A little over a month ago, 27-year-old Jordan Dittloff, a member of the Victorian Young Liberals, upstanding member of the community and owner-manager of Ace Travel in Colac, upped sticks and vanished from his travel agency.
For several days, police hunted for the aspiring politician as anxious family members, who had reported him missing, appealed for his return. They were not the only ones keen to track him down. For Dittloff, it is alleged, disappeared with more than $200,000 of his customers’ money. Everyone wanted answers.
After almost two weeks on the run, he surrendered to police and has since been charged with 36 counts of theft, his motivation still unknown.
Three weeks earlier, CTS Travel, also based in Victoria, abruptly shut up shop with its owner, Jenny Stoodley, owing creditors $340,000, most of them her customers who claim the money they handed to CTS never reached suppliers. For those unfortunate consumers there was, as it transpired, no booking and no holiday.
And winding back to earlier in the year the spotlight fell on Getaway Escapes, a Gold Coast-based agency which, as with CTS, left dozens of would-be holidaymakers furiously seeking retribution after handing over money which, allegedly, went no further than the agency’s bank account.
It doesn’t stop there. Up in the Northern Territory, travel agent Xana Kamitsis is awaiting trial after being accused of rorting a government travel subsidy scheme, a messy affair that led to the resignation of NT Police Commissioner John McRoberts.
Such a spate of highly suspicious cases begs the question, is such duplicitous behaviour ripe in the travel industry?
Throughout the protracted and occasionally feisty debate over regulation of the travel industry, among the many arguments put forward by the Travel Compensation Fund concerned one of image and reputation.
It contended, not without merit, that under its stewardship – a stewardship which lasted close to 30 years – the image of the industry was kept largely intact and its reputation, by and large, untarnished.
The argument went something like this: if consumers were hit by the failure of their travel agency, they would lodge a claim with the TCF.
In usual circumstances, the consumer would be swiftly reimbursed leaving them relatively satisfied, at least as satisfied as they could be after having their holiday plans wrecked. This reimbursement – and here comes the critical bit – meant consumers were not sufficiently motivated to pick up the phone to police or media outlets salivating over heartbreaking tales of broken holiday dreams.
Wind forward to a post-TCF world and three of the four aforementioned stories have featured on the TV version of the tabloid newspaper, A Current Affair, in the space of a few weeks.
Each told stories of crestfallen consumers – pensioners, hardworking families, scout groups – whose holiday dreams had been shattered by the apparently reckless behaviour of travel agents.
They haven’t just been the victims of a business which failed through tough economic conditions, volatile world events or geo-political issues. They suffered at the hands of unscrupulous individuals who showed complete disregard for their clients’ money and a contempt for the clients themselves.
Whether the actions are fraudulent remains to be seen and it must be stressed that no one, as yet, has been convicted of anything.
But whatever transpires in the weeks and months to come, these retailers stand accused of, at the very least, adopting shoddy business practices and operating in a manner which clearly brings travel agents, and the industry, into disrepute.
Soon after the CTS closure, reports emerged that Stoodley’s husband David had been the director of Williamstown Travel Services which called in liquidators in June 2014.
At the time of publication, Consumer Affairs Victoria told travelBulletin the investigation into the “unexpected” shutdown of CTS Travel was continuing, with “enquiries into the circumstances of the closure on-going”.
While the recent spate of collapses, disappearances and alleged misappropriation of funds has had the industry talking, the operation of rogue individuals is not a new phenomenon.
Darwin travel agent Jennifer Pfitzner was handed a three-year jail sentence, suspended after 12 months, in November 2013 after pleading guilty to 11 counts of theft totalling almost $170,000.
Another agent, Serpil Sevin, owner of Home Away Travel in the Melbourne suburb of Glenroy, was sentenced to community service in 2014 after her agency collapsed in late 2013.
And in 2012, Michael James oversaw the spectacular demise of Air Australia, formerly Strategic Airlines, which racked up losses of $100m and stranded thousands of holidaymakers overseas.
The airline had massively overspent– its launch party in Hawaii was a lavish affair – leading to the Australian Securities and Investments Commission (ASIC) banning James from managing a business for three years for failing to act with due care and diligence.
Even then, James cropped up in the industry in a senior position in wife Rachel’s Bestjet Travel business.
James’s title of commercial manager at Bestjet has since been removed, although as of last year he remained an employee of the company in an unspecified role.
In another case, the TCF – in a last hurrah before it is wound up – continues to pursue the auditors of defunct Kumuka who they accuse of failing to supply the TCF with accurate information over the transfer of funds from Australia to the UK.
Australian Federation of Travel Agents chief executive Jayson Westbury rejected any notion that fraud or rogue agents were a major problem in the industry, either now or before regulatory reform. But he has already accepted that AFTA needed to firm up ATAS’s “fit and proper” criteria, which it did in early June.
“Off the back of the CTS calamity we need to drive deeper into people who have potential influence over the business who have formerly been declared bankrupt,” he said, referring to David Stoodley and his possible involvement in the CTS business. “We are going to expand our criteria and, where we can, better validate any person who has anything to do with the operation of the business.
“Had AFTA known that the husband of Jenny Stoodley had been behind the failure of a previous business it would have prompted a series of questions over what influence he had over the business.
“We don’t want people like the Stoodleys in our industry,” he added, in comments that echoed those he gave to A Current Affair.
But Westbury acknowledged AFTA could only do so much, admitting a more stringent background check is largely dependent on ATAS applicants being upfront and honest.
“We cannot regulate – no industry can regulate – against fraudsters or rogue agents entirely who just don’t want to tell us the truth,” he said. “We can only do so much. There is no jurisdiction in the world that can regulate against dodgy people.”
Westbury attempted to put a positive spin on the negative publicity generated by A Current Affair, arguing such exposure will not spook the public but rather serve to remind nefarious individuals intent on underhand business practices that they will simply not get away with ripping off the public.
“What I find exciting, almost exhilarating is that the process has said loud and clear that if you are going to do the wrong thing you will be named and shamed,” he said, adding that the previous structure has been operating in a virtual “bubble”.
“The stories on A Current Affair were about two dodgy people who happen to be travel agents. That doesn’t mean everyone else in the travel industry is dodgy. We are more worried about this than the consumer. We are having this conversation with ourselves and beating ourselves up.”
Such a public outing will ensure characters such as the Stoodleys will be hard pressed to work again in the industry, something the previous regulatory system was unable to lay claim to, the AFTA chief said.
The spate of collapses has, perhaps inevitably, re-opened old wounds between reform protagonists, with Westbury blaming the system of consumer refunds under the TCF for effectively masking previously suspect business practices, and practitioners.
“Apart from a case in the NT, I can’t recall a single travel agent going to jail, so I hope he [Dittloff] goes to jail,” he said. “That is the message we need to send. We need to say that if you want to come into this industry and do dodgy things you are going to jail.
“That would never have happened under the TCF. If the TCF had paid out the $209,000 to consumers, no one would have been standing in front of the duty sergeant at Colac police station screaming about the fact that this guy has knocked them off. Some in the industry believe that is the way it should be done. Hush it up, sweep it under the carpet.
“Now, if they are crooks they will go to jail because consumers are aggrieved and will take action.” The previous regime only encouraged crooks who, Westbury said, had the opportunity to reoffend “because they thought they could get away with it”.
TravelManagers chairman Barry Mayo, a regular AFTA adversary in the reform debate, agreed that the spate of recent cases did not indicate a more widespread problem.
Yet the elimination of the TCF’s financial scrutiny has opened the door for anybody to set up a travel agency, according to Mayo, who said the pre-reform fear of trial by television was becoming a reality.
“With no minimum financial requirements and without mandatory licensing accompanied by the TCF conducting prudential oversight there is nothing to stop anybody opening a travel agency” he said. “This effectively means that anybody can currently set up a travel business which was not the case pre ATAS.
“Already it has been reported that more than one million people have viewed the A Current Affair segment and this is without taking into account those who have read the consumer press reports.
“The damage to the consumer perception of the travel agent community’s integrity is more extensive than people who should know better are prepared to admit. That will accumulate and grow with each new travel agent insolvency,” Mayo said.
Another reform opponent who regularly crossed swords with Westbury, TCF chief executive Glen Wells, rejected any suggestion that potential cases of fraud were quietly forgotten. Far from turning a blind eye, Wells estimated that 25% of collapses appeared suspicious enough to be referred to the police after initial TCF investigations.
“Nothing was brushed under the carpet. Consumer refunds simply meant negative stories did not appear on TV. We pursued people through the courts and even now continue to do so,” he said, adding those declared bankrupt were prevented from obtaining another license to operate. “But now, you don’t need a license to operate and you don’t have to be member of ATAS so there are very few barriers to entry,” Wells said.
While few cases saw business owners disappear over the horizon – as Dittloff has been accused of doing – investigations often unearthed the very dubious and unethical practice of using client monies to temporarily assist cash flow and, essentially, operate the business.
It is no secret that Westbury and Wells in particular have never shared much common ground, to put it mildly. Indeed, they have sat at such opposing ends of the argument that the only thing they share is a dislike of each other. However, in a rare display of unity, Westbury, Wells and Mayo lambasted the idea of agents using client money in such a way.
“Spending customer’s money is simply a form of fraud. It was not their money to spend and was being used for purposes that it was not meant for,” Wells said, referring to the recent cases.
Mayo called for the introduction of client account funds to protect cash which has been handed to the retailer. “General operating bank accounts should be managed completely independently of each other. Using clients’ money for cash flow is not acceptable,” he said. “Client trust funds should be compulsory but in themselves they will not prevent rogue agents using client funds to pay operating expenses by funding cash flow or stop consumer scams.”
Wells, meanwhile, one of only two full time staff at the TCF as it enters its final months, described it as “fairly common practice” among agents enduring a tough period. “It is fraught with danger and leaves retailers wide open to accusations of fraud,” he said.
But that’s where the commonality ends.
Wells, as with Mayo, believes continuing exposure on TV and in consumer print media will have a detrimental effect on the industry. He also claims that the “hoops” agents had to jump through under the TCF weeded out many financially flaky businesses. Furthermore, refunds meant money remained in the industry.
“Customers were refunded within five to seven days and were able to rebook their holiday. It kept money in the industry,” he said. “We also had prudential oversight of their business which does not happen under ATAS.”
It may be 12 months on since reform of travel industry regulation, but the debate rages on. Shonky agents have made sure of that.