How agents can protect themselves against faulty credit transactions

"Why do I have to pay? You are the one who accepted the credit card!" 

"But I had an approval code!"

"It's not my responsibility!"

Have you ever heard people saying these things?

The travel agent or agency who deals with the customer making the purchase, is the one who will be responsible if there is a problem with the credit card payment.

Terms and conditions: your responsibility

Most terms and conditions for both tour operators and airlines say it clearly; you as the selling agent decide to take the card as payment and it is you who will need to pay if the card payment is not honored.

The IATA Travel Agent Manual, effective June 1, 2018, states in resolution 890:

4.4.2 The Agent recognises that receipt of an approval code from the card company does not guarantee the transaction, and that any such approval code or other authorisation does not (and will not be deemed to) guarantee that the charge will not be disputed……

Sample Tour Operator conditions:

In the event of a refusal by the credit card issuer to honor a payment for any reason whatsoever, the travel agency will be solely responsible for the costs and will have to pay TOUR OPERATOR any amount due under its invoice.

Are we all exposed to danger when taking a credit card over the internet, phone or via an email? Yes! This is what is referred to as a card not present (CNP) transaction. Since the data about the card can be good, the initial payment process will likely succeed, as at the time of sale the only validation taking place is a confirmation that there are available funds on the card.

Even though the money is initially transferred to the tour operator or airline, there is no guarantee that the actual cardholder will not say that the charge was not authorized.

Visa Zero Liability policy

The credit card companies make sure their cardholders do not suffer, Visa’s “Zero Liability” clause reads as follows:

Use your Visa card to make purchases anywhere and you're protected from unauthorized use of your card or account information. With the Visa Zero Liability policy, your liability for unauthorized transactions is $0-you pay nothing.

To get our industry better protection against CNP fraud, the Association of Tour Operators of Quebec (ATOQ), the Association of Canadian Travel Agencies (ACTA) and the Canadian Association of Tour Operators (CATO) have been working closely together to deploy tools that will allow the fraud risk to be transferred back to the card issuers. Stay tuned for positive changes as EMV 3DS (aka 3D Secure 2.0) becomes available towards the end of 2019 and on into 2020.

For now however, you are responsible, so be careful and always follow the tips and suggestions to avoid fraudulent transactions.

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