Bill Text: CA AB1107 | 2015-2016 | Regular Session | Chaptered
Bill Title: Sellers of travel: regulation.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2015-09-03 - Chaptered by Secretary of State - Chapter 253, Statutes of 2015. [AB1107 Detail]
Download: California-2015-AB1107-Chaptered.html
BILL NUMBER: AB 1107 CHAPTERED
BILL TEXT
CHAPTER 253
FILED WITH SECRETARY OF STATE SEPTEMBER 3, 2015
APPROVED BY GOVERNOR SEPTEMBER 3, 2015
PASSED THE SENATE AUGUST 20, 2015
PASSED THE ASSEMBLY MAY 14, 2015
AMENDED IN ASSEMBLY APRIL 8, 2015
AMENDED IN ASSEMBLY MARCH 26, 2015
INTRODUCED BY Assembly Member Irwin
FEBRUARY 27, 2015
An act to amend Sections 17550.15 and 17550.44 of the Business and
Professions Code, relating to sellers of travel.
LEGISLATIVE COUNSEL'S DIGEST
AB 1107, Irwin. Sellers of travel: regulation.
Existing law regulates sellers of travel, as defined, and
requires their registration with the Attorney General. Existing law
requires a seller of travel to deposit all sums received from any
person or entity for air or sea transportation, or for any travel
services offered by the seller of travel, and any refunds made by
carries or providers of travel services, into a trust account, as
specified. Existing law requires the seller of travel to file with
the Attorney General an agreement allowing the Attorney General, a
district attorney, or their representative to examine and obtain
copies of all business records, including, but not limited to, those
related to the trust account.
This bill would require the seller of travel to maintain all
business records for a minimum period of 3 years. The bill would
authorize the Attorney General to maintain an action for recovery of
examination costs and expenses in any court of competent
jurisdiction, as specified. The bill would require the seller of
travel to pay for costs and expenses for any examination if the
Attorney General bills the seller of travel, provided that the
examination shows that the seller of travel has failed to comply with
certain requirements.
Existing law creates the Travel Consumer Restitution Corporation,
which assesses each registered seller of travel for both its
operations and restitution funds. Existing law requires certain
assessments to be due 45 days from the date the bill for that
assessment is mailed.
This bill would instead require those assessments to be due 45
days from the date the bill for that assessment is sent to the seller
of travel.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 17550.15 of the Business and Professions Code
is amended to read:
17550.15. (a) This section applies to a seller of travel as
defined in Section 17550.1.
(b) The seller of travel shall deposit directly into a trust
account in a federally insured bank, savings and loan association, or
credit union 100 percent of all sums received from any person or
entity, including, but not limited to, those payments made in cash,
by credit card, or any other method of payment, for air or sea
transportation for any person, or for any travel services offered by
the seller of travel, and any refunds made by carriers or providers
of travel services. This subdivision does not require that a seller
of travel establish a separate trust account for each transaction.
(c) The seller of travel shall not in any manner encumber the
corpus of the trust account and shall not withdraw money therefrom
except as follows:
(1) In partial or full payment to the carrier for transportation,
or to the provider of travel services, for the services or
transportation purchased by the passenger.
(2) In partial or full payment to the carrier or provider of
travel services if payment is made by wire transfer directly to an
account of the Airlines Reporting Corporation, or by check or draft
paid to the Airlines Reporting Corporation for the transportation or
services contracted for by the passenger.
(3) Upon delivery of all tickets or vouchers necessary for the
passenger to obtain from the carrier or provider of travel services
the transportation or services purchased by the passenger, at which
time the seller of travel may withdraw the portion of the sum paid by
the passenger that is due the seller of travel as compensation for
sale of the transportation or travel services to that passenger.
Tickets or vouchers shall be deemed delivered if personally
delivered, turned over to an independent third-party delivery service
for regular delivery to the passenger at the address designated by
the passenger on the next business day, or deposited in the United
States mail with first-class postage prepaid.
(4) Upon full payment to the provider of transportation or travel
services, directly to the trust account identified in the
registration of another seller of travel to whom the funds are paid,
or to another registered seller of travel whose registration states
that the other registered seller of travel is exempt pursuant to
subdivision (b) or (c) of Section 17550.16 from the requirements of
this section, of the total amount that is required by the carrier or
provider of transportation or travel services or other registered
seller of travel in order to provide the transportation or services
purchased by the passenger, at which time the seller of travel may
withdraw from the trust account that portion of the sum paid by the
passenger which is commission due the seller of travel for sale of
the transportation or travel services to that passenger.
(5) To make refunds to the passenger.
(d) Subdivision (c) shall not prevent payment of the interest
earned on the trust account to the seller of travel.
(e) The seller of travel shall serve as trustee of the trust
accounts required by this article. If an individual person is the
seller of travel, the individual person shall be the trustee; if the
seller of travel is a corporation, partnership, limited liability
company, or other legal entity, a managing partner or partners, or
the chief executive officer of the corporation, or executive officer
or manager of a limited liability company shall be the trustee. The
trustee may designate in writing that an officer or employee may
manage the trust account if that officer or employee is under the
trustee's supervision and control, and the original of that writing
is on file with the Attorney General's office.
(f) (1) Except as otherwise provided in this section, all trust
accounts required by this article shall be maintained at a branch of
a federally insured bank, savings and loan association, or credit
union.
(2) The seller of travel shall file with the Attorney General an
irrevocable agreement in writing allowing the Attorney General, a
district attorney, or their representatives, upon written request, to
examine and obtain copies of all business records, including, but
not limited to, those related to the trust account wherever those
records may be, and including, but not limited to, those records
relating to any travel business account, or any account used for any
travel business transaction, or account to which trust funds have
been deposited. The statement shall indicate that the authorization
remains in effect as long as the seller of travel, financial
institution, or other custodian of records retains records.
(3) A seller of travel shall maintain all business records
described in paragraph (2) for a minimum period of three years.
(4) The Attorney General may maintain an action for recovery of
examination costs and expenses in any court of competent
jurisdiction, and may recover his or her reasonable costs and
attorney's fees as an item of costs, as provided for in paragraph
(10) of subdivision (a) and paragraph (5) of subdivision (c) of
Section 1033.5 of the Code of Civil Procedure. Costs and expenses for
an examination under this section shall be paid for by the seller of
travel if the Attorney General bills the seller of travel for those
costs and expenses, provided that the examination shows that the
seller of travel has failed to comply with any requirements of this
chapter.
(g) Every seller of travel has a fiduciary responsibility with
respect to all sums received for transportation or travel services.
(h) The following are deemed to be held in trust for passengers:
(1) All sums received by the seller of travel for transportation
or travel services whether or not required to be deposited in an
actual trust account and regardless of whether any of these sums were
required to be deposited or actually were deposited in a trust
account.
(2) All property with which any of the sums described in paragraph
(1) has been commingled if any of these sums cannot be identified
because of the commingling.
(i) Upon any judicially ordered distribution of any money or
property required to be held in trust and after all expenses of
distribution approved by the court have been paid, every passenger
has a claim on the trust for payments made for transportation and
other travel services not provided. Unless a passenger can identify
his or her funds in the trust within the time established by the
court, each passenger shall receive a proportional share based on the
amount paid.
(j) The seller of travel is not required to comply with the direct
deposit requirement set forth in subdivision (b) if all of the
following apply:
(1) The payment is made by credit card.
(2) The seller of travel does not deposit, negotiate, or factor
the credit card charge or otherwise seek or obtain payment of the
credit card charge or the crediting of the amount of the credit card
charge to any account over which the seller of travel has any
control.
(3) (A) If the charge includes transportation, the carrier that is
to provide the transportation processes the credit card charge.
(B) If the charge is only for services, the provider of services
processes the credit card charge.
(k) In lieu of the trust account required by this article, an
adequate bond as set forth in Section 17550.11 may be maintained by
the seller of travel. Prior to the advertisement of transportation or
services, or both, by the seller of travel, the seller of travel
shall file a copy of that bond with the Attorney General.
SEC. 2. Section 17550.44 of the Business and Professions Code is
amended to read:
17550.44. (a) In addition to the assessments required by Section
17550.43, the Travel Consumer Restitution Corporation shall bill and
collect from each participant an annual assessment that in the
aggregate shall consist of assessments for the operations fund and
the restitution fund. For each participant, the due date of that
annual assessment shall be 30 days prior to the annual renewal date
for registration pursuant to Section 17550.20 or 45 days after
billing, whichever is later. For a participant registering for the
first time, the assessments required by Section 17550.43 shall be due
10 days prior to the seller of travel doing business in this state.
A late fee of five dollars ($5) per day, up to a maximum of five
hundred dollars ($500), shall be paid for each day after the due date
specified in this section until the assessment is paid.
(b) The annual assessment for the operations fund shall be
determined no later than January 15 of each year for the next fiscal
year in an amount that does not exceed the amount necessary to fund
the operations and administration of the corporation, based upon the
annual operational budget required by subdivision (a) of Section
17550.43, and shall become effective immediately. The annual
assessment for the operations fund shall not exceed thirty-five
dollars ($35) per year for each location in the state from which a
participant does business.
(c) If, as of January 15 of any year, the balance in the
restitution fund is less than one million six hundred thousand
dollars ($1,600,000), the Travel Consumer Restitution Corporation
shall make an assessment of participants, up to a maximum amount of
two hundred dollars ($200) for each location in the state from which
a participant does business, to bring the restitution fund to an
expected balance of one million six hundred thousand dollars
($1,600,000). Every participant's assessment shall be determined pro
rata based upon the ratio of the number of locations in the state
from which the participant does business to the total number of
locations for all participants as of the preceding December 15.
(d) If, on May 1 or October 15 of any year, the balance in the
restitution fund is less than nine hundred thousand dollars
($900,000), the corporation shall make an emergency assessment of
participants, not more than twice per year, up to a maximum amount of
one hundred fifty dollars ($150) per year for each location in the
state from which the participant does business, for deposit in the
trust account to return the level of the restitution fund to an
expected balance of one million six hundred thousand dollars
($1,600,000). The corporation shall estimate the total cost of
billing, collecting, and processing the emergency restitution fund
assessment and shall assess and collect, together with the emergency
restitution fund assessment, an emergency operations fund assessment
that is in the aggregate sufficient to offset the estimated cost.
Each participant's assessments shall be determined pro rata based
upon the ratio of the number of locations in the state from which the
participant does business to the total number of locations for all
participants as of the first day of the preceding month. The board of
directors shall adopt rules for the notification of emergency
assessments.
(e) In addition to the assessments required by Section 17550.43
and subdivision (d), if at any time during the fiscal year the board
of directors of the Travel Consumer Restitution Corporation
determines that the operations fund will be insufficient to pay the
costs of operations and administration for the current or next fiscal
year, the corporation, as determined by the board of directors,
shall do either or both of the following:
(1) Make an emergency assessment of participants, not more than
once per fiscal year, up to a maximum amount of sixty-five dollars
($65) per year for each location in the state from which a
participant does business. The emergency assessment may be billed and
collected either on an emergency basis from all participants upon
the making of the assessment, or in conjunction with each participant'
s annual assessment pursuant to subdivision (a).
(2) Transfer any or all interest earned on the Restitution Fund to
the Operations Fund, provided that no transfer results in a
restitution fund balance of less than one million two hundred
thousand dollars ($1,200,000).
(f) The assessment required by subdivision (d) or (e) shall be due
45 days from the date the bill for that assessment is sent to the
seller of travel by the Travel Consumer Restitution Corporation. A
late fee of five dollars ($5) per day, up to a maximum of five
hundred dollars ($500), shall be paid for each day after the due date
specified in this section until the assessment is paid.
(g) The Travel Consumer Restitution Fund shall report to the
office of the Attorney General each levy of assessment within 10
business days after the levy.
