Protecting Consumer Rights in the Tour Industry:

Who Is Responsible?

CED-79-108: Published: Jul 23, 1979. Publicly Released: Jul 23, 1979.

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In 1977, American households took an estimated 312 million trips, of which 18.7 million were package tours. It is estimated that at least $4 billion was spent on these package tours. The growing number of complaints received by Federal agencies attests to the fact that the consumer rights of travelers taking package tours are not adequately protected. A Federal Trade Commission (FTC) investigation of the industry revealed that as many as 800,000 travelers a year may encounter problems with the tour they purchase. In early 1976 the FTC initiated an investigation of the package tour industry. During the investigation, FTC received about 3,000 complaints from travelers. Complaint files of subpoenaed tour operators were also checked.

FTC estimated that the most common unpleasant experience of traveling consumers is the failure to receive one or more advertised items. Almost all tour operators have a high incidence of complaints involving the notification or lack thereof of changes in tours. Another problem is the traveler's inability to ascertain easily from the brochure who the tour operator is and who is liable if something goes wrong. FTC uncovered only one operator who did not have an extremely broadly phrased limitation of liability clause, typically inserted in the fine print of the brochure. FTC found that almost invariably operators limit their liability for the failure of third parties to fulfill their contractual obligations. In a significant number of cases, operators attempt to exculpate themselves from their own negligent acts. GAO concluded that greater controls to protect the touring public are needed, but realized that this may be difficult to achieve under the current disjointed Federal regulatory structure. Although FTC is responsible for preventing unfair practices in industry, the various transportation regulatory agencies, such as the Civil Aeronautics Board, Interstate Commerce Commission, and the Federal Maritime Commission, are responsible for regulating the modal aspects of tours. FTC is precluded from exercising jurisdiction over transportation carriers, and the responsibility of the regulatory transportation agencies is unclear. A regulatory gap has resulted.

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