ARC Changes Travel Agents Service Fee Agreement

The process by which ARC assesses chargeback claims, which has been in effect for many years, will not change.

ARC-accredited agents last week received an email from ARC advising that the Travel Agents Service Fee Agreement was being changed effective January 1, 2017. Since there is no ARC process in place for this agreement similar to the Joint Advisory Board-Agent Reporting Agreement, there appears to have been no consultation with agent representatives about the changes. Nevertheless, the changes appear to affect nothing of substance for travel agents.

Section 11.2 of the existing TASF Agreement provides that “if a TASF is rejected or charged back to ARC or otherwise not paid by any payment network, credit card company, issuer, or bank for any reason, Entity will be liable for and will reimburse ARC for any losses it incurs due to such nonpayment and will reimburse ARC for such losses within 7 calendar days of ARC’s demand.”

The new section 11.2 replaces the “within 7 calendar days of ARC’s demand” with “upon ARC’s demand.” On its face this may suggest to some that “upon demand” means “upon receipt of this notice,” but that is not the case. According to Doug Mangold, ARC’s vice president of product, and Alex Kyle, TASF product manager at ARC, the change in language will not change the way ARC handles chargebacks involving TASF transactions and, more importantly, will not change the liability of travel agents for such chargebacks. 

The reason for this is that the process by which ARC assesses chargeback claims, which has been in effect for many years, will not change. Every day ARC receives and aggregates chargebacks from credit card companies and others; then, every Thursday, it sends a notice of intent to debit the amount of the chargeback against the agent’s bank account on the following Thursday. In ARC’s view, the date of ARC’s demand is the date of the notice, i.e., the date the chargebacks are consolidated, and calculated for each agency, and notice sent to the agent, not the date the notice reaches the agency.

The effect of the new language is simply to eliminate arguments about whether seven calendar days’ notice has actually been given. The procedure under the revised TASF Agreement will be the same as before; the notice to the agent will continue to state the next Thursday as the date the agent’s account will be charged. 

On the flip side, by the way, ARC gets no notice at all from the credit card companies.  When a chargeback occurs, it is immediately taken from ARC’s accounts by offset.

Most importantly for travel agents, the change in the Agreement for 2017 to “upon demand” will not alter the meaning of ARC’s “losses” that the agent must cover. ARC cannot claim that agents cover amounts larger than the identified chargeback amounts under the Agreement as it will read in 2017.

Even better news for travel agents is that ARC is working on a system to provide the notices of chargebacks by email, which will give the agent immediate notice of the claims and a full seven days to cover them. The date for implementation of this system is uncertain due to issues arising from ARC’s being assured that it has a valid email address for each agency.