Application of DOT Rules to OTAs
 

DOT clarified if the airline cancels a flight, a refund must be offered. How does this rule apply to a ticket that is booked through foreign OTA (India-based) for travel to the US? Was not able to find an answer after searching the forums. Thank you!

IANAL but if this hypothetical OTA has no presence (or assets) in the USA you will have a hard time making them comply with directives from the DOT.

OTA is irrelevant. The same rule applies.

The only problem is how you can push the OTA to comply.

No, it does not.

DOT only regulates commercial air carriers (in this context).

OP will need to request the refund, wait 7 days and likely file a chargeback with his credit card issuer (bank). He will likely need a copy of his e-ticket receipt, the cancellation notice, his request for a refund, and the denial of a refund (or some note that no response has been received).

Should be fairly cut & dry.

I've read different reports on this. The customer has paid the travel agent for a service (booking flights) and the TA has carried out their instructions/provided the service so no chargeback allowed. This third party in the transaction muddies the water and is another good reason for booking direct.

The TA is paid to make specific travel arrangements for specific destinations in specific dates. If those arrangements fall through because a third-party (e.g. airline, hotel) is unable to deliver the contracted service(s), the TA fails to provide the arrangements agreed upon (and paid for). Thus, the case for a credit card chargeback should be clear-cut in most jurisdictions.

(If I you prepay a lobster dinner for next month and at the time and date of the reservation the restaurant does not have any lobster, you are also also due a full refund. It does not matter what failed in the supply chain of the restaurant, you paid for a service that was not delivered to you as agreed upon at the time of payment.)

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True. So if it is a tour package, then it can be a SOL situation.

But if it is an air ticket only situation, then I beg to differ. Specifically, because OTAs do not issue the tickets per se (as they are issued by airlines), the issuing airlines ultimately is responsible. The job of OTA is to act on behalf of the airline, i.e. an agent. When IRROPS, airlines provide exception policies, these policies apply to OTA tickets as well. OTAs simply need to follow the airline's guidance to proceed.

DOT does not enforce its law over the OTAs (Yes - I agree that DOT lacks jurisdiction). Instead, DOT enforces its law over the airline who is ultimately for the ticket.

This, although some OTAs, including Expedia, do occasionally issue their own tickets.
But, to Gary's point, why would the OTA refuse to refund if they're only processing a request on your behalf with the airline? It isn't the OTA's money, so they don't have much to lose here.

It all depends on the specific transaction. But, as a general proposition, the TA only holds the funds for a very short period of time (or none at all). In the ordinary circumstance, one contacts the TA, it contacts the carrier for approval, and then issues the refund with the carrier's approval. Now, it either cannot get the approval because it is denied or the carrier is overwhelmed and does not respond. Thus, if the TA issues a refund, it is doing so with its own funds. For a low margin business, that means funds run out quickly.

This is where the chargeback comes in. If it is just an unflown air ticket, it is easy enough because the amount in question is the amount paid. If the ticket has been partially flown or it is a package, apportioning what is the air ticket can be harder. More importantly, some jurisdictions -- not the US -- do not permit partial chargebacks. My thought is if one cannot readily determine the amount, one does one's best and provides a justification for the amount.

The consumer has no way of knowing who holds the funds and at what point. But, the carrier and the TA can sort that with the card issuer and leave the consumer out of what amounts to a back office transaction.

Wouldn't the OTA only hold funds if the OTA acts at the merchant?
I have plenty of scenarios, although I don't think any with Expedia, where the agency just facilitates payment via ARC. The charge on my credit card is from the airline and the agency never touched the money.

In either case, though, fair point on the OTA being stuck in the middle if the airline doesn't respond or denies the refund.

In this case airline ticket was purchased from OTA, who charged my CC, so OTA is the merchant on my CC statement. OTA subsequently paid the airline (SQ) with a different CC which shows up on the ticket receipt. The ticket is issued on 618 SQ stock. The ticket was for flights on April 24 but all the segments were cancelled by the airline, who sent out cancellation emails.

I feel SQ should be required to comply with DOT rules and cannot avoid doing so simply because it sold its ticket through an OTA. I agree with the poster above that the OTA is merely acting as an agent of the airline. Apparently, SQ is being unresponsive to the OTA. I have followed through with the DOT. I am also talking to the CC issuer as the charge was made 10 months ago. We are talking several thousand dollars, and vouchers would be totally useless to us.

Not sure, the TA made the arrangements they were paid for (booked a ticket) and the airline who now has most of the money failed to deliver their bit. TA is clean. Your analogy fails as there's no agent involved when you pre-book/pre-pay the restaurant.

That's part of their business model to make money on changes or cancellations. Ordinarily it's pretty rare but nowadays it's massive and they stand to benefit hugely if nothing changes.

Well SQ just updated its policy to provide either refunds or travel credit depending on customer preference for tickets bought directly or from TA or another airline rendering my original question academic. I will believe it when i see it!

https://www.singaporeair.com/en_UK/s...t/?id=k8jxbjvz

Then do you know the ticket number prefix for Expedia?

(Not trying to argue. Really want to know...)

As I have said previously, Often1 was correct that DOT's does not have jurisdiction over TAs, but the airline. So the only thing a consumer can do is to push the issuing airline, which at that point the airline can either bypass the TA and issue the refund or can push the TA to act accordingly.

While I don't know the exact itinerary, IMHO, unless you are required to use a TA, or it is an itinerary that you can only get from TA, don't ever use a TA at all.

Years of reading these stories has taught me 1 thing only - things will always be messier with TAs.

exactly... if I order something from an online shopping portal and they have to order it in turn from a supplier, the supplier does not deliver then the online shopping portal can't keep my money, LOL! If the contract isn't fulfilled down the line then it implies the contract with the consumer isn't fulfilled as well. If the airline refunds the fare the the refund is due to the passenger.

Yes, that is correct... the DOT does not have jurisdiction but you are free to sue the TA. Any TA with half a brain would just refund you rather than deal with the complexities and cost of a lawsuit since they are not footing the bill anyway, they are just giving back the refund that they got from the airline.

What is interesting though is that even though I bought my ticket from an OTA on my CC the line item has the airline name on it. So, my guess is that the Airline gave a percentage or fixed fee to the TA for their service.

That's the ARC process I mention above. It also why some people are successful in getting a refund directly from the airline (so long as the airline issued the ticket on their stock).

And yes, the travel agency gets a commission from the airline.

Different business model with different Terms and Conditions. The shopping portal prices this into it's overheads and charges a little bit extra to every customer. The TA doesn't and charges a lot to a few customers. It's big news now because those few customers have just turned into a landslide and realised saving a few pounds/dollars/euros on a ticket to be subject to an intermediary's terms maybe wasn't such a good idea, and the noise is being heard.

They still have to pay all their costs which cancellation fees contributes to. In the current situation you'd like to think that instead of seeing it as a windfall they'd give something back by reducing their charges. If they don't then we all know exactly how they treat us and should respond accordingly.

If a small push by DOT can do the job, why bother with the justice system?

Some. Not all TA tickets are charged directly to the customer's credit card.

so if the OTA refuses the refund what are my options? I can't go directly to the airline can I? I expect the OTA to give me a reason why they can't give me a refund, it should be dependent on the airline not refunding them so it amounts to the same thing essentially.. i.e. if the OTA is unable to get the refund it's because the airline is denying it, hence I should be able to lodge a complaint against the airline with the DOT.

With most OTAs, actually the ticketing airline is charging the credit card directly. The OTA may run a second charge for its fee. A chargeback for the airline ticket costs should work out fine there.

Many carriers are now simply issuing refunds on demand when they have been paid by the OTA and then using their ADM process to clawback whatever fee the OTA earned. Thus, you may want to try the carrier, even though you would ordinarily be told no.

If none of this works, simply initiate a chargeback. The card issuer (bank) will sort it. You should supply a copy of your e-ticket receipt, the cancellation notice, your request for a refund, and the denial (or a note that you have no heard back).

I have not received a cancellation notice yet but my reservation code no longer works on the Air New Zealand site (says invalid reservation)

I contacted the OTA and they want me to fill out a refund request form on their site but I don't want to do that because I don't want to be the one to initiate a refund which would imply me trying to cancel.

Not sure how to go about it, my flight is August 28 so it's a ways off so should I give it more time to wait for a cancel notice or proactively pursue it?

Update: I talked to the OTA and they insisted that they will deduct 10-15% of the ticket price as a service charge and refund me the rest. At this time I did not discuss anything... I will get the refund first and take it up with either the CC company, BBB or the DOT for the difference later.

Don't you expect the OTA to be paid for their work?

No, not if the customer did not receive anything of value. If you bought something online, they took your money and a week later told you it is out of stock do you expect to pay the company for using their website? Of course not, that is ridiculous.

Edit - I actually work for a ticketing company (Entertainment/Sports), we've had to refund people due to event cancellations. We are not keeping people's money when the event is cancelled, as I said not only is that illegal it is downright stupid.

what does OTA contract say about refunds/cancellations?

it's not uncommon/unheard-of for them to charge a handling fee.

if fee is too high in relation to the ticket and above a token value (eg $50 fee for $60 flight isn't that high), you can try complaining to DOT under 49 US Code 41712

https://www.law.cornell.edu/uscode/text/49/41712

(41712 does regulate OTAs)

good luck though. 10-15% is not high, unless you can point to another place on the OTA contract where they put a smaller number



do note that once you request/agree to a refund, it must be processed within 7/20 business days. this includes OTAs. many airlines/OTAs have been dinged for not following this (no, you don't get the penalty, it goes into DOT)
https://www.transportation.gov/indiv...ection/refunds

It isn't a customer cancellation. A customer cancellation incurs a service fee, that is understood.

This is a cancellation of the flight by the airline... the service that was bought was deemed unavailable by the airline. Hence the entire transaction is void. A fee is charged for a service rendered, not for services that don't actually exist.

true.

well, OP is free to take it up with DOT under "Unfair practices" complaint. trying to see if someone successfully did one (most of the filings are usually for unadvertised all-in prices or lumping airline YQ under taxes)

thanks, I know I am legally due the full amount. The problem here is that my CC transaction has the name of the airline on it so it's charged directly to the airline. I called the airline and they are saying it's impossible for them to refund me since it's a 3rd party booking. I'm not sure if I can dispute the transaction if the refund I receive isn't for the full amount as that dispute will be for the charge by the airline and the airline would've already refunded the full amount to the OTA... so it gets complicated here. A DOT complaint may be the best route.

Except that you did receive something of value. You asked the OTA to book a ticket and they did just that. If you ask them to process a refund, they'll probably do that, too.

If you paid a separate fee to the OTA, then you should not expect it to be refunded.

If you did not pay a separate fee, which is common because airlines pay commissions, then it was actually the airline paying the OTA to issue the ticket. The OTA's lost revenue should be taken up with the airline and not the traveler.

Wow!

They provided the service you asked for, ie to book you a ticket and deal with any follow up matters if required. Of course they should be paid for this. If you wanted the airline's Ts & Cs you should have booked direct, but for whatever reason you chose not to.

Except that the service is to provide a valid booking so the service wasn't delivered as agreed. The validity of the service is determined in whether the booking delivered by the agent can be consumed on the date of service. It's a pretty simple concept that you fail to understand apparently.

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If you have purchased a ticket which originates or terminates in the US and a flight is cancelled, you are entitled to a refund. If you request one and it it is not initiated within 7 days, then you should dispute the charge with your credit card issuer (bank). Supply a copy of your e-ticket receipt, the cancellation notice, your request for a refund, and any denial of a refund (or a note from you that you have not heard back).

Don't try to come up with inapplicable analogies, don't try to parse through the law of agency, and don't worry about how the card issuer, the carrier, and the TA sort it out.

In future, do not book through TA's other than bricks & mortar operations where you have a direct personal relationship with staff and they have a reason to properly serve you. Those TA's likely charge fees and only you can determine whether the level of service makes the fee worth it.

I fully understand what your saying, but disagree profoundly that the TA has not carried out a service for you, and deserves paid for it. They are now providing more resource to chase your refund and that also costs money, unless you do it yourself by purchasing direct. Only you know your reason for using a TA, but is sounds like pounds, dollars, euros or whatever might have been part of it, and rather than admit your choice has got you to where you are, you're striking out at the TA as if they were in control of any cancellation.

Your choice of words ". . .the validity of the service is determined in whether the booking delivered by the agent can be consumed on the date of service" helps your case if it was true, but it's not. Making the booking as per your instruction was a line item as it were and was completed to both of yours' satisfaction. Dealing with subsequent issues is another line item, not usually required, and the two can not be combined just to suit your case.

I don't know where you've made the purchase so don't know the legal situation, but morally the Travel Agent deserves payment. None of us work for free so there is no doubt about that.

For openness, I have never worked in the travel business so have no personal axe to grind in this matter.

No, your understanding is incorrect. I don't really care about the airline, my dealings are not with the airline, the service I bought through the agent, the agent has not delivered the service. As another poster correctly mentioned above, a breakdown in the agent's supply chain isn't any of my concern. If the agent is unable to deliver the service due to a fault from their provider it is between the agent and the provider and not my problem.

I would of course say the opposite, that it's your understanding or interpretation that is 100% wrong, but we're going nowhere so we'll have to agree that our opinions or viewpoints (as that's all they are) differ as to whether the TA has carried out chargeable work for you or not. For me he has, and I wouldn't dream of screwing him for his time and effort when he is, IMO, totally blameless.

Of course the OTA deserves to be paid for the service.

However, the OTA should contact the airline to pay them for their service - not the customer.

It is all irrelevant. As one is due a refund and it has not been paid out, a chargeback is in order and the carrier(s) and OTA can sort it out. Whichever merchant vendor, carrier or OTA, was paid the funds when you purchased, will see the debit and then sort it. You, as the customer do not and should not become involved in the intricacies of the transaction.