Travel Agency Purchases: Can Californians Look Beyond California?

In the United States, there are four states that require travel agencies to have a Seller of Travel (SOT) registration: Hawaii, Washington, Florida, and California. If a travel agency is based in one of these states or has clients who reside in these states, they will need to register as a seller of travel for the respective state. This is because these states have extraterritorial laws, meaning the law extends beyond the borders of the state.

California requires all sellers of travel to register with the Attorney General's Office and to display the registration number on all advertising materials. While this does not guarantee that a company is reputable, it does signal that the seller of travel has followed the law to be registered.

Do Californians need to use a Californian travel agency?

Californians are not restricted to using a Californian travel agency. However, there are some important things to consider when booking with an out-of-state travel agency.

Seller of Travel Law

The Seller of Travel Law protects consumers by requiring the registration of sellers of travel, imposing financial restrictions, and creating a restitution fund to protect consumers from losses. This law applies to any travel agency that does business with California residents, so it is important to check that any travel agency you book with, whether based in California or not, is registered. You can do this by asking the agency directly or by using the "Seller Search" feature on the California Department of Justice website.

Consumer Protections

In addition to the Seller of Travel Law, there are other consumer protections in place that apply specifically to Californians. For example, if you book with an unregistered seller of travel, you may be able to recover your money through the Travel Consumer Restitution Fund. It is important to note that this fund is not available to residents of other states, so booking with an agency that is registered in California provides an extra layer of consumer protection.

Local Knowledge

Another benefit of using a Californian travel agency is that they are more likely to have knowledge of local laws, regulations, and requirements specific to California. This can be especially important if you are booking travel for a large group or if you have specific requirements that need to be met.

Ultimately, the decision of whether to use a Californian or out-of-state travel agency is a personal one and will depend on a variety of factors. However, it is important to be aware of the consumer protections that are in place and to ensure that any agency you book with is registered and reputable.

What are the benefits of using a travel agency from California?

Yes, a Californian can buy from a travel agency outside California. However, it is important to note that only four states in the US have Seller of Travel (SOT) registrations: Hawaii, Washington, Florida, and California. This means that if a travel agency is based in any of these four states or has clients residing in these states, they must register as a seller of travel for the respective state.

• Expert Recommendations: Travel agents from California will have extensive knowledge of destinations, having visited the places they recommend. They can provide insights on everything from currency to adapter plugs and local transportation, ensuring that travellers are well-prepared for their trip.
• Time-saving: Travel agents can save clients time by handling all the details of their trip, from booking hotels and making dinner reservations to arranging tour tickets. They can also provide advice on how many days to spend in each destination and how many activities to plan per day.
• Stress-free Planning: Californian travel agents are well-versed in the intricacies of travel planning and can help clients navigate potential challenges. They can provide reminders about what to pack, suggest side trips, and even recommend the best places to get coffee or take Instagram-worthy photos.
• Financial Savings: Travel agents may be able to get clients a better deal by offering access to special agency rates, onboard credits, or discounts. They also help prevent surprise fees on accommodations and activities, ensuring travellers are aware of all costs upfront.
• Troubleshooting: Should any issues arise during a trip, such as flight cancellations or delays, travel agents can advocate for their clients and quickly rebook itineraries. They have the necessary industry connections to navigate unexpected challenges and provide peace of mind for travellers.
• Local Expertise: Californian travel agents can offer exclusive experiences and off-the-beaten-path recommendations that may not be available to the general public. They have a global network of connections, including in-destination specialists, providing travellers with unique and memorable experiences.

What are the risks of using a travel agency from outside California?

Using a travel agency from outside California may come with some risks. Here are some things to consider:

• Legal protection: The Californian Seller of Travel Law protects consumers by requiring the registration of sellers of travel within the state. This means that if you encounter any issues with a travel agency based in California, you can take legal action. However, if the travel agency is based outside of California, it may be more difficult to resolve any disputes or seek legal recourse.
• Financial requirements: Travel agencies in California are required to meet certain financial requirements, such as depositing all payments received into a trust account or obtaining a surety bond. These requirements are in place to protect consumers from financial loss. Agencies outside of California may not have the same financial protections in place.
• Disclosure requirements: Before accepting payment, travel agencies in California must provide consumers with various written disclosures, including their name, business address, telephone number, itinerary, cancellation policy, and more. This helps consumers understand their rights and protects them from unfair practices. Agencies outside of California may not be subject to the same disclosure requirements.
• Changing travel conditions: The COVID-19 pandemic has highlighted the importance of being able to adapt to changing travel conditions. A travel agency in California is more likely to be aware of and comply with the latest travel restrictions and protocols. An agency outside of California may not have the same level of knowledge or resources to navigate these changing conditions.
• Local knowledge: Travel agents in California are likely to have more knowledge about local destinations, transportation options, and vendors. This can be especially important if you encounter any issues during your trip and need quick assistance.
• Time zone differences: Using a travel agency in a different time zone can make communication and booking more challenging, especially if you need to make last-minute changes or have a tight schedule.
• Language barriers: If the travel agency is based in a non-English speaking country, language barriers may arise, making it difficult to communicate your needs and preferences effectively.
• Limited regulatory oversight: The Californian Department of Justice oversees travel agencies within the state and can take action against deceptive or unfair business practices. Agencies outside of California may not be subject to the same level of regulatory oversight, making it more difficult to resolve any issues that may arise.

What are the legal requirements for a travel agency to operate in California?

To operate a travel business in California, you must obtain a California travel agency license. This involves registering with the state Attorney General's office, which issues a registration number that must be displayed on all advertising materials. This process makes you a licensed seller of travel.

Registration requires the disclosure of business addresses, fictitious business names, identifying information about principals and owners, the relationship with airlines, and the location of a trust account or surety bond information.

In addition to registering as a seller of travel, you need to register for a business ID, even if your business is not located in California. You can find the business filing forms and the latest fee schedule online.

California also requires participation in the Travel Consumer Restitution Fund, which all sellers of travel must pay into. To be eligible, the travel agency must have its principal place of business in California and do business with people in California.

There are some exemptions to requiring a California travel agency license. If your business meets all of the following criteria, you do not need a license:

• Your business model is a sole proprietor, single-member LLC, or single-shareholder S-Corp.
• You are selling through your host, with their accreditation number.
• You use your host's accreditation for all bookings and do not book directly or under your own accreditation.
• All fees must be processed through the host agency.
• Clients must pay the host or supplier directly and cannot pay in cash.
• You must disclose to every sale that you belong to a host, including the host's name, address, phone number, and CA SOT registration number.
• You have a written contract with a host agency that has a CA SOT.

California's Seller of Travel Law protects consumers by requiring registration, clear disclosures, financial restrictions, and restitution funds. It is important to comply with these regulations to avoid any legal issues and to build trust with travellers.

What are the legal requirements for a travel agency from outside California to sell to Californians?

To sell to Californians, a travel agency from outside California must adhere to the following legal requirements:

• Register with the Attorney General's Office: All sellers of travel operating in California must register with the state's Attorney General's Office and obtain a registration number to be displayed on all advertising materials. This includes travel agencies based outside of California that sell to Californians.
• Obtain a Seller of Travel (SOT) License: California is one of the few states that require a specific SOT license for travel agencies. This license must be renewed annually and costs $100 per business location.
• Register with the Travel Consumer Restitution Corporation (TCRC): California requires travel agencies to participate in the TCRC, a non-profit organization that protects consumers and sets requirements for travel agencies.
• Establish a Trust Account: A separate trust account is required for all direct payments from clients. This account must be used solely for client deposits and specific expense payments.
• Obtain a Surety Bond: A surety bond must be obtained, with a value equal to or greater than the amount of money in the trust account. This protects consumers in case of financial loss.
• Provide Detailed Disclosures: Before accepting any payments, travel agencies must provide clients with written disclosures, including business name and address, itinerary, cancellation policy, total amount to be paid, payment schedule, purpose of payment, itemized balance, and information about the trust account or surety bond.
• Comply with Consumer Protection Laws: California has strict consumer protection laws, including the requirement to provide refunds for travel services not provided. Misappropriation of client funds may be prosecuted as a felony.
• Renew Registrations Annually: All registrations, including the SOT license and TCRC participation, must be renewed annually to continue operating in California.

It is important to note that these requirements may vary depending on the business structure and specific operations of the travel agency. Some agencies may also be exempt from certain requirements if they meet specific criteria, such as being a sole proprietorship or operating under a host agency.

Frequently asked questions