The DOT’s new rule regarding ticket refunds is set to go into effect on October 26. The implementation of this rule was delayed to allow airlines and agencies time to establish effective communication channels to process refunds accurately and efficiently. However, there are concerns regarding whether this communication system will be ready in time, potentially leading to chaos within the industry.
The rule mandates refunds in cases of cancellations, significant delays, significantly delayed bags, and ancillary services fees not provided. It is important to note that voluntary refunds requested by clients are not covered under this rule. The responsibility for refunds falls on the agency that issued the ticket when they are identified as the “merchant of record.”
The DOT defines the “merchant of record” as the entity responsible for processing payments by consumers for airfare, as indicated in the consumer’s financial charge statements. In simple terms, if an agency uses its credit card merchant account to accept payment for an airline ticket or package, they are legally accountable for processing refunds. Moreover, transactions paid by means other than credit or debit cards should clearly indicate the entity responsible for refunds on the transaction receipt.
For credit card sales, agencies must issue refunds within seven business days upon receiving information from the airline. On the other hand, refunds for payments made by cash, check, or debit card should be processed within 20 calendar days. Surprisingly, there is no specified deadline for airlines to reimburse agencies for refunds made out of their own pockets. In fact, there is no mandatory reimbursement requirement in the rule at all.
The new rule on ticket refunds poses significant challenges and potential risks for agencies in the airline ticketing business. The obligation to refund customers in specific situations, coupled with the ambiguity surrounding the “merchant of record” definition, could lead to financial liabilities and operational complexities for agencies. The lack of a reimbursement deadline from airlines further complicates the situation, leaving agencies vulnerable to absorbing these costs.
The DOT’s new rule on ticket refunds introduces a series of requirements and responsibilities for agencies that issue airline tickets. It is essential for agencies to understand the scope of the rule, the definition of the “merchant of record,” and the deadlines for processing refunds to ensure compliance and mitigate potential risks. The industry is bracing for the impact of this rule, with concerns about its implementation and the challenges it may pose to agencies in the future.