The Department of Transportation has proposed a new regulation that would require travel agencies to give cash refunds if an airline cancels or delays a flight. This is true, is it?

It is indeed. The DOT wants to make it harder for travel agents to do business. The DOT wants travel agencies to be responsible for refunds if an airline cancels a flight or delays a flight, even if the agency is not the credit card merchant. If the airline does not pay the refunds, the agency will have to pay them.

This sounds crazy to me. You can read it yourself at The notice of proposed rulemaking can be found on this page.

The department doesn't propose limiting the rule to cases where the agency is still in possession of client funds because multiple entities may be involved in the transaction process.

Retail agencies of all sizes, conducting business online or via brick-and-mortar stores that transact directly with consumers are covered by the requirement. The problem with the rule is that most travel agents are now home based independent contractors. Since ICs are self-employed travel sellers, many of whom make airline reservations, it seems that they would have to guarantee the refunds.

The carrier would have to pay for refunds. I think it sounds like a lot of confusion.

It is not clear why the DOT made this exception.

ASTA needs to explain why the DOT shouldn't adopt the rule. Agencies need to do the same 90 days is the deadline for comments.

There will be a virtual hearing on August 22. Signing up in advance makes it possible for anyone to testify. The notice of public hearing can be found here.