EzTix, a booking platform for tours, activities, events, and festivals has filed for bankruptcy. In an email shared with Tourpreneur, the Toronto based res-tech company informed its customers that EzTix ‘has entered into a bankruptcy protection program and as such will not be issuing any further refunds as the company is no longer operating.’
Earlier this summer, EzTIx came under heavy fire from tour operators over the delay in paying out refunds to its customers who canceled bookings due to COVID-19.
Many operators were furious that the company shut down all its social media accounts and accused EzTix of not communicating with them.
Why does a tour operator booking platform need to refund guests?
Some res tech companies such as EZTix are the merchant of record. That means the res tech is authorized to process payments and assumes all liabilities around those payments, including refunds.. This is handy for tour and activity operators who don’t want to deal with setting up and managing their own payment gateway and merchant account.’
This meant thats those booking platforms who are the merchant of record are on the hook for issuing refunds for all the cancellations from the pandemic.’
EzTix CEO, Jeremy Mitchell explained to Tourpreneur back in August that ‘Under our former payment processing model, EzTix took on a considerable amount of risk as every booking processed on behalf of a third party equates to a line of credit being extended to that business.
This is because should a business not provide the service they are selling, EzTix is ultimately responsible for the value of that ticket for a period of 6 months after purchase.
Tour and event operators were paid out weekly for their sales, not on completed events once they have actually earned the revenue. Prior to the pandemic we saw this as an acceptable level of risk.’
Mitchell outlined, four factors that impeded his company from refunding quickly, one of which laid the blame at their payment processor for having a cap on the amount of refunds it could issue in any one day.
Mitchell also argued that there is a ‘massive debt owed to EzTix by tour operators due to refunds they had initiated without the funds to back up those refunds.’
‘This is the very reason there are limits on payment processing accounts. There are great players out there in the tour operator industry who responsibly manage their businesses and ensure that they do not spend their revenue before it’s earned (when the tour happens), but unfortunately, a very large portion of our client base had spent their funds and therefore had no ability to repay EzTix for the refunds that must be processed.’
How has this affected EzTix customers?
Leslie Padro, CEO of food tour operator Global Flavors told Tourpreneur that she ‘is chasing down $12k Eztix has owed us since March 2020.’
“When we received no answers from EzTIx we switched over to FareHarbor. EzTix then kicked us out of their system so we were unable to see which customers had been refunded and who had not. EzTix advised guests to open chargebacks and again we have no record of who requested that with their credit card company.”
EzTix advises its customers that ‘should you wish to refund those ticket buyers directly you are welcome to. Should you decide to do that, you may provide us proof of those refunds and we will in turn add your claim to the bankruptcy proceedings that will likely be resolved in August of next year.’
We will await any claim you may choose to make once proof of any refunds is provided. Otherwise unfortunately we are not able to assist any further on this matter.’
Padro’ss advice to other tour operators is to always hold a reserve in a bank account for refunds.
As of December 17th 2020, the EzTix website is still live with no warning that the company has filed for bankruptcy.
Confused about reservation platforms for Tour Operators? Check out the Arival Guide to Res System Pricing.
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