Understanding the New DOT Rule on Ticket Refunds for Agencies

The Department of Transportation’s new rule regarding ticket refunds for agencies is set to go into effect on October 26. This delay was put in place to allow airlines and agencies time to develop effective communication methods to ensure accurate and efficient processing of passenger refunds. However, there is skepticism surrounding whether these processes will be developed in time, potentially leading to chaos and agencies reconsidering their ticket-selling operations.

The rule mandates that agencies must provide refunds in cases of cancellations, significant delays, significantly delayed baggage, and fees for ancillary services that were not provided. It is important to note that the rule does not cover voluntary refunds requested by clients. The responsibility for issuing refunds lies with the agency that serves as the “merchant of record.”

The DOT defines the “merchant of record” as the entity that processes payments from consumers for airfare, as indicated in financial charge statements such as credit or debit card statements. This means that if an agency uses its credit card merchant account to process payment for an airline ticket, it assumes the responsibility for issuing refunds. Additionally, the entity that issued the transaction receipt for cash or check payments is also accountable for refunds.

For transactions made through credit or debit cards, agencies are required to issue refunds within seven business days of receiving information from the airline. However, for payments made via cash, check, or debit card, the agency must provide refunds within 20 calendar days. Notably, there is no specified deadline for airlines to reimburse agencies, leaving the possibility of no reimbursement at all.

The DOT’s new rule on ticket refunds for agencies introduces significant changes in refund procedures and responsibilities. Agencies must pay close attention to the definition of the “merchant of record,” adhere to strict refund deadlines, and prepare for potential challenges in the implementation of effective communication processes. Failure to comply with these regulations could result in operational disruptions and financial implications for agencies involved in ticket sales.