Introduction

The Business Practices and Consumer Protection Authority (BPCPA) was delegated responsibility on July 4, 2004 for the oversight of business practices and consumer protection in British Columbia from the Ministry of Public Safety & Solicitor General. The BPCPA is responsible for BC consumer protection activities under the Business Practices and Consumer Protection Act, the Cremation, Interment and Funeral Services Act and related regulations, including the Travel Industry Regulation.

The BPCPA is independent from government and is responsible for a range of licensing, inspections, investigations and enforcement activities. The BPCPA operates within a cost recovery model rather than a taxpayer-subsidized system.

History of the Regulation of the Travel Industry in BC

Prior to the mid 1970s, the travel industry in BC was unregulated. The many business closures reduced consumer confidence in the industry and industry stability was impaired. The industry sought government assistance to become regulated.

In 1976, the Travel Agents Act was passed and in 1977, the Travel Agents Act Regulations were brought into force. The Travel Agents Act required the registration of travel agents and wholesalers, as of 1978.

Current Situation

As of July 4, 2004, travel agents and travel wholesalers in British Columbia are required to be licensed under the Business Practices and Consumer Protection Act and regulations. The Travel Industry Regulation requires a travel agent and travel wholesaler to have a licence for each location from which they conduct business in British Columbia. The regulation also prohibits a licensee from carrying on business from a place that is not a permanent place of business or from a private dwelling unless authorized by the director. Further, licensees must not carry on business from a place that is not open to the public during normal business hours.

The director considers requests to authorize licensees to work from a private dwelling on a case by case basis to ensure that the discretion of the director is not fettered. Criteria that the director considers in this decision is whether the licensee is located in a remote or rural community where there is a lack of commercial space and lack of access to other travel agents.

The BPCPA adopted the existing Commission Agent Guidelines for independent contractors, independent travel consultants, outside sales representatives, travel counselors, etc. The guidelines were issued in 1995 in order to clarify the option to use “outside sales” staff that would not violate the requirement to operate only from a registered location. The Commission Agent Guidelines apply to “representatives” which refers to both employees and commission agents of a licensed travel agency. “Representatives” differ from telecommuters in that they contact clients outside of the licensee’s permanent place of business, but not from their own homes. They may meet with clients and conduct sales meetings at other locations such as clients’ premises.

 The BPCPA also adopted the existing Telecommuting Guidelines. These guidelines were issued in 1998 in order to provide more clarity with respect to employees of licensees working from home as telecommuters. The guidelines restricted licensees from having more than 25% of their employees registered as telecommuters and provided that telecommuters may not reside more than 50 kilometers from the licensed office. The 25% restriction was established in order to not undermine the need for a physical business location and the 50 km restriction was to restrict the registrant from expanding into new geographical areas without a branch office being registered.

Other Jurisdictions

In Canada, provincial legislatures have authority over matters that directly affect the travel industry and the rights and remedies available to the consumer. Only three provinces, Ontario, Quebec and British Columbia, regulate travel retailers and wholesalers. In other provinces, the practices of all businesses, including the travel sector, may be governed by general or specific consumer protection legislation.

 In Ontario, travel agents and wholesalers are regulated by the Travel Industry Council of Ontario (TICO) under the Travel Industry Act and regulations. Section 10 outlines the conditions that a registrant may carry on business from a dwelling, as follows:

• The registrant must provide proof to the registrar that carrying on the business from the dwelling is permitted by the municipality responsible for enforcing local zoning requirements;
• The registrant has a business telephone number that is listed under the name under which the registrant carries on business and is different from any residential telephone number.
• The registrant has made arrangements that are satisfactory to the registrar to provide access to the registrant’s business records.

The Ontario legislation requires that travel services be sold or offered directly by the registrant or by an individual who is employed or has a written contract with the registrant. Consumers cannot be invited to the outside sales representative’s home to conduct business relating to travel. Any business conducted must be from the registered location of the agency.

The legislation distinguishes between a main office and a branch office and requires both to be registered.

In Quebec, the Regulation Respecting Travel Agents Under the Travel Agents Act requires retail travel agents to establish and maintain a principal establishment open to the general public without distinction and wholesale travel agents to establish and maintain a principal establishment open to retail travel agents. The regulation allows for more than one establishment.

Issues

With the growth of electronic technology, the travel industry has new opportunities for conducting business. There is greater demand for flexible work and business arrangements. Further, there is more competition from outside the province and this threatens the preservation of a level playing field.

The travel industry identified concerns about restrictions on employees of travel agents working from home and about the need to ensure that all employees and licensees meet specific requirements, including training and experience, to ensure consumer protection.

The industry has also expressed concern about the existing Telecommuting Guidelines and the Commission Agent Guidelines and has submitted a proposal to the Travel Industry Advisory Group (TIAG) that reports to the Board of the BPCPA. TIAG has indicated its support for change and has also expressed concern about the current restrictions in the telecommuting guidelines.

Process to Date

The BPCPA established TIAG in 2004 to identify consumer and industry related issues and potential solutions for consideration by the BPCPA. The group also provides feedback on any matters put forward by the BPCPA for consideration. The group began identifying issues for discussion which included home-based businesses, telecommuting, internet sales and educational requirements.

The Association of Canadian Travel Agencies (ACTA) held a workshop on May 31, 2005, attended by some TIAG members and facilitated by the BPCPA. ACTA developed recommendations with respect to the guidelines and forwarded them to TIAG.

The rationale for the recommended changes was as follows:

• increased competition from out-of-province travel agencies and internet-based travel agencies;
• more consumer choice as a result of expanded operations of licensees;
• minimum training standards for travel agencies and their employees to improve consumer protection by elevating the professionalism in the industry;
• greater enforceability of the restriction on conducting business outside of the licensed location; and
• reduced overhead costs with electronic/administrative support of counselors working outside the office.

The recommendations were formally presented to TIAG at their August 31, 2005 meeting. They received support and were referred to the BPCPA for its consideration.

The BPCPA advised that amending the guidelines would not resolve the issues identified. The BPCPA had further discussions with TIAG at their December 8, 2005 meeting.

At the December meeting, TIAG members advised that they did not wish to see the industry adopt a business model where the focus was more on multi-level marketing. Nor was there any support for regulatory change to facilitate home-based businesses.

ACTA/TIAG Recommendations

ACTA and TIAG identified eleven recommendations:

1)      The existing Telecommuting Guidelines and the Commission Agent Guidelines should be combined into one set of guidelines;

2)      The guidelines should provide information regarding method of remuneration;

3)      There should be a two-year minimum standard of training and/or retail travel experience for all telecommuters, outside/commission agents and independent contractors as hired by the licensed agency;

4)      All business cards of the telecommuters, outside/commission agents and independent contractors must contain the licensed office telephone number and a designated business line (such as a cell phone number) plus the provincial registration number of the licensee. This information should be provided on all printed material and websites;

5)      A process should be developed for the reporting of the names of all telecommuters, outside/commission agents and independent contractors to the BPCPA;

6)      The percentage of telecommuters, outside/commission agents and independent contractors per licensed location should be increased from 25% to 50%;

7)      The maximum distance requirement (currently 50 km) for all telecommuters should be eliminated;

8)      All documents should be sent to the licensed office to forward to the consumer. Ownership of all data and software belongs to the licensed agency;

9)      Technology access of client files is required by all telecommuters, outside/commission agents and independent contractors; however, processing of all documents must be done at the licensed office;

10)  All the telecommuters, outside/commission agents and independent contractors must conduct business under the International Air Transport Association (IATA) or the Travel Industry Designator Service (TIDS) number of the licensed agency;

11)  All telecommuters, outside/commission agents and independent contractors are considered to be employees of the licensed agency – guidelines will apply to everyone. How they are compensated by the licensed agency is not relevant. They must be considered an employee of the licensed agency.

BPCPA Response to ACTA/TIAG Recommendations

The BPCPA reviewed the recommendations from ACTA and TIAG. Recommendation 1 and 2 recommend combining the two guidelines and making amendments to them. The challenges with these recommendations are that:

• The Travel Industry Regulation which replaced the Travel Agents Act Regulation no longer refers to either “Commission Agent” or “employee” and therefore, no longer supports the guidelines;
• As the guidelines are not incorporated in regulation, they are not enforceable;
• The guidelines are inconsistent with the regulation which requires licensees to conduct business from licensed locations only;
• There is no provision in regulation to allow for either the restriction of the number of telecommuters or a mileage limitation;
• The guidelines are open to inconsistent interpretation;
• Businesses could expand into new geographical areas from a licensed location, resulting in an uneven playing field (one must be licensed, the other does not require a licence);
• The recommendations would undermine the need for licensed locations;
• There would be a loss of ability to control activities of individuals working outside of the licensed location;
• The recommendations would limit the accountability of the licensee for individuals working outside the licensed location;
• Unintended impacts of allowing work from home may lead to the establishment of home-based businesses;
• The recommendations change the intent of the regulation respecting the director’s authority to grant exceptions to carry on business from a private dwelling in unusual circumstances only.

 In view of the above concerns about the guidelines, the BPCPA has advised TIAG that it will eliminate both the Telecommuting Guidelines and the Commission Agent Guidelines, effective April 1, 2006. In addition, the BPCPA is undertaking this consultation on the travel regulations.

Changes for Consideration

The BPCPA recognizes that the elimination of the guidelines is not sufficient to address the needs of industry with respect to the changing business environment. Changes to the travel regulations will be required to address the concerns raised by the travel industry. Based on the discussions which were held during the December 8th TIAG meeting, the BPCPA has concluded that the following changes to the Travel Industry Regulation would assist in addressing the needs of industry.

Definitions

The Travel Industry Regulation states that a travel agent and a travel wholesaler must have a licence for each location from which they conduct business in British Columbia. However, there is no definition of “conducting business”, leading to confusion in what constitutes “conducting business”.

The Business Practices and Consumer Protection Act defines “travel agent”, “travel service” and “travel wholesaler” (s. 142) as well as requiring that travel agents and travel wholesalers have licences (s. 143). However, the provisions in the current Act will be replaced by the provisions in the Miscellaneous Statutes Amendment Act (no. 2), 2005 which requires licences for persons engaged in a designated activity. The definition of licensed activity may be subject to interpretation.

Proposed amendments to the regulation are:

• The definition of “conducts business” may need to be clarified;
• The term “employee” would be included in the regulation and would apply to individuals who were employed by or under contract to the licensee. Only licensees or their employee(s) may sell or otherwise provide travel services;
•  Employees would be required to comply with the legislation.

 
Head Office and Branch Office Requirements

Changes to the requirements for licensed locations are suggested which would include different requirements for a head office and a branch office.

 Presently, the regulation only differentiates between principal and other locations with respect to security requirements, with security of $15,000 required for the travel agent’s principal location and $5,000 for other locations.

 The requirement for a licence for each location would be continued and there would be no change in security requirements. The activities conducted at each location will be carried on only under the name(s) of the licensee as specified on the issued licence. In addition, the terms “head office” and “branch office” would be differentiated as follows:

 
Head Office

• The head office would continue to be responsible for the overall operations and the place of business shall not be a dwelling, unless authorized by the Director;
• The head office licensee would be explicitly responsible for the activities of all employees and individuals with whom the licensee has a contract;
• Files and records would be centralized at the head office.

Branch Office

• The location of the branch office could be either commercial or a dwelling. If it was a dwelling, it would be subject to restrictions such as meeting local zoning requirements, allowing for access to records by BPCPA inspectors, maintaining a business phone line separate from any residential listing, and having appropriate insurance;
• The branch office could publish direct phone numbers and its address;
• The on site location manager of branch offices must meet the two-year training / experience requirements;
• Where a licensee is required to contribute to the Travel Assurance Fund (TAF), branch offices would continue to contribute to the TAF as their sales are included in the overall calculation performed by the head office. Existing licensees who have satisfied their obligations to the TAF would continue to provide an initial contribution to the TAF, upon application, for any new branch offices in accordance with current regulations.

Advantages

• provides a greater degree of clarity with respect to compliance with the regulation and enforceability;
• allows for enforceability as changes would be made through regulation;
• addresses the conflict of the guidelines exceeding the authority of the regulations;
• reflects the industry recommendations received by the BPCPA;
• allows for the appropriate restrictions and for training and experience requirements;
• increases flexibility for businesses by allowing new opportunities for expansion and by allowing the opportunity for a branch office to operate from a dwelling;
• acknowledges efficiencies from new technology through linking head and branch office operations.

 
Disadvantages

• requires changes to regulations;
• timeline is not immediate;
• does not address that segment of the industry who would like home-based businesses as the only business location;
• may lead to an uneven playing field for licensees in smaller communities.

Next Steps

The BPCPA will seek feedback over a two-month period from travel licensees and other key stakeholders on potential changes to the Travel Industry Regulation. The consultation paper will be posted on the BPCPA website, sent by email to the members of TIAG and to travel services licensees, and included in licence renewal packages.

Notice will be given to licensees that the Telecommuting Guidelines and the Commission Agent Guidelines will be eliminated, effective April 1, 2006.

In addition, the BPCPA will meet with BC Ministry of Public Safety and Solicitor General staff to discuss the issues prior to a formal submission to government.

Appendices I and II

Appendix I. TELECOMMUTING GUIDELINES (To be eliminated April 1, 2006)

Appendix II COMMISSION AGENT GUIDELINES (To be eliminated April 1, 2006)