Penalty Policy for Irregularities

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Penalty Policy for Irregularities

ADM Policy | Penalty Policy for Irregularities

In the management of transactions between travel agencies and LATAM Airlines, Agent Debit Memos (ADMs) play a fundamental role. They are key to maintaining transparency and ensuring compliance with the commercial agreements established between both parties. In other words, ADMs notify travel agencies that, unless there is a valid justification, they have an outstanding debt with the issuing airline for the amount indicated in the ADM and for the reasons specified.

In order to guide our travel agency partners on the practices that are subject to ADM collection, we would like to remind you of the following:

LATAM's ADM policy complies with IATA resolution 850m and IATA resolution 890 for charge back cases.
LATAM may issue ADMs for any type of irregularity, non-compliance or errors associated with, but not limited to, fare rules issued, booking, issuance, re-issuance and refund policies, tax calculation, sale settlement, mandatory fields on issuance, commission rendition, taxes and penalties.
LATAM may include in the ADM administrative fees or fines related to the issuance of the ADM or the type of irregularity. As of May 22, 2024, the administrative fee or penalty is $10 USD for all countries and is non-refundable. The amount is stated in U.S. dollars (USD), but will be charged in local currency, so please convert accordingly.
The minimum ADM amount established by LATAM is USD 5 or equivalent in local currency, which may be adjusted in case of recurring irregularities.
ADMs generated for non-compliance with issued fare rules result in amounts that are the difference between the issued fare and the applicable public fare as of the date of issuance for the issued booking class or the next higher applicable class.
ADMs generated by non-compliance with policies, mandatory fields, surrender of commissions imposed and fines are translated into amounts equivalent to the value of the non-compliant item.
The distribution of ADMs will be made through the open channels that the company has available in each market, whether BSP LINK, ARC, email or any other available channel.
Please note that LATAM Airlines has the PIA (Agency Irregularities Portal) system for our partner agencies to manage and dispute irregularities made on bookings (without the need for a linked issued ticket) - not available to U.S. agencies.

Booking Policy - Irregularities that may generate an AL

LATAM Airlines has the PIA (Agency Irregularities Portal) system that manages the process of detection, publication and collection of irregularities found by LATAM in travel agency bookings without the need for a linked issued ticket. These fines or penalties are commonly known as ALs.

Through the PIA, relevant information on irregularities is made available and a channel is opened with LATAM to manage each irregularity detected, allowing the agency to submit its dispute to request the cancellation or reimbursement of a fine for an irregularity.

Two forms of reply will be made available:

Appeal: An instance in which irregularities for a given period are only published in the PIA. Agencies may appeal their cases during the 15 days prior to the issuance of the collection documents, avoiding the issuance of ALs.

Dispute: Agencies may dispute charges through the PIA. If the dispute is accepted within 20 days of issuance, it will be cancelled and no collection will be made. Otherwise, upon payment of the AL, accepted disputes will be returned to the agency through the ALC (ALC credit).

Access to PIA: pia.latamtrade.com

Not available for U.S. agencies.

The scope of the audit covers, among other things, the following:

Nº	Reason	Definition
1	No Show	Reservations with unissued segments or without an associated ticket number will be considered No Show, as well as reservations with tickets with statuses considered invalid to fly, such as void, exchange, refund, which remained active until the date of the flight.
2	Fictitious names	The reservation, issuance or re-issuance of tickets under a fictitious name, i.e., under a name that does not correspond to a real name.
3	Duplication of reservations or redundant segments	The reservation, issuance or re-issuance of tickets for duplicate reservations (or in redundant segments), considered to be those in which the same passenger has reservations that are part of the same itinerary or similar itineraries, created by the same agency (PCC, IATA and office ID), that are simultaneously active and that it is evident that it is impossible to be present for both reservations. If similar flights between bookings are domestic, LATAM will classify them as duplicates if the difference in departure time between them is less than or equal to 24 hours. For flights within South America, 72 hours is established, while it will be 120 hours for the remaining international flights.
4	Churning	The practice known as churning is prohibited, which is the successive cancellation and reservation of a segment, with the purpose of manipulating the flight schedules established by the airline, seeking promotional fares and/or meeting the productivity goals imposed by GDS's (Global Distribution System). Such a practice affects the availability of flights and causes damage to LATAM. For the purposes of this policy, the fourth cancellation (and subsequent occurrences) made by the travel agent or LATAM partner on the same reservation will be considered churning.
5	Inconsistent tickets	The issuance or re-issuance of inconsistent tickets, which are those with invalid numbering or inconsistent reservation information, such as: I. Reservations with tickets containing fictitious numbering; II. Reservations with tickets used in another reservation; III. Reservations with tickets with inconsistent information related to passenger, itinerary, classes, flight date, etc.; IV. Reservations with active segments associated to coupons with void, flown, refund or exchange status.

You can access LATAM Airlines' complete BookingPolicy by country here:

Ticketing Policy - Irregularities that may result in an ADM

LATAM may issue ADMs for any type of irregularities, non-compliances or errors associated with, but not limited to, fare rules issued, booking, issuance, re-issuance and refund policies, tax calculation, sale settlement, mandatory fields in issuance, surrender of commissions, taxes and fines. The scope of the audit covers, among other aspects, the following:

Nº	Type	Subtype	Definition
1	Commision	Non-Commissionable	Carrier is retrieving funds paid on a transaction that is not commission eligible (zero commission is the only acceptable amount).
2	Commision	Incorrect Commission	Carrier is retrieving funds paid on a transaction where more commission was taken than allowed
3	Commision	Incorrect Commissions – Invalid Tour or Ticket Designator	Carrier is retrieving funds paid on a transaction where more commission was taken than allowed. Commission not applicable due to: • Invalid (incorrect or expired) tour code or ticket designator • Tour code or ticket designator is not located in requested field. • Class of service is not valid per commission agreement.
4	Commision	Incorrect Commissions – Missing Tour or Ticket Designator	Carrier is retrieving funds paid on a transaction where more commission was taken than allowed. Commission not applicable due to: • Missing tour code or ticket designator. • Tour code or ticket designator is not located in requested field. • Class of service does not match commission allowed
5	Exchange	EX - Fare Under Collected - Other	Debit memo issued for fare not calculated accurately (no ATPCO fare rule violations)
6	Exchange	EX - Penalty Fee Not Collected	Agent processed exchange without deducting penalty amount
7	Exchange	EX - Penalty Fee Not Accurately Collected	Agent processed exchange without deducting the accurate penalty amount
8	Exchange	EX - Class Error - Category 1	Incorrect booking type for the selected fare base.
9	Exchange	EX - Day/Time Application - Category 2	Day/Time (Category 2) is used to define time and/or days of the week when travel is permitted or not permitted
10	Exchange	EX - Exchange Validity Error	Ticket/Document has expired and is not valid for exchange.
11	Exchange	EX - Exchange Not Permitted	Exchange not allowed per carrier’s rules.
12	Exchange	EX - Advance Reservations and Ticketing Category 5 Fare Rule Violation	Advance Reservations and Ticketing (Category 5) is used to define advance reservations and ticketing requirements applicable to a fare. Reservation restrictions may be specified as a period of time before departure of the originating flight of the pricing unit that indicates either the latest time reservations are required or the earliest time reservations are permitted. Ticketing restrictions are specified as either a period of time before departure of the originating flight of the pricing unit and/or a period of time after reservations are confirmed that indicate the latest time ticketing is required.
13	Exchange	EX - Blackout Dates[1]Category 11 Fare Rule Violation	The Blackout Dates Category (Category 11) provides the capability to define single dates or date ranges when travel is not permitted
14	Exchange	EX - Combinability Category 10 Fare Rule Violation	This category supports combinations that are permitted with specified fares and other fares to create one way round trip, circle trip and open jaw transportation. Combinability is the process of using multiple fares or half of round trip fares to arrive at a complete fare to be charged to the passenger. The Combinations category (Category 10) has nine subset categories
15	Exchange	EX - Incorrect Commissions	Debit memo issued to retrieve funds paid on a transaction for where more commission was taken than allowed.
16	Exchange	EX - Minimum Stay Category 6	Minimum Stay (Category 6) is used to define when the earliest that return travel may commence. Minimum stay is calculated from the departure of the point specified in the From field to the point specified in the To field.
17	Exchange	EX - Maximum Stay Category 7	The Maximum Stay Category (Category 7) provides the capability to indicate the last time at which travel must commence or must be completed from the point specified in the Return Travel From field. Calculation of this date may be based on travel commencement or ticket issuance, and the maximum stay may be stated as either a day of week or elapsed time.
18	Exchange	EX - Sales Restrictions -Category 15	Category 15 is present when the sale of a fare is restricted by various conditions. These conditions include reservations/ticketing dates, countries/currencies of sale, form of payment, method of ticketing, who may sell the fare, and/or locales where the fare may or may not be sold. Every private tariff fare must have an associated Category 15 provision detailing who is permitted to sell and display the fare.
19	Exchange	EX – Seasonality Category 3	Seasonality (Category 3) provides the capability to specify permitted dates or date ranges of travel
20	Exchange	EX – Stopovers Category 8	Category 8 defines the conditions under which stopovers are permitted and the applicable charges. It is assumed that stopovers are not permitted unless this category is present. However, when stopovers are allowed, it is assumed that they may be made at any point along the carrier’s route
21	Exchange	EX - Tax calculation is invalid	Inaccurate Collection of Taxes. Tax code(s) is correct but one or more of the amounts is invalid
22	Exchange	EX - Taxes collected under one/wrong code	Inaccurate Collection of Taxes. One or more taxes collected under the one/wrong tax code
23	Exchange	EX – Taxes not collected	One or more tax(s) was not collected
24	Exchange	EX - Travel Restrictions Category 14	Category 14 (Travel Restrictions) is used to convey the travel dates associated with a fare. It can indicate the first date at which travel may commence within a pricing unit, journey or fare component, the last date at which travel may commence for a pricing unit, journey or fare component, and the last date of travel permitted for a pricing unit, journey or fare component. Category 14 is more commonly as a footnote and not in the fare rule as the Footnote Provision will override the fare rule provision.
25	Exchange	EX - Surcharges - Category 12	The surcharge category (Category 12) is used to define conditions when surcharges are applicable to the fare being validated as well as the corresponding charge. The following conditions may be used to define surcharge applicability: airport/terminal, business class, peak travel time, equipment, fuel, peak, holiday, side trip, seasonal, weekend, Sleeperette, waiver for advance purchase requirements, navigation, security, maximum stay waiver, RBD, miscellaneous/other.
26	Exchange	Taxes not collected	Taxes not paid on reissue
27	Exchange	Name change	Name change not allowed according to LATAM policy. Ticket with use NON REF Fare
28	Exchange	IATA change	IATA change between different and unrelated agencies.
29	Exchange	Origin/destination change	Origin/destination change in an involuntary reissue is not allowed. They are audited as a voluntary change to the next available rate.
30	Exchange	YQ/YR was not accurately calculated	Carrier surcharge. YQ/YR was not accurately collected
31	Exchange	YQ/YR was not collected	Carrier surcharge. YQ/YR was not collected.
32	Exchange	Unpaid fare difference	Fare difference not paid on exchange
33	Prime Sales	Fare Under Collected - Other	Debit memo issued for fare not calculated accurately (no ATPCO fare rule violation(s)
34	Prime Sales	Various Sales Rule Restrictions - Category 15	Category 15 is present when the sale of a fare is restricted by various conditions. These conditions include reservations/ticketing dates, countries/currencies of sale, form of payment, method of ticketing, who may sell the fare, and/or locales where the fare may or may not be sold. Every private tariff fare must have an associated Category 15 provision detailing who is permitted to sell and display the fare.
35	Prime Sales	YQ/YR was not accurately calculated	Carrier surcharge. YQ/YR was not accurately collected
36	Prime Sales	YQ/YR was not collected	Carrier surcharge. YQ/YR was not collected.
37	Prime Sales	Tax calculation is invalid	Tax calculation is invalid
38	Prime Sales	Day/Time Application - Category 2	Day/Time (Category 2) is used to define time and/or days of the week when travel is permitted or not permitted
39	Prime Sales	Seasonality - Category 3	Seasonality (Category 3) provides the capability to specify permitted dates or date ranges of travel.
40	Prime Sales	Advance Reservations and Ticketing - Category 5	Advance Reservations and Ticketing (Category 5) is used to define advance reservations and ticketing requirements applicable to a fare. Reservation restrictions may be specified as a period of time before departure of the originating flight of the pricing unit that indicates either the latest time reservations are required or the earliest time reservations are permitted. Ticketing restrictions are specified as either a period of time before departure of the originating flight of the pricing unit and/or a period of time after reservations are confirmed that indicate the latest time ticketing is required
41	Prime Sales	Minimum Stay - Category 6	Minimum Stay (Category 6) is used to define when the earliest that return travel may commence. Minimum stay is calculated from the departure of the point specified in the From field to the point specified in the To field.
42	Prime Sales	Travel Date Restrictions - Category 14	Category 14 (Travel Restrictions) is used to convey the travel dates associated with a fare. It can indicate the first date at which travel may commence within a pricing unit, journey or fare component, the last date at which travel may commence for a pricing unit, journey or fare component, and the last date of travel permitted for a pricing unit, journey or fare component. Category 14 is more commonly as a footnote and not in the fare rule as the Footnote Provision will override the fare rule provision
43	Prime Sales	Maximum Stay - Category 7	The Maximum Stay Category (Category 7) provides the capability to indicate the last time at which travel must commence or must be completed from the point specified in the Return Travel From field. Calculation of this date may be based on travel commencement or ticket issuance, and the maximum stay may be stated as either a day of week or elapsed time.
44	Prime Sales	Stopovers - Category 8	Category 8 defines the conditions under which stopovers are permitted and the applicable charges. It is assumed that stopovers are not permitted unless this category is present. However, when stopovers are allowed, it is assumed that they may be made at any point along the carrier’s route.
45	Prime Sales	Flight Application - Category 4	Flight Application (Category 4) is used to further restrict a fare beyond a specified routing and/or transfer capabilities by restricting travel to a specific flight number or ranges, carriers, geographic locations and/or portions of travel, and types of services
46	Prime Sales	Tax overpaid	Tax paid for a lower amount
47	Prime Sales	Incorrect Fare Class	Incorrect booking type for the selected fare base.
48	Prime Sales	Blackout Dates - Category 11	The Blackout Dates Category (Category 11) provides the capability to define single dates or date ranges when travel is not permitted.
49	Prime Sales	Fare Under Collected – Discount Not Allowed	Debit memo issued for fare not calculated accurately (no ATPCO fare rule violations). Discount applied in a market not allowed in contract
50	Prime Sales	Fare Under Collected – Invalid Tour or Ticket Designator	Invalid Tour Code
51	Prime Sales	Surcharges - Category 12	The surcharge category (Category 12) is used to define conditions when surcharges are applicable to the fare being validated as well as the corresponding charge. The following conditions may be used to define surcharge applicability: airport/terminal, business class, peak travel time, equipment, fuel, peak, holiday, side trip, seasonal, weekend, Sleeperette, waiver for advance purchase requirements, navigation, security, maximum stay waiver, RBD, miscellaneous/other.
52	Prime Sales	Taxes not collected	Taxes not collected
53	Refund	Invalid Refund Calculation - Commission error	Recall Commissions. Carrier is retrieving funds refunded by the agent.
54	Refund	Refund of Non-Refundable Fare	Agent refunded a non refundable ticket without documenting valid airline approval
55	Refund	Invalid Refund Calculation - Tax calculation error	One of more taxes refunded incorrectly. This is a miscalculation of any tax on a full or partially used ticket.
56	Refund	Refund Penalty Under Collected	Penalty calculation error. Agent processed refund without deducting proper penalty amount.
57	Refund	Invalid Refund Calculation - Tax on Commission error	Invalid Refund Calculation - Tax on Commission error
58	Refund	Invalid Refund Calculation - Fare Error	Incorrect fare calculation for a full or partial refund. Carrier needs to define what caused the incorrect calculation. This is a miscalculation of the fare.
59	Refund	Refund Penalty Not Collected	Penalty calculation error. Agent processed refund without deducting penalty amount.
60	Refund	Refund Ticket Validity Error	Refund of a ticket that no longer has value.
61	Refund	Invalid Refund Calculation - Tax calculation error, Non-Refundable YQYR	taxes refunded incorrectly, the miscalculation of YQ/YR carrier surcharge.
62	Refund	Invalid Refund Calculation - Fare Error, Tax calculation error	Incorrect fare/tax calculation for a full or partial refund.

Charge or Administrative Fee associated with ADMs

The administrative fee to be generated from May 22, 2024 is $10 USD for all countries. The amount is stipulated in US dollars (USD), but will be charged in local currency, therefore the corresponding conversion must be made.

The administrative fee or penalty is non-refundable, except when an agency dispute is acknowledged due to an error attributable to LATAM.

For countries where sales tax (IGV, etc.) applies, the value of the tax is included in the FEE amount indicated.

Omissions of information in the issuance of EMDs or tickets that consequently generate ADMs will be subject to an administrative charge even if the amount of the irregularity is subsequently disputed, so that even if the ADM is cancelled, the administrative charge will continue to be levied.

ADM Dispute Process and Timelines

The ADM dispute process is the procedure followed when a travel agency disagrees with the charge or adjustment made through an ADM. When a travel agency receives an ADM that it considers incorrect or unjustified, it may initiate the dispute process, which involves filing a formal complaint with the airline and the relevant service provider, explaining in detail the reasons why the charge or adjustment is disputed.

BSPLink Agencies

ADM disputes must be made using the BSPLINK. The deadlines for disputes are as follows:

Day 1: Issuance of ADM in BSPLink.
Day 14: Deadline for the agency to dispute the ADM.
+ 60 days: Once the agency has submitted the dispute, LATAM will have a further 60 days to accept or reject it. If rejected, the ADM will be billed.

If the agency misses the deadline to file the dispute, it can still dispute an invoiced ADM, either for the full or partial value, through the PBD (post billing dispute). The agency has up to 12 months from the generation of the ADM to do so. However, only one dispute is allowed at this stage. Remember that if you have obtained a waiver or authorization you must enter it at the time of opening the PBD, and only at that time.

Both LATAM and the agency will have 30 days to respond to the PBD. If either party responds on the last day (day 30), the other party will have an additional 7 days to respond.

During the PBD period, the disputed amount is held by IATA. If the dispute is in favor of the agency, the amount withheld will be paid to the agency. On the other hand, if the resolution is in favor of the airline, the amount will be returned to LATAM.

ARC Agencies

The Memo Manager in ARC is the only channel in which LATAM accepts disputes from agencies using ARC. Please note that, for agencies using ARC, the term DM (Debit Memo) is more commonly used instead of ADM (Agent Debit Memo).

Agencies have up to 2 interactions in Memo Manager to submit a dispute, as long as they follow the established deadlines correctly. The deadlines for disputes are as follows:

Day 1: Issuance of DM in ARC (Memo Manager).
Day 21: Deadline for agency to make its first DM dispute.
Day 42: Deadline for LATAM to respond to the first dispute in Memo Manager.
Day 63: Last chance to dispute DM in the event of rejection of the first dispute.
Day 84: Deadline for LATAM to respond to the second dispute.
Day 90: Payment deadline, otherwise DM will be closed by the airline in Memo Manager.

Disputes made outside the established deadlines will not be considered. If the agency's disputes are rejected or the agency acknowledges that the debit is correct, it must pay the amount of the DM by the 90th day.

In the event that the agency does not pay the debit amount within the established deadline, it will no longer be able to issue tickets with LATAM until the debt has been paid. The agency must pay the balance through IAR (ARC) or by bank transfer. Once the payment has been made, the agency must inform LATAM using the following available here.

Company:	LATAM AIRLINES GROUP - MIAMI REP OFFICE
Name of bank:	Citibank, NA
Bank Address:	111 Wall Street, New York, NY 10043
Account number:	31143346
Account type:	Corriente
Currency:	USD
ABA number:	021000089
Swift code:	CITIUS33

Use of Travel Agency Credit Cards

IATA Resolution 890 establishes the rules and agreements for the acceptance of cards by airlines, allowing them to receive payment for the sale of passenger air transportation and ancillary services performed by travel agencies.

It is important to note that LATAM does not authorize the use of travel agency credit cards, travel agency owners and travel agency executives in lieu of the customer's credit card or the customer's chosen means of payment, unless they have the express written consent of LATAM.

To avoid this type of irregularity, the following is recommended:

Do not change the card that the customer originally used to make payments.
If an exception or authorization is required, LATAM's express authorization for card use must be requested beforehand. The request may be duly approved or rejected.
Exceptions may be authorized by LATAM in a general or specific manner.
Authorizations for general exceptions will be authorized if the alternative means of payment requested by the agency has a cost equal to or lower than the cost of LATAM's means of payment. Authorizations for specific exceptions will be evaluated on a case-by-case basis by LATAM.

In the event that LATAM detects any of the above-described irregularities, fines or Agent Debit Memos ("ADMs") may be generated to travel agencies for an amount equivalent to 2% of the amount paid by credit card.

IATA liability disclaimer

The airline documents published via this medium in no way represent the opinion or policy of BSPLink Management or IATA. The information contained in these documents is provided by the airline named in them for the benefit of BSPLink users. IATA accepts no responsibility for any misstatement or misrepresentation in these documents, nor for their content or the use of information contained herein.

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