If you sell travel to consumers in one of the states that has Seller of Travel laws, you may be required to register your company, manage your client funds through a trust account, provide evidence of a bond, and/or pay an annual fee.
Among the states that have these requirements are two large consumer markets:
Other states that regulate Sellers of Travel, travel promoters, and/or travel agents to varying degrees include:
- New York
- Rhode Island
Compliance with a state’s regulations is mandated if you satisfy their definition of a seller of travel (or similar term) but do not meet any of the listed exemptions and your client resides in that state. Take note that if you meet the definition of seller of travel in a state, the Seller of Travel laws apply to your company regardless of where it is located (including non-U.S. based companies), as long as you are advertising to and/or selling to consumers located in that state.
State regulate sellers of travel in order to exercise their power to protect the consumers residing in their state from perceived and actual risks of misleading advertising and unfair business practices, namely improper use of client funds.
Some of the various penalties and consequences that may arise from a failure to comply with the laws include:
California: For failure to register prior to soliciting consumers in California a late fee of $5 per day, up to a maximum of $500 is payable until the required information is received. Doing business without the required registration or doing business in violation of any requirement of California’s SoT law results in a misdemeanor or felony offense punishable by up to three years in prison and/or a fine of up to $25,000 for each violation.
Florida: Fines or penalties ranging from $5,000 to $10,000 per violation, and criminal conviction of a misdemeanor. In addition, failure to register and maintain annual registration can result in contracts being declared void and unenforceable in the event of a dispute. See Omega Cong., Inc. v. BAF Tour Servs., Inc., 855 So. 2d 113, 114 (Fla. Dist. Ct. App. 2003).
Iowa: In addition to criminal penalties for serious misdemeanor offense, a civil fine of not less than three times sum received from doing business without registration.
Missouri: Violation is subject to prosecution as a class D felony and subject to penalty of $10,000.
Washington: Civil penalty assessment of $500 to $2,000 per violation, assessment in an amount necessary to make restitution for violation of the law, and in the event of a lawsuit, an award of attorney fees.
The information included here relates solely to “Seller of Travel” laws and regulations which are distinct from general business laws governing the conduct of business in all states. Every state requires companies to register with them when they meet that state’s threshold for conducting or transacting business in that state. Additional laws and regulations may apply in the listed states and/or in other states.
For additional information, read the related blog post titled “Are You at Risk of Unexpected Penalties, Criminal Charges, or Loss of Business?”