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Seller of Travel Laws and Client Trust Accounts: What U.S. Travel Agents need to know

Learn which U.S. states require travel agents to register, post bonds, or maintain client trust accounts. A practical guide to Seller of Travel laws, disclosures, and accounting best practices.

BRANDUSA

8/29/20257 min read

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red and blue star

Do you need a Seller of Travel License? Understanding U.S. State Rules and Client Trust Accounts

If you are selling travel in the United States, compliance is not just about paying taxes or keeping your books in order. Several states impose Seller of Travel (SOT) laws that go much further, requiring agencies to register, post a bond, or even maintain a dedicated client trust account. These rules exist to protect consumers, but for travel advisors, they create financial and operational obligations that are easy to overlook.

The “Big Four” states with strict Seller of Travel laws are California, Florida, Washington, and Hawaii. Each has its own framework for how client money must be handled, how agencies must register, and what disclosures are required. Beyond these, other states like Illinois, New York, Massachusetts, Delaware, and Louisiana have additional licensing or disclosure rules that travel businesses need to be aware of.

From an accounting perspective, this matters because client funds are not your revenue until the trip is fulfilled. In states that mandate trust accounts, deposits must be recorded as liabilities and held in a separate bank account—never mixed with operating funds. Even where a trust account is not legally required, many agencies adopt them as a best practice to protect their reputation and reduce risk.

The Big Four States (see sections below for more info and references)

California

  • Requires either a trust account, a surety bond, or enrollment in a Consumer Protection Plan.

  • Client funds in trust accounts must be held separately from operating money, and misuse is a criminal offense.

  • Agencies must also register with the Travel Consumer Restitution Fund (TCRF) and provide clients with mandatory disclosures.

Florida

  • Registration and a surety bond are required for agencies selling to Florida residents.

  • Hosted agents may be exempt if they never handle client money directly and work under their host’s license.

  • Many out-of-state agencies get caught here by marketing to Florida clients without realizing they are subject to the rules.

Washington

  • If client funds are held more than five business days, they must go into a trust account in a Washington-based institution, or the agency must post a bond.

  • Withdrawals from trust accounts are only permitted for supplier payments, refunds, commissions, or after services have been delivered.

  • Agencies must notify the Department of Licensing of the account details.

Hawaii

  • Requires a client trust account with a bank in Hawaii, no exceptions.

  • Strict recordkeeping rules apply, including retaining statements and transaction details for at least two years.

  • Agents may only withdraw commission (capped at 15%) or remaining balances after supplier costs are paid.

Other States to watch

  • Illinois: Conditional trust account rules; exemptions possible if the agency holds $1M in Errors & Omissions insurance plus a $100,000 bond.

  • Delaware: Travel agencies physically located in the state need an occupational license (~$225), but no trust account.

  • Louisiana: Retail storefront agencies pay an annual licensing fee; home-based agencies are exempt.

  • Massachusetts: Requires compliance with consumer protection rules under 940 CMR 15.07 but no trust account.

  • New York: The Truth in Travel Act mandates detailed consumer disclosures.

  • Iowa: Formerly had a Seller of Travel law but repealed it in 2020.

  • Other states (Michigan, Nevada, Pennsylvania, Rhode Island, Virginia) often require business or occupational licenses for agencies with a physical presence.

Accounting and Risk Implications

The accounting treatment of client funds is as important as the legal requirements. Trust accounts mean deposits are liabilities, not revenue, until services are delivered. This can significantly affect your balance sheet and cash flow projections.

Even if you are not legally required to maintain a trust account, consider adopting one as a safeguard. It keeps your books clean, avoids accidental commingling of funds, and provides reassurance to clients that their money is safe. Pair this with strong written terms and conditions, professional liability insurance, and regular reconciliation of accounts.

Why this matters

The penalties for getting this wrong can sometimes be severe, such as fines, legal disputes, loss of your right to sell travel, and reputational damage. But with clear systems, the right bank accounts, and proper accounting, compliance can become a straightforward part of your business model.

Agencies that take client money seriously are the ones that build long-term trust, protect themselves against disputes, and maintain financial resilience through crises.

Hollywood, California
Hollywood, California

California

  • Trust account requirement: Sellers of Travel (SOTs) must maintain a separate “trust account”, distinct from their operating account, used exclusively for consumer funds and payments to travel suppliers. Personal or business operating expenses—including your own registration fee—must never be paid from this account.

    Misuse may be criminal.

  • Alternatives/exemptions: Instead of a trust account, you may qualify for one of:

    • Surety bond

    • Consumer Protection Deposit Plan (CPDP)

    • Consumer Protection Escrow Plan (CPEP)

  • Disclosure requirements: If you're required to have a trust account or bond, you must provide a clear and conspicuous disclosure stating, for example, “California law requires certain sellers of travel to have a trust account or bond…” If participating in the Travel Consumer Restitution Fund (TCRF), you must also disclose clients’ rights to make a claim on that fund.

  • Participation in TCRF: Agencies must register with the TCRF and likely pay assessments, which cover consumer losses due to insolvency or failure to deliver services.

people standing near grey statue during daytime
people standing near grey statue during daytime

Florida

  • Registration & bond: Florida SOTs must register with the state and post a surety bond (amount varies).

  • Possible waivers: Hosted agents may be exempt from obtaining their own trust account if:

    • They have a written contract with a host agency

    • They do not accept fees directly from clients

    • They don't issue travel documents or hold unused ticket stock

white space needle under black sky
white space needle under black sky

Washington State

  • Trust account or bond requirement: If client funds are held for over five business days, you must have either:

    • A trust account in a federally insured institution in Washington

    • Or a surety bond (typically between $10,000 to $50,000, based on sales volume)

  • Permitted withdrawals from trust account include:

    • Payment to suppliers

    • Refunds

    • Agency commission

    • Interest earned

    • Remaining client funds after services are delivered

    • Reimbursement for operational funds pre‑advanced by the agency

  • Notification obligations: You must register the trust account (account number and institution name) with the department and notify them within one business day of any changes.

  • Alternative compliance: Instead of a trust account, you may post a surety bond or join a qualified professional association providing a bond and/or Errors & Omissions coverage.

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brown wooden clothes hangers on green plants

Hawaii

  • Mandatory trust account: All travel agencies must establish and maintain a client trust account at a federally insured bank located in Hawaii.

  • Record-keeping requirements: Maintain records for at least two years, including bank statements, deposit slips, canceled checks, and transaction documents.

  • Commission and remaining balance rules:

    • Agents may withdraw up to 15% commission

    • Or retain the remaining client balance after paying necessary supplier expenses Travel Industry Solutions

  • Licensing nuance: If a branch office shares the principal office’s trust account, separate licensing for each branch may not be required. DCCA

  • Strict enforcement: Penalties for violations can include fines, license suspension, or even court injunctions. ccra.com

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books on white wooden shelf

References

California

Florida

Washington State (not D.C.)

Hawaii

Other States

Illinois

Delaware

Louisiana

Massachusetts

New York

Iowa

Other States (MI, NV, PA, RI, VA)

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