BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: AB 2138 Hearing Date: June 6,
2016
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|Author: |Low |
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|Version: |April 20, 2016 |
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|Urgency: |No |Fiscal: |No |
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|Consultant|Sarah Mason |
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Subject: Sellers of travel
SUMMARY: Clarifies that the Sellers of Travel law applies to
sellers of travel in California that offer travel to visitors
from outside of California.
Existing law:
1) Establishes the Sellers of Travel law (Law) which provides a
comprehensive scheme for the regulation of sellers of travel
(SOT), as defined, and requires a seller of travel, unless
exempted, to register with the Attorney General (AG) and to
comply with various requirements. (Business and Professions
Code (BPC) § 17550 et. seq.)
2) Defines a SOT as a person who sells, provides, furnishes,
contracts for, arranges, or advertises that he or she can or
may arrange, or has arranged, at wholesale or retail either
of the following: air or sea transportation either separately
or in conjunction with other travel services, or land or
water vessel transportation, other than sea carriage, either
separately or in conjunction with other travel services if
the total charge to the passenger exceeds three hundred
dollars ($300).
(BPC § 17550.1(a))
3) Excludes from the definition of a SOT the following: an air
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carrier; an ocean carrier; a hotel, motel, or similar
lodging establishment that arranges for transportation for
its registered guests; a motor club; or a motor or rail
carrier or water vessel operator operating from a state,
federal, or other governmental entity.
(BPC § 17550.1(b))
4) Requires a SOT to register with the Attorney General's office
(AG).
(BPC § 17550.20)
5) Declares that a seller of travel shall be deemed to do
business in this state if the seller of travel solicits
business from locations in this state or solicits prospective
purchasers who are located in this state. (BPC § 17550.20
(a))
6) Establishes the Travel Consumer Restitution Corporation
(TCRC) which creates the Travel Consumer Restitution Fund
(TCRF) as a mechanism for an aggrieved passenger to be
reimbursed when a SOT fails to provide for travel or in the
event that a SOT becomes insolvent. (BPC § 17550.38)
This bill:
1)Clarifies that a SOT shall be deemed to do business in
California if the SOT solicits prospective purchasers located
in the state or solicits business from locations in the state,
regardless of the geographic location of the prospective
purchaser, including persons located outside of California or
the United States.
FISCAL
EFFECT: None. This bill is not keyed fiscal by Legislative
Counsel.
COMMENTS:
1. Purpose. The California Tour Guide Coalition is the Sponsor
AB 2138 (Low) Page 3
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of this measure. According to the Author, "there were issues
in Southern California about travel companies promoting
travel packages to foreign visitors, specifically from China,
to visit California. For example, a travel agent would sell
a package that includes a stay at a five star hotel and a
trip to Disneyland, among other things. But what they end up
getting is a three star hotel experience and a drive-by in
front of Disneyland, a trip of much less value than the
couple thousand dollars that was paid." The Author states
that this bill will simply clarify that the SOT law includes,
and applies to, businesses or operators recruiting in a
foreign country or in another state, if the businesses or
operators are based in California. According to the Author,
in a situation like that cited above, a consumer would then
be able to benefit from the TCRF and protections under the
Law.
2. Sellers of Travel Law. The Law was enacted by SB 918
(Chapter 1123, Statutes of 1994), authored by
then-Assemblymember Jackie Speier and sponsored by the
California Coalition of Travel Organizations working in
cooperation with the AG's office. The Law requires all
sellers of travel to register with the AG's office, pay an
annual fee of $100 to fund the program and pay annual
assessments into a self-sustaining restitution fund (the
TCRF). The Law provides specific protections to consumers
who purchase sea or air transportation either singly or in
conjunction with other travel services, such as lodging and
car rentals. The Law applies to all sellers located in
California, as well as those who sell or offer to sell from
locations outside the state to persons located in California
and applies to both retail and wholesale transactions,
covering sales by tour operators, consolidators, and
wholesalers. A seller who only offers lodging, bus, or train
tours without also offering air or sea transportation is not
covered by the Law. Lodging establishments that book travel
for their guests and accept no money for doing so, along with
airlines, and cruise lines are also not covered by this law.
The Law provides several layers of protections for consumers,
including:
a. Disclosure and identification of the seller. Among
other things, SOTs must disclose business addresses,
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fictitious business names, identifying information of
principals and owners, any relationship with airlines, and
the location of a trust account or information about a
surety bond. The registration number, displayed in all
advertising and offers to sell, is a means of identifying
the businesses in the event of claims or complaints and
does not indicate any review or approval of the business by
the AG's office. Therefore, so long as the seller
discloses the necessary information in its application and
pays the appropriate fees, the registration will be
approved and a registration number issued.
b. Financial protections. Some SOTs must deposit payments
into a trust account or obtain a surety bond on behalf of
their customers. In addition, sellers receiving payment
from a passenger may not use that money for any other
purpose (i.e., to buy travel on behalf of another
passenger, pay rent or business overhead, or any personal
use) until it has delivered the purchased goods and
services.
c. Restitution fund. The law provides for a private
non-profit corporation, the TCRC, which administers
the TCRF. If the purchaser is located in California
and the purchase is from a registered seller of travel
whose principal place of business is also in
California, and the purchaser does not receive what he
or she contracted to purchase, the purchaser can file
a claim with the TCRC. Registered California sellers
and out-of-state sellers whose stock is nationally
traded are required to pay annual assessments to the
TCRC.
d. Written disclosures. Prior to, or at the time of,
receiving any payment, a SOT must provide the
purchaser with various written disclosures including
its name, business address and telephone number, an
itinerary, a statement about its cancellation policy,
the total amount to be paid, the amount paid to date,
the date of any future payment, the purpose of the
payment made, an itemized statement of any balance
due, whether it has a trust account or surety bond,
whether the payment is protected by the TCRF, and how
to make a claim of the TCRC.
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In addition to those primary purposes highlighted above,
the Law also provides for a number of "guarantees." In
the event that there is a cancellation, the purchaser is
entitled to receive a prompt and automatic refund. If
there is a material misrepresentation by the seller, the
law likewise requires a refund. Finally, the law
provides that once the seller has received the
purchaser's full payment, the purchased tickets must be
promptly delivered.
1. Arguments in Support. Supporters note that there exist
growing concerns about businesses that sell or promote a
particular service or good to foreign visitors. According to
members of the California Tour Guide Coalition , consumers and
honest travel businesses are negatively impacted because of
misrepresentation by certain tour guide companies to these
foreign travelers who reside outside of the state and
country. Supporters believe that this bill is an important
step forward in the fight against unfair business practices
and misrepresentation by tour guides in California.
2. Prior Related Legislation. AB 1107 (Irwin) updated the Law
to require a SOT to maintain their business records for a
period of three years; authorized the AG to recover costs and
attorney fees pursuant to an audit that determines
noncompliance with the Law and; authorized TCRC bills to be
sent electronically.
AB 836 (Rendon) of 2015 would have created a voluntary
certification program for tour guides under the California
Travel and Tourism Commission (Commission) and required tour
guides providing tours to multiple sites in California to
have adequate training and knowledge and pass a criminal
background check. Would have required the Commission to
provide a list of certified tour guides to individuals
seeking to hire a tour guide in California upon request.
( Status: The measure was held under submission in the
Assembly Committee on Appropriations.)
NOTE : Double-referral to the Senate Committee on Appropriations.
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SUPPORT AND OPPOSITION:
Support:
California Tour Guide Coalition
Opposition:
None on file as of May 31, 2016.
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