You’ve reserved and paid for your flights, hotels, and tours and are looking forward to your getaway when you receive a dreaded email – one of the companies supplying your travel has shut down. While uncommon, travel suppliers, like any business, aren’t immune from financial difficulties, and it can happen quickly and unexpectedly. When the fortunes of a business cannot be improved, the supplier may suddenly cease doing business, in which case you’ll be asking “what now?” At Sunset Vacations &TP, we want to help guide you around this possibility. There are some crucial steps you can take to protect yourself financially once deposits have been made. Here’s what you need to know.
ALWAYS pay with a credit card rather than a debit card. Under the Fair Credit Billing Act (FCBA), credit card consumers have 60 days from the time they receive a billing statement to refuse payment for services not provided. If you’ve made payments to a supplier that has shut down, you can immediately dispute the charge even if outside this window of time because you did not receive what you paid for. FCBA only applies to credit card purchases; therefore, we always advise against using a debit card when reserving travel plans. With a debit card, the funds are immediately withdrawn from your account and you’ll have to work with your bank to try and recover the money. The success rate is low compared to utilizing a credit card.
ALWAYS purchase travel insurance as part of your travel investment. Travel is a valuable investment of your time and money; so you should protect it against unforeseeable events that might arise. Travel insurance offers a variety of protections depending on the policy chosen relating to cancellations, health issues, and schedule changes. Many policies also include coverage for financial default of a supplier, but it’s important to always ask if the policy covers the specific company you are using whether it’s an airline, cruise line, tour operator, or resort. Your policy must be purchased within 14 days of the date of your first trip payment or deposit to be covered.
Be aware that if you purchase trip protection sold by the supplier, it will never cover the supplier for insolvency/bankruptcy. Trip protection provided by the supplier can offer financial remedies for certain issues, but they will never cover themselves for financial default or bankruptcy. Therefore, when working with us, we will connect you to other insurance options that include a clause for financial default by the supplier you are traveling with. Then you must purchase the policy within 14 days.
Cruise passengers. If you’re taking a cruise departing from a U.S. port, another recourse may be through the Federal Maritime Commission, which requires cruise lines to provide evidence they will indemnify travelers in the event of their non-performance. Claims processes vary depending on the situation, and affected passengers are not guaranteed a full refund.
Default by tour operators. Tour operators that are part of the United States Tour Operators Association (USTOA) are required to participate in a Travelers Assistance Program under which members post $1 million in security to reimburse consumers in the event of financial default or non-performance. Not all tour operators are part of USTOA, and while $1 million seems like a significant amount of money, it may not be enough to cover all claims.
Travel operators, like any industry, can be affected by financial conditions. Investing in a comprehensive travel insurance policy paired with using a credit card for ALL payments allows you to breathe easy and focus on your stress-free vacation. Travel is one of the most worthwhile investments you can make; make it a priority to protect it from the unknowns!
My goal is to simplify travel-planning through an equal exchange process where I acquire your ideas and expectations for your trip relieving you of the worry, hassle, stress and time that accompanies Do-It-Yourself planning.