When it comes to the Department of Transportation’s (DOT) new refund rule set to take effect on October 26, there are various implications for corporate travel, meetings, and incentives. One of the key questions that arises is how the rule applies to corporate and institutional clients who pay by check or wire transfer after tickets have been issued.
The rule states that the “merchant of record” is responsible for processing payments by consumers for airfare. This term is defined as the entity shown in the consumer’s financial charge statements, such as debit or credit card charge statements. Initially, it may seem that if a client pays by cash, check, or wire transfer, there is no financial charge statement, and therefore, the rule does not apply. However, the DOT’s explanatory statement indicates a broader interpretation. It suggests that if a consumer purchases a ticket with cash or check and receives a transaction receipt, the entity issuing the receipt is responsible for refunds. This implies that issuing a receipt for cash, check, or wire transfers makes you the merchant of record.
To potentially avoid the rule’s refund obligations, one strategy could be to refrain from issuing receipts for cash, check, or wire payments. For instance, if a corporation makes a large cash deposit for multiple tickets, you could acknowledge the deposit without issuing individual receipts for each ticket. Instead, you could provide a weekly deduction report without it being considered a receipt.
Using the agency’s credit card or the credit card of the agency’s owner to pay the airline does not exempt you from the rule’s obligations. The focus is on how the consumer pays you, not how you pay the airline. Additionally, using your agency’s credit card without the plating carrier’s permission violates an ARC rule. It’s important to adhere to payment regulations to avoid any potential legal issues.
It’s worth noting that the DOT’s mention of “consumers” in the rule does not typically include businesses or institutions. This raises questions about whether the refund rule applies differently to transactions involving corporate clients versus individual consumers. Clarifying this distinction is crucial for understanding the extent of your refund obligations under the new rule.
Navigating the DOT’s new refund rule as it pertains to corporate travel, meetings, and incentives requires a thorough understanding of your role as the merchant of record. By carefully considering the payment methods, issuing receipts, and following industry regulations, you can mitigate potential risks and ensure compliance with the rule. Stay informed about any updates or clarifications from the DOT to adapt your practices accordingly.