Mark Pestronk
Q: My agency may have violated the DOT's full-price rule, which requires that we advertise and quote the full price of an airline ticket or a package that includes air travel. I understand that the DOT can go after us, but something unexpected has just happened. We just heard from our state attorney general's office, which is investigating our alleged violations. This sounds crazy. Can the state really penalize us for violation of a federal regulation?
A: Until recently, I would have advised you that states cannot regulate the advertisement or sale of air transportation and that the attorney general's investigation will go nowhere. Under the Airline Deregulation Act of 1978, no state may enact or enforce a law dealing with an airline's rates, routes or services, which means that states cannot have their own rules dealing with airfares.
The Deregulation Act remains in place, but on April 16, the DOT broke new ground. It announced that it had deputized the attorneys general of 18 states and territories to investigate violations of the DOT's rules in their states. In other words, the DOT authorized the state officials to determine whether travel agencies (as well as airlines) violated the federal regulations.
The 18 states and territories that signed the DOT's memorandum of understanding and thereby entered into what the DOT calls the Airline Passenger Protection Partnership are California, Colorado, Connecticut, the District of Columbia (which has its own attorney general), Illinois, Maine, Maryland, Michigan, Nevada, New Hampshire, New York, North Carolina, the Northern Mariana Islands, Oklahoma, Pennsylvania, Rhode Island, the U.S. Virgin Islands and Wisconsin.
So if your agency or your client is in one of these 18 places, the state can now make a preliminary determination of whether the facts of a consumer complaint indicate a potential violation of DOT rules. The state attorney general will then notify the DOT of any meritorious complaints and request that the DOT take enforcement action.
The DOT will then take over the case if it chooses to do so. Interestingly, there is a five-complaint guideline in the memorandum of understanding, which states, "If the state attorney general submits a referral that identifies more than five similar consumer complaints against a single regulated entity indicating potential violations of a statute or regulation enforced by [DOT], [DOT] will send a letter of inquiry to that entity and copy the state attorney general in that letter."
The memorandum does not let the state enforce the rule by fining or suing you, but the end result could be the same action by the DOT. With so many more government officials authorized to investigate complaints, travel agencies can expect heightened regulatory scrutiny.
The deputization of so many state officials comes at a particularly turbulent time for travel agencies, which are now responsible for refunds for canceled and delayed flights in some cases. So any consumer in those 18 states and territories that feels that their travel agency should have made a refund now has a receptive ear at the state level.