Finding a “reliable” supplier—however defined—in a field heavily populated by small operators has been a vexing question for years. That’s certainly the case for tour operators, who belong to a marketplace in which consumers see lots of hype and very little hard information. A reader put the question this way:
“How does a person pick a reliable tour company? For example, I’m considering a tour of Texas with either Gadabout Tours or World Wide Country Tours. Gadabout belongs to the NTA, CLIA, and is bonded and registered with the state of California. Worldwide is affiliated with the ABA, NTA, and CLIA. But I’m so accustomed to traveling with Grand Circle and Vantage that I hesitate to consider a smaller tour company, for fear of their reliability.”
The short answer: You can’t ever be 100 percent sure, even of a big tour operator. However, you can protect yourself against some of the worst potential tour operator disappointments.
Financial failure or default of an operator—prevalent in the 60s and 70s—is the ultimate in unreliability. Fortunately, it’s increasingly rare, but it still happens. And a serious failure can mean serious loss and hassle:
- The worst cases are those where an operator fails after you arrive at your destination, only to find that the operator has not paid for your hotel accommodations, return transportation, or both. When that happens, you not only lose your prepayments but you also have to pay again for the remainder of your trip and maybe to get back home. In the past, when you were caught in that kind of failure, you had very little recourse.
- When operators fail after you’ve paid but before your trip starts, your prepayments are at risk, but you have some safety nets.
As a tour buyer, both governmental and industry programs can protect you against financial failure:
- Federal regulations require operators of tours that use charter air travel to deposit your prepayments in escrow accounts, to be released only when you actually receive the service. Although a few crooked operators established phony escrow accounts, this protection has proved effective. The main downside is that fewer and fewer tours use charter air travel. And the provisions do not apply to the vast majority of current tours that use scheduled air travel.
- Federal banking regulations provide for chargebacks to your credit card if you did not receive the service you bought with that card. This is an extremely effective protection—and one of several reasons why you should always use a credit card.
- Several states (including California) have established registration requirements for “sellers of travel” that provide for some demonstration of financial responsibility and restitution funds and other systems for compensating you if a tour operator fails while holding your prepayments. However, full protections usually apply only to residents of the state involved.
- The United States Tour Operators Association (USTOA) requires all members to post a bond or some other form of financial security to compensate you if a member operator fails. However, USTOA membership is generally confined to larger operators, and no other such association provides similar protection. Specifically, NTA’s protections are very weak.
- You can buy trip-cancellation insurance that covers you for financial failure of a tour operator—as long as you don’t buy the insurance from that operator.
Keep in mind that none of the legal/industrial safety net protections covers disappointment or hassle. They cover just failure or default. A few consumers still try to use a chargeback to recover payments for major problems, but that doesn’t work.
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