The Department of Transportation (DOT) has introduced a new rule that requires agencies to make ticket refunds out of their own pockets in certain cases. This rule is set to go into effect on October 26th, with the aim of ensuring proper communication between airlines and agencies to process refunds accurately and efficiently. However, the implementation of effective communication processes remains questionable, potentially leading to chaos in the industry.
One of the key aspects of this rule is the definition of the “merchant of record.” According to the DOT, this entity is responsible for processing payments made by consumers for airfare. This includes transactions made through credit or debit cards, as well as those paid by cash or check. Therefore, if an agency processes a payment through its own credit card merchant account, it becomes legally accountable for issuing refunds. The same applies if the agency provides a receipt in its name for cash or check payments.
For credit card transactions, agencies are required to issue refunds within seven business days upon receiving information from the airline. On the other hand, refunds for cash, check, or debit card payments must be processed within 20 calendar days. Surprisingly, there is no specific deadline for airlines to reimburse agencies for these refunds, leaving the latter with financial burdens.
The rule mandates refunds for cancellations, significant delays, delayed baggage, and ancillary service fees not provided. However, voluntary refunds requested by clients are not covered under this regulation. It is crucial for agencies to determine whether they fall under the “merchant of record” category to understand their responsibilities for issuing refunds.
Considering the complexities and potential challenges posed by this new rule, many agencies may contemplate ceasing the sale of airline tickets. The lack of clarity and the absence of specific guidelines regarding checks and cash payments further contribute to the confusion surrounding the rule. As a result, the industry is bracing for a period of uncertainty and upheaval once the rule comes into effect.
Overall, the DOT’s new rule for ticket refunds introduces a significant shift in the responsibilities of agencies and airlines. It emphasizes the importance of effective communication, adherence to refund deadlines, and accurate identification of the “merchant of record.” As the deadline approaches, agencies must prepare themselves to navigate through the complexities of this rule to ensure compliance and mitigate potential risks in the industry.