CTC Professional Ethics & Compliance 3 — Questions and Answers
Question 1: A travel consultant recommends a higher-priced itinerary that yields a significantly higher commission over a comparable lower-cost option. This practice is known as:
- Up-selling
- Churning
- Rebating
- Steering (Correct answer)
Correct answer: Steering
Steering occurs when a consultant directs clients toward options primarily because of higher commission rather than client benefit, which is an ethical violation.
Question 2: When a supplier changes booking terms after a client has already paid in full, a CTC's primary obligation is to:
- Inform the supplier that the original terms must stand
- Promptly notify the client of the changes and present available options (Correct answer)
- Wait until the travel date approaches to avoid unnecessary alarm
- Absorb any cost differences without notifying the client
Correct answer: Promptly notify the client of the changes and present available options
Timely and transparent communication of material changes is a core ethical duty; clients must be informed promptly so they can make informed decisions.
Question 3: Which of the following best describes 'errors and omissions' (E&O) insurance in the context of travel consulting?
- Coverage for travel delays caused by weather events
- Professional liability insurance protecting against claims from mistakes or oversights in professional services (Correct answer)
- Insurance that covers client medical emergencies abroad
- Supplier-funded protection against booking system errors
Correct answer: Professional liability insurance protecting against claims from mistakes or oversights in professional services
E&O insurance protects travel consultants against claims arising from professional mistakes, omissions, or negligence in their advisory services.
Question 4: A CTC learns that a client who is a government employee wants to book travel that appears to violate the client's agency's travel policy. The consultant should:
- Book as requested since enforcing employer policies is not the agent's job
- Advise the client of the apparent policy conflict and document the conversation (Correct answer)
- Refuse all bookings for government employees to avoid compliance issues
- Contact the client's employer directly to report the potential violation
Correct answer: Advise the client of the apparent policy conflict and document the conversation
Advisng the client and documenting the conversation protects both the client and the agency while respecting the boundaries of the consultant's advisory role.
Question 5: The Travel Agents Consumer Disclosure Act primarily requires travel agents to:
- Post their commission rates for all transactions
- Clearly disclose their agency affiliations, fees, and material relationships to clients (Correct answer)
- Obtain written consent before booking any international travel
- File quarterly reports with the FTC on consumer complaints
Correct answer: Clearly disclose their agency affiliations, fees, and material relationships to clients
Consumer disclosure requirements mandate that agents transparently identify their business relationships, fees, and any material conflicts that could influence recommendations.
Question 6: A CTC who holds client funds in escrow for a group tour must:
- Invest the funds to offset agency overhead costs
- Keep those funds separate from general operating accounts until disbursed to suppliers (Correct answer)
- Transfer the funds to suppliers immediately regardless of cancellation terms
- Use the funds for any agency expense as long as they are replenished before travel
Correct answer: Keep those funds separate from general operating accounts until disbursed to suppliers
Client funds held in trust must be kept in dedicated accounts separate from operating funds to protect clients in the event of supplier default or agency insolvency.
Question 7: When marketing travel services on social media, a CTC who has been compensated by a supplier to post favorable content must:
- Disclose the compensation relationship clearly and conspicuously in the post (Correct answer)
- Post as an organic recommendation since travel agents are exempt from FTC rules
- Obtain advance approval from ASTA before any sponsored post
- Limit sponsored posts to verified review platforms only
Correct answer: Disclose the compensation relationship clearly and conspicuously in the post
FTC endorsement guidelines require clear and conspicuous disclosure of any material connection, including compensation, when posting endorsements or recommendations.
CTC Professional Ethics & Compliance 3
A travel consultant recommends a higher-priced itinerary that yields a significantly higher commission over a comparable lower-cost option.
This practice is known as: