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Contact Us
Need to report fraud? Have questions about fraud?
Phone: 703-816-8137
Fax: 703-816-8138
Email: FIFP@ARCcorp.com
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Fraud Prevention
ARC is dedicated to preventing fraud. Learn more
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Ownership Change Schemes
The Airlines Reporting Corporation (ARC) reminds all owners of ARC-accredited agencies, who are considering selling or transferring their agency, to exercise extreme caution and maintain full control of all aspects of the agency’s operations and security until ARC provides written approval of the change.
Agents in the United States have been the victim of fraudulent ownership change schemes. These unauthorized ownership changes involved situations where the ARC owner of record surrendered control of their agency to a third party. The third party promised to send the appropriate ownership change papers to ARC. Sometimes they did send in the paper work but most times they did not. The third party then conducted transactions that resulted in major financial losses to ARC participating carriers. Such schemes typically involve one or more of the following elements:
- An individual contacts an ARC agency with a generous purchase offer. The purchase is agreed to and the sale is completed without ARC’s knowledge or approval. Remember: If the offer sounds too good to be true, it probably is!
- The purchaser promises to handle the ownership change application with ARC. In many cases the application is never mailed to ARC.
- While the alleged ownership application is being created/submitted/processed, the ARC owner of record permits the purchaser or his representative to work at the agency. He/she provides the purchaser with a key, access to the CRS functions, the ARC traffic documents, the agency bank accounts, and the proceeds from the ticket sales.
- The owner of record in effect becomes an absentee owner or pays little attention to the weekly ARC reporting of Sales, Refunds and Exchanges.
- Having taken control of the agency, the purchaser conducts multiple/many high dollar transactions, which ultimately result in a large financial loss for the owner of record.
- When the flak hits the fan the purchaser and/or his/her representatives disappear and the owner of record has no photos, no form of identification and/or other audit trail that they can provide to police/prosecutors as to who defrauded them.
- The transactions are not discovered until the Debit Memos start rolling in. Even if there was an ownership change approval, the original owner is still responsible for transactions prior to the approval of the ownership change. The losses will be applied against the ARC bond and/or letter of credit, which ARC holds for six months subsequent to an ownership change. ARC will consider additional litigation for losses in excess of the bond/letter of credit on file.
REMEMBER: Do not turn over the operation and control of your agency location and the blank ticket stock to any third party, including the purchaser, until you have received written notification from ARC that your change of ownership is approved. Until that approval, the ARC owner of record is responsible for all financial losses on ARC traffic documents supplied to the location.
SUGGESTIONS: The owner of record should obtain original color photographs of purchaser and his/her representatives and color replicas of Passport and/or Government Drivers License Data of purchaser and his/her representatives prior to executing any contract with purchaser. If purchaser objects, you should think twice about going forward with the sale. License plate numbers of all automobiles driven by the purchaser representatives should be noted for possible future use. The owner of record should periodically check with ARC Accreditation’s Department to ensure a Change Of Ownership Application has been submitted and that it is complete to allow timely processing. Owners of record who believe they have been solicited by insincere purchasers are requested to notify ARC Field Investigations & Fraud Prevention Department via FAX: 703-816-8138; phone: 703-816-8137 or email: FIFP@ARCcorp.com.
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