Commissioner Sola Proposes Changes to FMC Regulations on Cruise Line Performance & Refunds

Updated 8/10/20 to provide details on the proposed changes to passenger refunds for canceled bookings.

Commissioner Louis E. Sola has proposed the Federal Maritime Commission initiate a rulemaking to amend its regulations governing Passenger Vessel Operators (PVOs or cruise lines) in order to create a uniform standard for non-performance of transportation and to make clear how passengers may obtain refunds.

The recommendations are contained in an interim report issued today by Commissioner Sola providing an update on the second phase of this work leading the Fact Finding 30 investigation of COVID-19 impacts to the cruise industry.

As part of Fact Finding 30, an in-depth review of the policies and practices of various PVOs for offering refunds to passengers was conducted.  Additionally, the authority of the FMC to regulate the refund polices of the cruise lines was carefully reviewed.  Commissioner Sola determined that the FMC’s regulations do not adequately define what constitutes nonperformance of transportation.  As Fact Finding Officer, Commissioner Sola concluded that the Commission had adequate authority to further clarify the standard.  In explaining his rationale, Commissioner Sola opined that the primary and inviolate obligation of any ticket for passage is the conduct of the voyage itself and any interpretation of this phrase must take this into consideration.

“Our analysis revealed that, for the most part, consumers are satisfied with the responses they have received from the PVOs concerning the cruises cancelled due to the CDC no sail order,” remarked Commissioner Sola.  “That said, we discovered some places where we, as a regulator, could improve our ability to protect the consumer; that is why I propose amending the Commission’s rules related to non-performance and refunds.”

Commissioner Sola proposed that the Commission interpret nonperformance of transportation to include cancelling a sailing or delaying passenger boarding by at least 24 hours.  He also proposed that the Commission modify its regulations to make clear how passengers may obtain refunds under a PVO’s financial responsibility instruments, such as surety bonds.

The specific changes proposed are:

• When a sailing is cancelled or a passenger boarding is delayed by at least 24 hours due to any reason other than a governmental order or declaration, full refunds must be paid within 60 days following a passenger refund request.
• When a sailing is cancelled or consumer boarding is delayed due to a governmental order or declaration, full refunds must be paid within 180 days following a passenger refund request. This includes all consumers who, at their own discretion, cancelled their booking within sixty (60) days prior to said governmental action and commensurate cancelled or delayed sailing.
• If, following a declaration of a public health emergency, any consumer cancels a cruise booking of a sailing that may be affected by such emergency after the PVO’s refund deadline, but the sailing is not cancelled, the PVO will provide a credit for a future cruise equal to the consumer’s amount of deposit. In all other cases in which a consumer cancels and embarkation and sailing occur within the prescribed timeline, the cruise line’s rules for cancellation will apply.
• A PVO may set a reasonable deadline for a consumer entitled to a refund to request the refund which shall not be less than 6 months after the scheduled voyage.
• Refunds should include all fees paid to the PVO by consumer to include all ancillary fees remitted to the carrier by the consumer.
• Refunds to be given in same fashion as monies were originally remitted to the carrier.

The proposed rule change is intended to both protect the consumer and provide clear uniform standards with which the PVOs may rely upon when making business decisions.  These proposed changes do not prevent the consumer and the PVO from entering into an alternative form of compensation in full satisfaction of a required refund.

The Commission will vote on whether to initiate rulemaking to prescribe the measures proposed by Commissioner Sola.  A vote is expected by mid-August.

“This proposal benefits both the consumer and the industry, it is a product that everyone affected can and should embrace,” said Commissioner Sola.

The interim report also contains a review of the consumer complaints received by FMC, a summary of the refund policies of PVOs, and a synopsis of current agency statutory authority over mandating cruise lines provide refunds.

Commissioner Sola noted that his review of refund policies benefitted from the work of consultative panels comprised of consumer advocates, representatives of PVOs, port managers, and other federal government agencies.