A Partnership With An Uninsurable Operator!

About a week ago, a press release was issued about a travel MLM firm offering trips to Europe. It was even picked up as "news" by Modern Agent. In reading the release, I shake my head. Is it such a monumental task to be able to sell trips to Europe--like no one has ever done it? I also wonder why other agencies are not getting equal time in the press on their marketing efforts.

But as I read a little deeper, this was announcing a partnership with the same Chinese firm that is providing Olympic Packages (oops, Summer Event Packages...more on that later) for the agency. Now why on earth is a US based company partnering with an Asian company to provide travel to Europe? It just does not make sense! I don't see any European agencies partnering with Apple Vacations to provide travel to South Africa.

Certainly with the number of "agents" in place, it makes sense to seek out USTOA members? If not for a marketing advantages, how about the consumer protection membership brings? Are the clients of this "agency" very confident in Shanghai Springs? If the Olympic (oops, my bad ...Summer Event) sales are any indication, I guess not.

Now I have heard rumors that there is a continuous line of travel suppliers lining up to do business with this "agency". I would think that with all those options, it might make sense to partner with a company in the US that might be held accountable by US laws and not Chinese laws.

What do their current European vendors have to say. Collette Tours and Trafalgar. Seems like it is eroding the market share to me. Well, I guess if there was no market share to erode it is a moot point.

I just see this as yet another warning flag. Not only are we dealing with a company whose upper management has zero travel industry experience, but we are dealing with a sales force that is minimally trained and now the fulfillment is coming from a foreign corporation. There is zero protection for the consumer. Are the "agents" or the websites advising that this supplier is NOT COVERED by travel insurance? They are not on the Access America approved list of suppliers. So, if a policy is sold, the customer is SOL if the supplier defaults on the agreement.

But as the "agency" preys on the naive to join, I suppose the "agents" prey on the naive to buy! Good luck with that!

Protected With A Blanket E&O Policy? Think Again!

The other day, I sent an email to Mark Pestronk regarding a blanket E&O Insurance policy and the protection or coverage it offers to an RTA. This is self explanatory.

February 22, 2008
Hi Mark--

Someone asked me a question and I had no clue and thought you might know.

A client books a trip with an RTA or Independent Contractor and something goes horribly wrong and they sue the "agency". Where does the liability fall? I know YTB says they have a blanket E&O policy for their 140K agents. I am sure their website disclaims liability. I am sure they would say the RTA is an independent business and disclaim liability. So, where does the liability ball fall? Does it make a difference if the transaction is completed by the client online by themselves? Or does liability shift if the RTA sells and processes it by themselves. It just seems to be such a grey area and one that is untested to date.

Any thoughts?

Hope all is well.

John

and the reply....

February 27, 2008
John:

It is not a gray area, really.

Liability for negligence or breach of contract falls only on the IC, not on the host. As a practical matter, the host will get sued anyway, as the consumer and his attorney cannot tell the difference.

Insurance does not affect my answer one way or the other. If the host's insurance covers the IC, it does not follow that the host has liability to the consumer.

Finally, the website disclaimer tends to deter suits against the party or parties named in the disclaimer. Again, it does not affect liability for negligence of breach of contract if something goes horribly wrong.

Mark

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