Lessons We Can Learn from Club ABC's Bankruptcy

"We departed on a trip to Peru with Club ABC on Oct 4," read the email I just got, from a listener to our radio show. "When we arrived we found out from the local tour company that Club ABC had gone out of business. In order to continue with the trip, the tour company demanded that we pay an additional $700 per person. If we refused then they would take no further action or assistance."

And so began what must have been quite the ordeal for this poor couple, taking what they'd hoped would be a dream vacation to Peru. 

They did one thing right, and one thing wrong.

According to the note, the couple had paid for the trip with their American Express card. So they contacted the credit card company and were offered assistance.  A number of their fellow passengers had paid in cash, in return for a 5% discount and were stuck. Lesson: ALWAYS pay with a credit card for big ticket travel items; the sorts of protections they offer are the very reason people use these cards in the first place.

Unfortunately, the couple had bought trip insurance through Club ABC. The insurance company had never heard of them when they called, leading them to assume that Club ABC simply pocketed the money. I have no evidence that that happened (and in its defense Club ABC had been in business for many, many years without problems such as this). But it points up the importance of going to third parties to purchase insurance. That way, you know that you're covered should anything go wrong. InsureMyTrip.com is an excellent clearinghouse for travel insurance information, allowing users to pick the best policy for their upcoming trip (and that will vary trip to trip).

My condolences to all the folks who booked with Club ABC and are now dealing with this mess.