BP BHEAD INT S

AN ACT Relating to clarifying sellers of travel registration requirements including the establishment of a registered sellers of travel recovery account; amending RCW 19.138.021, 19.138.030, 19.138.040, 19.138.050, 19.138.100, 19.138.110, 19.138.120, and 19.138.140; adding new sections to chapter 19.138 RCW; repealing RCW 19.138.055; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 19.138.021 and 1994 c 237 s 2 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Department" means the department of licensing.

(2) "Director" means the director of licensing or the director's designee.

(3) "Seller of travel" means a person, firm, or corporation ((~~both~~)) whose principle place of business is located either inside ((~~and~~)) or outside the state of Washington, who transacts business ((~~with~~)) selling travel services within the state of Washington or who sells travel services to Washington state consumers((~~, including,~~)) or businesses. A seller of travel includes, but is not limited to, ((~~travel agencies,~~)) a person or entity who sells, provides, furnishes contracts for, arranges, or advertises, either directly or indirectly, by any means or method, to arrange or book any travel services including travel reservations or accommodations, group or individual tours, tickets for domestic or foreign travel by air, rail, ship, bus, or other medium of transportation or hotel or other lodging accommodation and vouchers or coupons to be redeemed for future travel or accommodations for a fee, commission, or other valuable consideration.

(a) "Seller of travel" includes, but is not limited to, a travel agent, tour operator, and any person who is an independent contractor or outside agent for a travel agency or other seller of travel whose principal duties include consulting with and advising persons concerning travel arrangements or accommodations in the conduct or administration of its business. ((~~If a seller of travel is employed by a seller of travel who is registered under this chapter, the employee need not also be registered.~~))

(b) "Seller of travel" does not include:

(i) An air carrier;

(ii) An owner or operator of a vessel including an ocean common carrier as defined in 46 U.S.C. App. 1702(18), an owner or charterer of a vessel that is required to establish its financial responsibility in accordance with the requirements of the federal maritime commission, 46 U.S.C. App. 817 (e), and a steamboat company as defined in RCW 84.12.200 whether or not operating over and upon the waters of this state;

(iii) A motor carrier;

(iv) A rail carrier;

(v) A charter party carrier of passengers as defined in RCW 81.70.020;

(vi) An auto transportation company as defined in RCW 81.68.010;

(vii) A hotel or other lodging accommodation;

(viii) An affiliate of any person or entity described in (i) through (vii) of this subsection (3)(b) that is primarily engaged in the sale of travel services provided by the person or entity. For purposes of this subsection (3)(b)(viii), an "affiliate" means a person or entity owning, owned by, or under common ownership, with "owning," "owned," and "ownership" referring to equity holdings of at least eighty percent.

(4) "Travel services" includes transportation by air, sea, or ((~~rail~~)) ground transportation, hotel or any lodging accommodations, or group, individual, or package tours, whether offered or sold on a wholesale or retail basis.

(5) "Advertisement" includes, but is not limited to, a written or graphic representation in a card, brochure, newspaper, magazine, directory listing, or display, and oral, written, or graphic representations made by radio, television, or cable transmission that relates to travel services.

Sec. 2. RCW 19.138.030 and 1994 c 237 s 10 are each amended to read as follows:

A seller of travel shall not advertise that ((~~air, sea, or land transportation either separately or in conjunction with other services is~~)) travel services are or may be available unless he or she has, prior to the advertisement, determined that the product advertised was available at the time the advertising was placed. This determination can be made by the seller of travel either by use of an airline computer reservation system, or by written confirmation from the vendor whose program is being advertised.

It is the responsibility of the seller of travel to keep written or printed documentation of the steps taken to verify that the advertised offer was available at the time the advertising was placed. These records are to be maintained for at least two years after the placement of the advertisement.

Sec. 3. RCW 19.138.040 and 1994 c 237 s 11 are each amended to read as follows:

At or prior to the time of full or partial payment for ((~~air, sea, or land transportation or any other services~~)) travel services offered by the seller of travel ((~~in conjunction with the transportation~~)), the seller of travel shall furnish to the person making the payment a written statement conspicuously setting forth the following information:

(1) The name and business address and telephone number of the seller of travel.

(2) The amount paid, the date of such payment, the purpose of the payment made, and an itemized statement of the balance due, if any.

(3) The registration number of the seller of travel required by this chapter.

(4) The name of the vendor with whom the seller of travel has contracted to provide travel arrangements for a consumer and all pertinent information relating to the travel as known by the seller of travel at the time of booking. The seller of travel will make known further details as soon as received from the vendor. All information will be provided with final documentation.

(5) The conditions, if any, upon which the contract between the seller of travel and the passenger may be canceled, and the rights and obligations of all parties in the event of cancellation.

(6) A statement in eight-point boldface type in substantially the following form:

"If transportation or other services are canceled by the seller of travel, all sums paid to the seller of travel for services not performed in accordance with the contract between the seller of travel and the purchaser will be refunded within thirty days of receiving the funds from the vendor with whom the services were arranged, or if the funds were not sent to the vendor, the funds shall be returned within fourteen days after cancellation by the seller of travel to the purchaser unless the purchaser requests the seller of travel to apply the money to another travel product and/or date."

Sec. 4. RCW 19.138.050 and 1994 c 237 s 12 are each amended to read as follows:

(1) If the ((~~transportation or other~~)) travel services contracted for are canceled, or if the money is to be refunded for any reason, the seller of travel shall refund to the person with whom it contracts for travel services, the money due the person within thirty days of receiving the funds from the vendor with whom the services were arranged. If the funds were not sent to the vendor and remain in the possession of the seller of travel, the funds shall be refunded within fourteen days.

(2) Any material misrepresentation with regard to the transportation and other services offered shall be deemed to be a cancellation necessitating the refund required by this section.

(3) When travel services are paid to a vendor and charged to a consumer's credit card by the seller of travel, and the arrangements are subsequently canceled by the consumer, the vendor, or the seller of travel, any refunds to the consumer's credit card must be applied for within ten days from the date of cancellation.

(4) The seller of travel shall not be obligated to refund any cancellation penalties imposed by the vendor with whom the services were arranged if these penalties were disclosed in the statement required under RCW 19.138.040.

Sec. 5. RCW 19.138.100 and 1994 c 237 s 3 are each amended to read as follows:

No person, firm, or corporation may act or hold itself out as a seller of travel unless, prior to engaging in the business of selling or advertising to sell travel services, the person, firm, or corporation registers with the director under this chapter and rules adopted under this chapter.

(1) The registration number must be conspicuously posted in the place of business and must be included in all advertisements. ((Any corporation which issues a class of equity securities registered under section 12 of the securities exchange act of 1934, and any subsidiary, the majority of voting stock of which is owned by such corporation including any wholly owned subsidiary of such corporation are not required to include company registration numbers in advertisements.)) A seller of travel is not required to include registration numbers on institutional advertising. "Institutional advertising" is advertising that does not include prices, location, or dates for travel services.

(2) ((~~The director shall issue duplicate registrations upon payment of a nominal duplicate registration fee to valid registration holders operating more than one office.~~)) Separate offices or business locations licensed separately by the state of Washington must be individually registered under this chapter.

(3) No registration is assignable or transferable.

(4) If a registered seller of travel sells his or her business, when the new owner becomes responsible for the business, the new owner must comply with all provisions of this chapter, including registration.

(5) If a seller of travel is employed by or under contract as an independent contractor or an outside agent of a seller of travel who is registered under this chapter, the employee, independent contractor, or outside agent need not also be registered if:

(a) The employee, independent contractor, or outside agent is conducting business as a seller of travel in the name of and under the registration of the registered seller of travel; and

(b) All money received for travel services by the employee, independent contractor, or outside agent is collected in the name of the registered seller of travel and deposited directly into the registered seller of travel's trust account as required under this chapter.

Sec. 6. RCW 19.138.110 and 1994 c 237 s 4 are each amended to read as follows:

An application for registration as a seller of travel shall be submitted in the form prescribed by rule by the director, and shall contain but not be limited to the following:

(1) The name, address, and telephone number of the seller of travel;

(2) Proof that the seller of travel holds a valid business license in the state of its principal state of business;

(3) A registration fee in an amount determined under RCW 43.24.086;

(4) The name, address, and social security numbers of all employees, independent contractors, or outside agents who sell travel and are covered by the seller of travel's registration. This subsection shall not apply to the out-of-state employees of a corporation that issues a class of equity securities registered under section 12 of the securities exchange act of 1934, and any subsidiary, the majority of voting stock of which is owned by the corporation;

(5) A report prepared and signed by a licensed public accountant or certified public accountant or other report, approved by the director, that verifies that the seller of travel maintains a trust account or other approved account at a federally insured institution located in the state of Washington, the location and number of that trust account or other approved account, and verifying that the account is maintained and used as required by RCW 19.138.140. The director, by rule, may permit alternatives to the report that provides for at least the same level of verification.

Sec. 7. RCW 19.138.120 and 1994 c 237 s 5 are each amended to read as follows:

(1) Each seller of travel shall renew its registration ((~~on or before July 1 of~~)) every ((~~other~~)) year or as otherwise determined by the director.

(2) Renewal of a registration is subject to the same provisions covering issuance, suspension, and revocation of a registration originally issued.

(3) The director may refuse to renew a registration for any of the grounds set out under RCW 19.138.130, and where the past conduct of the applicant affords reasonable grounds for belief that the applicant will not carry out the applicant's duties in accordance with law and with integrity and honesty. The director shall promptly notify the applicant in writing by certified mail of its intent to refuse to renew the registration. The registrant may, within twenty-one days after receipt of that notice or intent, request a hearing on the refusal. The director may permit the registrant to honor commitments already made to its customers, but no new commitments may be incurred, unless the director is satisfied that all new commitments are completely bonded or secured to insure that the general public is protected from loss of money paid to the registrant. It is the responsibility of the registrant to contest the decision regarding conditions imposed or registration denied through the process established by the administrative procedure act, chapter 34.05 RCW.

Sec. 8. RCW 19.138.140 and 1994 c 237 s 8 are each amended to read as follows:

(1) Within five business days of receipt, a seller of travel shall deposit all sums received from a person or entity, for travel services offered by the seller of travel, in a trust account or other approved account maintained in a federally insured financial institution located in Washington state. Exempted are airline sales made by a seller of travel, when payments for the airline tickets are made through the airline reporting corporation either by cash or credit card sale.

(2) The trust account or other approved account required by this section shall be established and maintained for the benefit of any person or entity paying money to the seller of travel. The seller of travel shall not in any manner encumber the amounts in trust and shall not withdraw money from the account except the following amounts may be withdrawn at any time:

(a) Partial or full payment for travel services to the entity directly providing the travel service;

(b) Refunds as required by this chapter;

(d) Interest earned and credited to the trust account or other approved account; or

(e) Remaining funds of a purchaser once the travel seller has provided the purchaser verified proof that full and final payment for all travel services ((~~have been provided or once tickets or other similar documentation binding upon~~)) has been made to the ultimate provider of the travel services ((~~have been provided~~)).

(3) At the time of registration, the seller of travel shall file with the department the account number and the name of the financial institution at which the trust account or other approved account is held as set forth in RCW 19.138.110. The seller of travel shall notify the department of any change in the account number or location within one business day of the change.

(4) The director, by rule, may allow for the use of other types of funds or accounts only if the protection for consumers is no less than that provided by this section.

(5) The seller of travel need not comply with the requirements of this section if all of the following apply, except as exempted in subsection (1) of this section:

(a) The payment is made by credit card;

(b) The seller of travel does not deposit, negotiate, or factor the credit card charge or otherwise seek to obtain payment of the credit card charge to any account over which the seller of travel has any control; and

(c) If the charge includes transportation, the carrier that is to provide the transportation processes the credit card charge, or if the charge is only for services, the provider of services processes the credit card charges.

(6) If the seller of travel maintains its principal place of business in another state and maintains a trust account or other approved account in that state consistent with the requirement of this section, and if that seller of travel has transacted business within the state of Washington in an amount exceeding five million dollars for the preceding year, the out-of-state trust account or other approved account may be substituted for the in-state account required under this section.

NEW SECTION. Sec. 9. (1) The registered sellers of travel recovery account is created in the state treasury. All receipts from moneys derived from sections 9 through 17 of this act shall be deposited into the account. Expenditures from the account may be used only for the purposes of sections 10 through 17 of this act. Only the director may authorize expenditures from the account. The account is subject to allotment procedures under chapter 43.88 RCW, but no appropriation is required for expenditures.

(2) The director shall adopt rules to set all fees required under this chapter in accordance with RCW 43.24.086. All moneys derived from civil penalties and fines imposed under this chapter must be deposited in the registered sellers of travel recovery account created in this section.

(3) The funds in the registered sellers of travel recovery account may be invested only in investments that are legal for domestic life insurance companies under chapter 48.13 RCW and RCW 39.60.010. The interest from these investments must be deposited to the credit of the account and must be available for the same purposes as all other moneys deposited in the account.

NEW SECTION. Sec. 10. A person aggrieved by an act, representation, transaction, or conduct of a registered seller of travel operating in this state that is in violation of this chapter, the rules adopted by the department under this chapter, or the consumer protection act, chapter 19.86 RCW, may recover from the registered sellers of travel recovery account the actual moneys expended for purchases of travel services, including attorneys' fees incurred to pursue claims under this chapter, subject to the following:

(1) The maximum obligation of the account is not more than three thousand dollars per person for each purchase of travel services;

(2) The liability of the account for the acts of a registered seller of travel is terminated upon payment in full or three thousand dollars per person for each purchase of travel services, whichever is less, from the account for full payment, or unsatisfied portions of payment, of orders, decrees, or recommendations of administrative, state, or federal courts, in an aggregate amount of two hundred thousand dollars on behalf of the registered seller of travel;

(3) A registered seller of travel as a principal in a travel transaction has no claim against the account; and

(4) Only a consumer who has been aggrieved by an act, representation, transaction, conduct, or violation of this chapter by a seller of travel registered under this chapter at the time the violations occurred may seek compensation from the account as determined by an order, decree, or recommendation of an administrative, state, or federal court. However, orders of consumer restitution contained in consent decrees and judgments brought by the office of the attorney general in the name of the state of Washington for violations of this chapter must be paid from the account, and orders of consumer restitution contained in the criminal sentencing in a state or federal court of a registered seller of travel convicted for criminal acts committed as a registered seller of travel must be paid from the account.

NEW SECTION. Sec. 11. When a person or entity applies for an original registration to practice as a registered seller of travel, the person or entity must pay, in addition to the original registration fee, a fee is an amount not to exceed two hundred dollars for deposit in the registered sellers of travel recovery account.

NEW SECTION. Sec. 12. In addition to the registration fees provided for in this chapter, the department may, based upon the need to ensure that a minimum balance of two hundred thousand dollars is maintained in the registered sellers of travel recovery account, assess each registered seller of travel, only upon renewal of the seller's registration, an amount, not to exceed two hundred dollars, set by rule adopted by the department.

NEW SECTION. Sec. 13. (1) The director shall order payment from the registered sellers of travel recovery account upon receipt of an order, decree, or recommendation of an administrative, state, or federal court as defined in section 10(4) of this act. However, if the recovery account is depleted at the time of presentation to the director, the director shall order payment as soon as the account has sufficient funds to make the disbursement.

(2) The department shall adopt rules for the acceptance and processing of payments from the registered sellers of travel recovery account.

NEW SECTION. Sec. 14. A qualifying order, decree, recommendation, or judgment must be presented to the director within one year of the date of the order, decree, recommendation, or judgment to be eligible for payment from the registered sellers of travel recovery account. However, if a seller of travel is making payments on an order, decree, recommendation, or judgment, that document must be presented to the director for payment from the recovery account within sixty days of the date of default by a registered seller of travel. The date of default is the date the current payment was due.

NEW SECTION. Sec. 15. (1) If the department orders payment from the registered sellers of travel recovery account for an amount in settlement of a claim or toward satisfaction of a judgment against a registered seller of travel, the registration of the seller of travel is automatically revoked. If the registration is that of a corporation or partnership, the registration of the qualifying principal or principals of the corporation or partnership is automatically revoked upon revocation of the registration.

(2) A seller of travel whose license is revoked under subsection (1) of this section is not eligible to receive a new registration until the seller of travel has repaid the registered sellers of travel recovery account in full the amount of money paid on the seller of travel's behalf, plus interest at the established rate of interest on judgments in the state of Washington at the time of the judgment.

(3) A discharge in bankruptcy does not relieve a seller of travel from the obligations of this chapter.

NEW SECTION. Sec. 16. If the money deposited in the registered sellers of travel recovery account is insufficient to satisfy a duly authorized claim or portion of a claim, the department shall, when sufficient money has been deposited in the account, satisfy the unpaid claim or portion of a claim in the order that the claims or portions of the claims were originally filed, plus interest at the established rate of interest on judgments in the state of Washington at the time the order, decree, recommendation, or judgment was entered.

NEW SECTION. Sec. 17. When the department has ordered payment from the registered sellers of travel recovery account to the judgment creditor or state on behalf of aggrieved consumers, the department is subrogated to rights of the judgment creditor to the extent the judgment creditor receives payment from the account. The judgment creditor shall assign the rights, title, and interest in the judgment in the amount being received from the registered sellers of travel recovery account before payment is made from the account, and the department shall deposit into the account any amount and interest recovered by the department due to this assignment. If the total amount collected on the assignment by the department exceeds the amount paid from the account to the original judgment creditor plus interest and the cost of collection, the department may pay the overage collected to the original creditor to the extent the original creditor's whole claim has not been previously satisfied. Costs incurred by the department attempting to collect assigned judgments must be paid from the account prior to distributing any excess funds. Further, if the original judgment creditor's claim has been previously wholly satisfied, an overage collected must be deposited in the registered sellers of travel recovery account.

NEW SECTION. Sec. 18. Sections 9 through 17 of this act are each added to chapter 19.138 RCW.

NEW SECTION. Sec. 19. RCW 19.138.055 and 1994 c 237 s 31 are each repealed.

NEW SECTION. Sec. 20. This act shall take effect January 1, 1996.