When it comes to corporate travel, meetings, and incentives, there are specific considerations to keep in mind regarding the DOT’s new refund rule. One of the main questions that arise is who is responsible for refunds for canceled or delayed flights when payments are made via check, wire transfer, or cash deposit.
According to the rule, the entity responsible for processing payments by consumers for airfare is known as the “merchant of record.” This term is clearly defined as the entity shown in the consumer’s financial charge statements, such as debit or credit card charge statements. This definition raises questions about situations where payments are made through methods other than credit or debit cards.
While it may initially seem that payments made via cash, check, or wire transfer do not fall under the rule since there is no financial charge statement, the DOT’s explanatory statement suggests a broader interpretation. The DOT indicates that if a client purchases a ticket using cash, check, or wire, the entity that issues the receipt should be responsible for refunds. This interpretation implies that issuing a receipt for non-card payments makes the agency the merchant of record.
To potentially avoid the rule’s refund obligations, agencies can explore alternatives to issuing traditional receipts for non-card payments. For instance, if a corporation makes a bulk cash deposit for multiple tickets, the agency can acknowledge the deposit without providing a receipt for each ticket. Instead, a detailed report of deductions from the deposit can be offered on a regular basis, avoiding the classification of the report as a receipt.
Paying the airline using the agency’s credit card or the credit card of the agency’s owner does not exempt the agency from the rule’s obligations. The determining factor is how the consumer pays the agency, not how the agency pays the airline. It is important to note that using the agency’s credit card to pay for tickets without the plating carrier’s permission violates an ARC rule and does not absolve the agency of refund responsibilities.
The use of the term “consumers” in the DOT’s statement raises questions about whether businesses or institutions fall under the scope of the rule. While the term typically refers to individual consumers, the DOT’s interpretation may encompass business transactions as well. Agencies must navigate this distinction and understand their obligations under the rule when dealing with corporate clients.
Overall, the application of the DOT’s new refund rule to corporate travel requires careful consideration of payment methods, receipts issuance, and compliance with industry regulations. Agencies serving corporate clients must be proactive in understanding their responsibilities and taking steps to ensure compliance with the rule to avoid potential penalties and legal issues.
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