 20 deposited, the seller of travel furnishes to the traveler a 21 written statement or electronic communication clearly and 22 conspicuously setting forth the following information: 23 (1) The name, business address and telephone number of 24 the seller of travel. 25 (2) The amount paid, the date of payment, the purpose of 26 the payment made and an itemized statement of the balance 27 due, if any. 28 (3) The location of the bond required by this act. 29 (4) The method of transportation, the date and place of 30 each departure. 19990H0143B3590 - 7 -
1 (5) The conditions, if any, upon which the contract 2 between the seller of travel and the traveler may be 3 canceled, and the rights and obligations of all parties in 4 the event of a cancellation. 5 (6) A statement in ten-point boldface type which clearly 6 and conspicuously states, "If travel and tour services or 7 other services are canceled by the seller of travel all sums 8 paid to the seller of travel for services not performed in 9 accordance with the contract between the seller of travel and 10 the traveler will be refunded within ten days of receipt of 11 money from the travel service provider unless the traveler 12 requests the seller of travel to apply the money to another 13 travel or tour service, destination or date." 14 Section 7. Cancellation and refunds. 15 (a) Refunds.--In the event that travel services or tour 16 services contracted for are canceled through no fault of the 17 traveler or if the travel services or tour services are not 18 provided through no fault of the traveler and unless the 19 traveler otherwise advises the seller of travel in writing, the 20 seller of travel shall return to the traveler all moneys paid 21 for services not performed and goods not delivered in accordance 22 with the contract. 23 (b) Misrepresentation.--Any material misrepresentation with 24 respect to the date or place of all departures or arrivals or 25 type of aircraft or land or ocean carrier or similar occurrence 26 shall be reasons for cancellation by the consumer, which will 27 require the refund specified in this section. The seller of 28 travel has the right to substitute another ship, airline or 29 hotel of equal or greater value due to strike, bankruptcy or 30 condition making the accommodations uninhabitable. 19990H0143B3590 - 8 -
1 (c) Subrogation.--Any seller of travel who makes any refund 2 under the provisions of this act shall be entitled to 3 subrogation as defined in this act. 4 Section 8. Evidence of financial security. 5 (a) Filing and amount.--Before offering, advertising, 6 selling or executing or causing to be executed any contract in 7 this Commonwealth for travel or tour services, every seller of 8 travel shall file and maintain with the bureau evidence of 9 financial security as follows: 10 (1) An adequate bond issued by a surety authorized to do 11 business in this Commonwealth and specifically authorized to 12 issue such surety bonds in this Commonwealth. The requisite 13 bond amount shall be in an amount equal to 100% of the seller 14 of travel's amount of retail business not to exceed $25,000. 15 However, if the seller of travel has revenues in excess of 16 $250,000, then the seller of travel must be bonded for 10% of 17 the previous year's annual gross sales. If the seller of 18 travel provides or offers vacation certificates as part of 19 the travel or tour services, then the bond must be equal to 20 100% of the seller of travel's amount of retail business. A 21 seller of travel filing the bond shall maintain the bond in 22 force in the proper amount as a condition of continuing to 23 engage in business. Evidence of the bond must be filed with 24 the bureau. 25 (2) An adequate bond shall be in favor of the bureau for 26 the benefit of: 27 (i) any traveler injured by having paid money for 28 travel or tour services to a person or entity that fails 29 to provide the travel or tour service; or 30 (ii) any traveler injured as a result of a violation 19990H0143B3590 - 9 -
1 of this act.
2 (3) The bond requirement may be waived on an annual
3 basis if any of the following apply:
4 (i) sellers of travel who have:
5 (A) contracted with the Airlines Reporting
6 Corporation for the most recent consecutive three
7 years or more and who do not offer vacation
8 certificates; and
9 (B) had three or more consecutive years of
10 experience as a seller of travel under the same
11 ownership and name in this Commonwealth in compliance
12 with this act, unless acquired or formed by a
13 registered seller of travel that has been in business
14 under the same ownership for a period of three years
15 and has not had any civil, criminal or administrative
16 actions instituted against the seller of travel in
17 the vacation and travel business by any governmental
18 agency or any action involving fraud, theft,
19 misappropriation of property or moral turpitude; or <--
20 (ii) the seller of travel is a broker who has
21 complied with 52 Pa. Code § 39.15 (relating to security
22 for the protection of the public) and has furnished a
23 bond or other security approved by the commission.
24 Such waiver may be revoked if the seller of travel
25 violates any provision of this act; OR <--
26 (III) THE SELLER OF TRAVEL HAS BEEN IN BUSINESS OF
27 SELLING OR ARRANGING TRAVEL OR TOUR SERVICES FOR A
28 MINIMUM OF THREE YEARS, HAS NOT HAD A BANKRUPTCY IN THE
29 PREVIOUS FIVE YEARS AND ALREADY MAINTAINS A BOND OF EQUAL
30 OR GREATER AMOUNT REQUIRED BY THIS SECTION. PROOF OF
19990H0143B3590 - 10 -
1 THESE REQUIREMENTS MUST BE SUBMITTED TO THE BUREAU AT THE 2 TIME OF REGISTRATION, REQUIRED BY SECTION 10, IN ORDER TO 3 HAVE THE BOND REQUIREMENT WAIVED. 4 (b) Consent for cancellation.--An adequate bond shall not be 5 canceled without the consent of the bureau. 6 Section 9. School purchases of travel or tour services. 7 (a) Purchase from registered seller of travel.--If a school 8 purchases or arranges for the purchase of travel or tour 9 services for or on behalf of the students of the school, the 10 school shall purchase the travel or tour services from a seller 11 of travel that is registered under section 10 and that holds 12 adequate security as required by section 8. 13 (b) Nonapplication.--This section does not apply to trips in 14 which the entire cost of the trip for the students as a whole is 15 less than $2,500. 16 (c) Definition.--As used in this section, "school" means a 17 public school offering kindergarten through grade 12 or any part 18 thereof. 19 Section 10. Registration. 20 (a) Registration.--A seller of travel shall file a statement 21 with the bureau, indicating name, home address and business 22 address and, where applicable, the name and address of the 23 financial institution where the bond is located and any other 24 information required by the bureau under this act. The bureau 25 shall assign a registration number to each seller of travel. 26 (b) Registration fee.--Registration fees shall be $150 for 27 the first year and $50 for each subsequent year. Registration 28 costs have been calculated to be equal to the costs of 29 implementing and enforcing this act. For sellers of travel which 30 have more than one office, registration fees shall be assessed 19990H0143B3590 - 11 -
1 at the main location which maintains the principal banking 2 relationship for the branch offices. 3 (c) Additional material to be filed.--Sellers of travel who 4 offer vacation certificates must also submit and disclose to the 5 bureau with the application for registration, and any time such 6 document is changed but prior to the sale of any vacation 7 certificate, the following: 8 (1) A copy of the contract by which the rights, 9 obligations, benefits and privileges resulting from purchase 10 of a vacation certificate are established. 11 (2) A copy of each promotional brochure, pamphlet, form 12 letter, registration form or any other written material 13 disseminated in connection with the advertising, promotion or 14 sale of any vacation certificate. 15 (3) A verbatim script of each radio, television or movie 16 or other similar advertisement broadcast to the public in 17 connection with the advertising, promotion or sale of any 18 vacation certificate. 19 (4) A transcript of any standard verbal sales 20 presentation utilized in connection with the advertising, 21 promotion or sale of vacation certificates. 22 (5) A copy of all rules, regulations, conditions or 23 limitations upon the use of, or obtaining reservations for 24 the use of, accommodations or facilities available pursuant 25 to the vacation certificate. 26 (6) A copy of a written authorization for the use of any 27 registered trademark, trade name or trade logo utilized in 28 promotional brochures, pamphlets, form letters, registration 29 forms or other written materials disseminated in connection 30 with the advertising, promotion or sale of vacation 19990H0143B3590 - 12 -
1 certificates from the holder of each trademark, trade name or 2 trade logo so used. 3 (7) A complete copy of the original of each testimonial 4 letter from previous vacation certificate purchasers utilized 5 in advertisements disseminated in connection with 6 advertising, promotion or sale of vacation certificates. 7 (8) Where discount or complimentary coupons or tickets 8 are to be provided to purchasers, a copy of such ticket or 9 coupon which shall include a statement of the names and 10 addresses of businesses where the coupons or tickets are 11 honored, the goods, services or amenities provided and any 12 additional charges, limitations or conditions. 13 (9) Where other goods, services or amenities are 14 provided to the purchasers, a copy of such ticket or coupon 15 which shall include a statement of the names and addresses of 16 businesses where the coupons or tickets are honored, the 17 goods, services or amenities provided and any additional 18 charges, limitations or conditions. 19 (10) A statement of the number of certificates to be 20 issued and the date of their expiration. 21 (11) A copy of the vacation certificate and its 22 component parts, including, but not limited to, any 23 registration card, form letter, reservation form, 24 confirmation form and lodging directory. 25 (12) A copy of all agreements between the seller and 26 business entities providing accommodations or facilities to 27 purchasers. 28 (13) A copy of all agreements between the seller and 29 each business entity providing or honoring discount or 30 complimentary coupons or tickets or providing other goods, 19990H0143B3590 - 13 -
1 services or amenities to the purchaser. 2 (14) A listing of the full name, address and telephone 3 number of each person through which the distribution and sale 4 of vacation certificates is to be carried out, including the 5 number of vacation certificates allocated or sold to each 6 person and the name and address of a registered agent for 7 service of process in this Commonwealth. 8 (15) A financial statement prepared by an independent 9 certified public accountant in accordance with generally 10 accepted accounting principles. Such statement shall be 11 submitted annually at the close of each fiscal year. A seller 12 which has not yet begun operations shall submit a balance 13 sheet prepared by an independent certified public accountant 14 in accordance with generally accepted auditing principles in 15 lieu of an initial financial statement, thereafter annually 16 submitting a financial statement or Federal income tax return 17 at the close of the fiscal year. 18 Section 11. Prohibited practices by sellers of travel. 19 It shall be illegal for any seller of travel and, if such 20 seller of travel is a corporation, any officer or director 21 thereof to engage in any or all of the following enumerated 22 practices: 23 (1) Make a material misrepresentation regarding the 24 quality of aircraft, vehicle, ship or train, day of departure 25 or arrival, points served, quality of lodging, time share or 26 other accommodation or other services available, reserved or 27 contracted for in connection with any trip, tour or other 28 travel services, unless such misrepresentation was based upon 29 a reasonable belief as to the services available based upon 30 representations made by the person, company, corporation, 19990H0143B3590 - 14 -
1 common carrier or other entity offering such services. 2 (2) Misrepresent the fares and charges for 3 transportation or services, unless such misrepresentation was 4 based upon a reasonable belief as to the fares and charges 5 applicable based upon representations made by the person, 6 company, corporation, common carrier or other entity offering 7 such services. 8 (3) Misrepresent that special priorities for 9 reservations are available when such special considerations 10 are in fact granted to members of the public generally. 11 (4) Sell transportation to a person or persons on a 12 reservation or charter basis for specified space, flight or 13 time or represent that such definite reservations or charter 14 is or will be available or has been arranged without a 15 binding commitment with a carrier for the furnishing of such 16 definite reservation or charter as represented or sold. 17 (5) Sell or issue tickets or other documents to 18 passengers to be exchanged or used for transportation if such 19 tickets or other documents will not be or cannot be legally 20 honored by carriers for transportation. 21 (6) Misrepresent the requirements that must be met by a 22 person or persons in order to qualify for charter or group 23 fare rates, unless such misrepresentation was based upon a 24 reasonable belief as to the requirements applicable based 25 upon representations made by the person, company corporation, 26 common carrier or other entity offering such charter or group 27 fare. 28 (7) Fail or refuse to honor a purchaser's vacation 29 certificate request to cancel if such request is made: 30 (i) within 30 days from the date of purchase or 19990H0143B3590 - 15 -
1 receipt of the vacation certificate, whichever occurs 2 later; or 3 (ii) at any time accommodations or facilities are 4 not available pursuant to a request for use as provided 5 in the contract, provided that the contract shall not 6 require notice greater than 60 days in advance of the 7 date requested, if acceptable to the purchaser, 8 comparable alternate accommodations or facilities in a 9 city, or reservations for a date different than that 10 requested, may be provided. 11 Section 12. Offenses. 12 A violation of the provisions of this act constitutes a 13 violation of the act of December 17, 1968 (P.L.1224, No.387), 14 known as the Unfair Trade Practices and Consumer Protection Law. 15 In addition to the penalties provided in this act, any seller of 16 travel who violates the provisions of this act shall be subject 17 to a civil penalty of up to $5,000 for each violation. The 18 Attorney General, a district attorney or the traveler may seek 19 such penalties in addition to any other penalty or remedy 20 permitted under the Unfair Trade Practices and Consumer 21 Protection Law or any other laws of this Commonwealth. 22 Section 13. Burden of proof. 23 (a) Proceeding under this act.--In any civil proceeding 24 alleging a violation of this act, the burden of proving an 25 exemption is upon the person claiming it. In any criminal 26 proceeding alleging a violation of this act, the burden of 27 producing evidence to support a defense based upon an exemption 28 or an exception is upon the person claiming it. 29 (b) Other proceedings.--Compliance with this act does not 30 satisfy nor substitute for any requirements for license, 19990H0143B3590 - 16 -
1 registration or regulation mandated by other laws. 2 Section 14. Investigation. 3 (a) Authority.--If the Attorney General OR DISTRICT ATTORNEY <-- 4 has reason to believe that a violation of this act has occurred, 5 the Attorney General OR DISTRICT ATTORNEY shall have the <-- 6 authority to investigate, on behalf of the Commonwealth, its 7 citizens or a political subdivision. 8 (b) Procedure.--Prior to the institution of a civil action, 9 the Attorney General is authorized to require the attendance and 10 testimony of witnesses and the production of documents. For this 11 purpose, the Attorney General may issue subpoenas, examine 12 witnesses and receive evidence. If a person objects to or 13 otherwise fails to comply with a subpoena or request for 14 testimony, the Attorney General may file in Commonwealth Court 15 an action to enforce the subpoena or request. Notice of hearing 16 the action and a copy of all pleadings shall be served upon the 17 person who may appear in opposition. 18 Section 15. Authority. 19 (a) Authority of bureau.--The bureau shall have all powers, 20 rights and duties as are provided in this act to seek penalties, 21 remedies and procedures against any seller of travel that is 22 engaged in practices that are unlawful according to the 23 provisions of this act. 24 (b) Other remedies preserved.--The provisions of this act 25 are not exclusive and do not relieve sellers of travel or 26 contracts subject thereto from compliance with all other 27 applicable provisions of law nor shall these provisions provide 28 immunity for any civil claim against any seller of travel which 29 has acquired any moneys or property, real or personal, by means 30 of any practice declared unlawful by this act. 19990H0143B3590 - 17 -
1 Section 16. Venue. 2 An offense under this act is deemed to have been committed in 3 any county where the seller of travel has a place of business, 4 the county from which payment by the traveler was made or the 5 county where money was collected by the seller of travel. 6 Section 17. Regulations. 7 The bureau may adopt rules and regulations necessary to 8 enforce and administer this act. These rules and regulations, 9 when promulgated pursuant to the act of July 31, 1968 (P.L.769, 10 No.240), referred to as the Commonwealth Documents Law, shall 11 have the force and effect of law. 12 Section 18. Effective date. 13 This act shall take effect in 90 days. A19L12RZ/19990H0143B3590 - 18 -