How To Protect Your Vacation Money Against Your Travel Agent Going Bust

1. Pay by Credit Card if Possible

Most credit card companies do, by convention, shoulder the responsibility if the travel agent you book with goes out of business. In the United Kingdom, under section 75 of the Consumer Credit Act, the credit card issuer and trader are equally liable for purchases of £100 – £30, 000.

Some companies, though, because of the location where they operate, are not able to process credit cards. They may be an excellent, reliable company but merely by the fact of being based in Peru, are unable to take payments by credit card.

In this case, what do you do?

2. Take out Travel Insurance

Everyone should take out travel insurance in addition to that offered by their credit card company. For emergency health care, theft and unexpected events of all kind, it always makes sense to take out travel insurance. Most policies offer cover against ‘financial default’ ie if your travel agent goes bankrupt or stops trading in any way. In order to be covered for this, however, you should take out your policy at the time you pay your vacation deposit. Often, you will only be covered for financial default if you take out your insurance within 15-30 days of paying your vacation deposit. Certainly you should get your insurance BEFORE you make your final payment.

3. Check where the company is registered

Who would you rather book with? A travel agency with offices in Ecuador but registered somewhere in Central America, or one registered in the USA?

Best of all, is a company based in the United Kingdom. All UK travel agents have to take out insurance protecting customers if the company has financial difficulties.

4. Check what the travel association memberships mean

Travel Agencies are very keen to show you what associations they are members of. But what to those memberships actually mean?

ASTA: Members adhere to a code of conduct. Members do not need to show any financial information or pay bonding to ensure security for travelers. If your travel agency goes out of business, there is little ASTA can do besides cancel the agency’s membership of ASTA.

ABTA: Members have to adhere to a code of conduct. Financial information of the agency has to be disclosed and / or members are required to have bonding as security to passengers in case the agency gets into difficulties.

ATOL: For travel agencies who sell airline tickets. Also requires members to submit to certain financial criteria covering passengers if the agency or ticket issuer gets into financial difficulties.

There are plenty of excellent agencies operating on the ground, in the places you want to visit; and it makes good sense to use their local contact and knowledge – just make sure that when you do, you are money smart and keep your vacation money safe!