My Host Agency Isn’t Paying My Commissions

In these challenging economic times it seems everyone is having difficulty making ends meet. Uncertainty in our own economy, worldwide fear of financial, political and civil unrest is enough to temper even the most aggressive and well capitalized businesses. It is hard to watch the news, read a paper, surf the web or listen to a radio program without being reminded of the coming economic debacle of one kind or another. Natural disasters like hurricanes, fires, earthquakes and tsunamis appear like daily events and it seems that war is everywhere. To make matters worse, travel industry fraud attempts are rampant. Stolen credit card airline ticket scams affect every agent in our industry. Host agencies are plagued by GDS access scams, fraudulent transactions and downright incompetency.

It shouldn’t come as a surprise that everyone needs to pay close attention with whom they do business.

Recently there has been a seemingly deluge of agents complaining that their host agency is having difficulty paying them the commissions that are due them. It is a difficult situation because the agent has a working relationship with the host and wants to continue believing that they are going to be paid. So, I thought I would share a wealth of experience on this topic in a way everyone can use to take action when this occurs.

Understand the Host Model Cash Flow: Host agencies act as clearing houses for their agents. The agents do the work and commissions are paid to the host for settlement with their agents. While each host is different, there is no host that will pay a commission before they have received it from the supplier. This is sometimes the cause of a dispute between an agent and a host.

But, if the host has received the commission and isn’t paying you, guess what? The host is having financial difficulty. Continuing to book with a host that is not current paying commissions to their agents is like throwing money away. Don’t do it!

Pay Attention When Deciding on a Host Agency: This one drives me nuts. There was recently a “host agency” whose principles had been involved in a failed MLM and God knows what else. This “host” was vilified by those in the industry that knew of their past, yet the “host” was able to convince agents that they could earn 100% commission and that they were taking over the industry by storm. Of course, thousands of agents got burned for hundreds of thousands of dollars. It came as no surprise to those that warned agents time and time again.

Our industry has some well capitalized, efficient and reputable host agencies. stick with them. I maintain a list of quality host agencies at www.HomeBasedTravelAgent.com. Stick with these hosts. Understand that the trade associations do not qualify host agencies. A quick look at the hosts that belong to the associations will reveal several who are currently in arrears with their agents. All the host has to do is pay the membership fee to belong to the association. In the most recent discussion on www.TravelProfessionalCommunity.com regarding a host agency that was not paying commissions, the agency was a member of all the associations. If you belong to one of the associations and see a host agency that has a problem, file a complaint with the association and demand that their membership be suspended.

Take Immediate Legal Action to Protect Your Commissions: Before you extract your revenge on discussion boards or threaten your host agency, understand your legal standing. Review your Host Agency Agreement. If there is an “Arbitration Clause” you may have agreed to forego the legal system for resolving a dispute with arbitration. While this may sound good and fair, the reality is that you will incur a good amount of expense trying to engage the host agency in arbitration. If there is a “Choice of Legal Venue” clause, you may have signed away your right to sue in your community and will have to sue the host in whatever legal venue was agreed upon.

Understand these legal concepts BEFORE you sign a host agency agreement.

Make You Initial Claim in Writing: The very hour that you decide that your host agency is in arrears paying your commissions, you should carefully document the amount owed to you with as much detail as possible and send a letter of demand to the host agency documenting commissions due in great detail. Give the host agency a reasonable period of time to respond and then send a second letter of demand giving them 24-hours to settle the demand.

File a Small Claims Lawsuit: When the 24-hours have elapsed, visit your nearest small claims court and file your lawsuit. You should have all of the documentation (including your demand letters) when you file the suit. You can choose to have a summons delivered either via mail or by the Sheriff’s office. I would strongly suggest that you use the Sheriff’s services, as it has so much impact when the party is served. Be sure to know exactly who to serve. It should be spelled out exactly on your Agreement.

Go to Court: If your host agency resides in another town or state, it is quite likely that they will not show up for the hearing. This is an excellent outcome, as you will be awarded a judgment for the damages that you have claimed. If the party shows up at the hearing, they will probably dispute your claim and offer some sort of proof that negates your claim. In this instance, the Judge will make a determination and issue a decision regarding who won the case. This is the reason that you should always have your evidence documented in a way that it is undisputable. You need to provide evidence of the delivery of your demand letters to the appropriate party. While getting a signature that the document was delivered is optimum, obtaining a certificate of mailing is also satisfactory. However, do not present your demands without being able to prove that they were delivered to the appropriate party.

Execute Your Judgment: Once you have received a judgment from the court, you may then execute the judgment in a number of ways. There are several excellent books written about this topic and my suggestion is to read as many as you can. One excellent resource for everything legal is NOLO Press (www.nolo.com)

Remember, it’s Business: When all is said and done, your relationship with your host agency is strictly business. While they may also be your friends, you must remember that it is your livelihood that is being affected and acting in anything less than a professional manner may only make things worse. Don’t threaten, attack or otherwise impact your host’s ability to continue in business, just take the appropriate action to identify and request payment of your commissions from the host in the most compelling way possible.