Ontario law governing NewLeaf internet sales has “deficiency”, Statutory Registrar acknowledges

Ontario law governing NewLeaf internet sales has “deficiency”, Statutory Registrar acknowledges

Ontario law governing NewLeaf internet sales has “deficiency”, Statutory Registrar acknowledges (Screen capture & image composition)

Today (Friday, July 29th), Richard Smart, Statutory Registrar, Chief Executive Officer & President, Travel Industry Council of Ontario (TICO) replied to questions & request for clarifications this reporter sent earlier this week on Monday (July 24th).

Mr. Smart first gave some general context and then tried to answer my questions. With focus on issues this reporter raised, excerpt of the provided context, Q&As with emphasis/links added (minor wording changes for length).

Mr. Smart states (emphasis added):TICO’s current legislation (Travel Industry Act, 2002 and Regulation 26/05) was written at a time when the internet was nascent. The Ontario government, who “owns” the legislation  recognizes this deficiency, and has recently announced a comprehensive review of both the Act and the Regulation (you are welcome to provide input towards this review at TravelIndustryAct@ontario.ca). While not perfect, I do believe that TICO, with the support of the underlying legislation does provide reasonable consumer protection for those consumers who book with an Ontario registered agency.

It is good to hear the Ontario government has recently announced a comprehensive review of both the Act and the Regulation. But this reporter takes serious objection to the year 2002 being a year that “internet was nascent” can be reasonably claimed by a responsible government given for example the online shopping site Amazon.com was found in July 5, 1994 (according to Wikipedia). And 1994 was 22 years ago and 8 years before 2002!
[This reporter’s question to Mr. Smart:]
1) s. 4 (1) (a) of the Travel Industry Act, 2002
In paragraph #6 of the July 23rd, 2016 affidavit of Mr. Donald James Young, CEO of NewLeaf Travel Company Inc., filed with the the Federal Court of Appeal,
“[…] Travel Industry Council of Ontario (“TICO) considers Newleaf to be a travel agent […]”
Now I am not a lawyer, but given s. 4 (1) (a) of the Travel Industry Act, 2002 states that,
4. (1) No person shall act or hold himself, herself or itself out as being available to act,
(a) as a travel agent unless the person is registered as a travel agent under this Act
I would like to know what prior permission and from whom at TICO or other government bodies or authorities had NewLeaf obtained an exemption to the s. 4 (1) (a) requirement?
How does NewLeaf currently operate its business affairs and activities at the Hamilton Airport legally within Travel Industry Act, 2002 ?

And as Statutory Registrar, what are your legal obligations under Travel Industry Act, 2002 if 4 (1) (a) violations occur ? Can travel agents operate in Ontario without TICO registration without any consequences?

I am new to all these so please kindly clarify and help.

Reply from Mr. Smart (with emphasis added):You are correct that NewLeaf is not currently registered. TICO is a fair and firm regulator, and as Registrar, I have advised NewLeaf that they require registration in Ontario and have given them a short window to bring themselves into compliance. Please note, there is no exemption under the Act for NewLeaf to operate and sell travel services as a travel agent. I am comfortable with this decision; enforcement tools are available, but these are typically a last resort.

[This reporter’s question to Mr. Smart:] 

2) NewLeaf as a company domiciled outside of Ontario

My understanding after chatting with Ms. Werda [Vice President of TICO, Operations] is that TICO registration is required for NewLeaf Travel because of its physical operation at the check-in counter at the Hamilton Airport since it may take in any cash or credit-card transaction. Is this correct?
Now even when NewLeaf Travel receives its TICO registration in a couple of weeks (no fixed date yet), all online transactions (ticket purchases, ticket upgrades, etc) will still NOT be covered by TICO as TICO considers NewLeaf as a company domiciled outside of Ontario. Is this correct??
I think it is likely fair to assume a vast majority of NewLeaf Travel’s ticket transactions will be happening online instead of at the physical location of the Hamilton Airport check-in, then a majority of the customers (potentially including many Ontario residences) will still likely not be protected by TICO. Is this correct?
Reply from Mr. Smart (emphasis added): You have highlighted the limited protection provided by the Compensation Fund as it relates to NewLeaf (i.e. for sales out of Hamilton only). TICO’s jurisdiction applies to those entities selling travel from a place of business located in Ontario. This captures all sales that the Hamilton counter concludes with customers. One requirement under TICO’s legislation is that registrants are required to advise consumers of the existence of travel and medical insurance (even if they do not sell it themselves). NewLeaf, once registered,  will need to consider all disclosure requirements under the legislation. However, there is much more TICO does to enhance consumer protection. As mentioned, there are 4 other services (above) that NewLeaf will need to abide. Consumers should have added comfort that the regulator is overseeing NewLeaf’s activities and administers various disclosures, financial monitoring, advertising and more. Consumers always have an outlet to call if they have questions and/or concerns concerning any Ontario registrant, including NewLeaf.

After reading Mr. Smart’s reply, this reporter questions the sufficiency of simply requiring registrants like NewLeaf “to advise consumers of the existence of travel and medical insurance“.

You see, most passengers do not spend extra hard-earned dollars to purchase travel insurance to cover repatriation costs (when they are stranded in another city or a sun destination in a remote country) because real regulated airlines like Air Canada and WestJet are under much more stringent government regulations. So even if, in the unlikely event of bankruptcies of Air Canada and WestJet, as far as this reporter understand, they will have funds (mandated by government regulations/laws) set aside to bring the passengers home, the repatriation costs secured elsewhere even if the airlines go bankrupt tomorrow. Same thing cannot be said of NewLeaf because it is a travel agent and not an “airline”.

And the fact that NewLeaf claims passengers’ credit card purchases of the tickets (as per affidavit of Mr. Young) simply show the lack of understanding that credit card companies will refund (say customers’ purchase ticket amount of $689) the face value of the discount ticket purchase and that has nothing to do with a potential $1,600  (or whatever, for example) price a last minute ticket an alternate airline may charge to fly the stranded passengers home. (see more in this previous report)

The guaranteed funds available to cover repatriation costs is one of the things Air Passenger Rights Advocate Dr. Gábor Lukács work hard to fight NewLeaf for Canadian air passengers. It is unfortunate to see NewLeaf instead of working with advocate like Dr. Lukács, it is reported today that NewLeaf has launched a defamation lawsuit against him. (Global TV, CBC)

On a separate note, it was a sad day for freedom of press when NewLeaf decided to block this reporter yesterday from following its Twitter feed to try to write accurate report base on researched facts and in-depth interviews with industry regulators like the one in the article “TICO Clarifies NewLeaf Offers Ontario Flyers Limited Protection“.
====
References:
July 28, 2016 report: “NewLeaf Travel blocks reporter after TICO Clarifies report
July 27, 2016 report: “TICO Clarifies NewLeaf Offers Ontario Flyers Limited Protection
July 23, 2016 report: “Chat with Air Passenger Rights Advocate Lukacs re: urgent NewLeaf injunction

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