Travel agents offering credit notes rather than refunds could face a “sting” as customers look to credit card companies to get their cash back.
The warning comes as Abta prepares to meet representatives of the Departments for Transport (DfT) and Business (BEIS) to discuss urgent changes to the rules on refunding consumers for cancelled holiday bookings.
Simon Morgan, owner of Welsh miniple Tailor Made Travel, said credit notes would be “far better” for agencies in the current climate than refunds, which are currently required to be paid within 14 days of the cancellation.
But he warned that many customers would go through their credit card companies to claim refunds if travel firms took a blanket approach with credit notes.
“My big fear is that when a tour operator says they are not refunding customers, instead offering them a credit note or asking them to go through insurance, those customers will call their credit card companies,” said Morgan.
“Credit card companies will issue refunds. The Consumer Credit Act is simple: customers are entitled to a refund if the product or service – in our case a holiday – isn’t provided. The chargeback will be made to the agent, who took the payment, so agents who say they can’t give a refund may get a sting.”
Morgan, who said Tailor Made is refunding every customer who requests it, called for “clarity” on the rules, but said that if they were changed to allow credit notes instead of refunds the right messaging was important to avoid a consumer backlash. “The reaction could be either acceptance or defiance,” he added.
Holidaysplease marketing director Charles Duncombe said refunds were “the main thing threatening to send airlines and operators to the wall” and that is why they are “starting to resist their obligations to refund” describing the situation “like a game of pass the parcel with a live IED”.
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He said he could understand customers’ frustrations if the industry “changes the goalposts” on refunds, which could “destroy consumer confidence in our financial protection system”.
Duncombe said many agents were not aware customers could go to their credit card companies, which could “land the refund IED in the lap of the travel agent”.
He explained: “This close to departure the travel agent is the one person in the supply chain who will not have the customer’s balance as it would have been paid to the operator weeks before. So, the one person who will not have the money is the person who could be responsible for it? We have already started to see this with some of our customers, and who can blame them?”
Duncombe called on the government to cover the costs of tour operator and airline refunds when travel plans were cancelled due to coronavirus, or lend the money for refunds.
“This would then give operators confidence to refund consumers and maintain confidence in the system,” he said.
“I know as agents we would prefer customers to be postponing rather than getting a refund but you can still persuade a customer to do this if they have faith that they will get their money back in the future. If you start taking away previously promised protections then they won’t trust us and getting any bookings becomes harder and harder.”
Amanda Matthews, managing director of Designer Travel, said: “We will support every supplier on whatever we need to, but as an industry we need to be clear that what we are offering the clients is clear, dispute-proof and safe in terms of protection for clients.
“Until we have this authorisation in place from government, everyone appears to be making their own decisions which is really dangerous for our short and long-term reputations and it’s really hard for front line staff to explain with confidence.
“It’s all up in the air and we feel like we are making it up as we go along.
“Until we get that clarity – and a common practice for everyone, we all need to press the stop button. No-one is going anywhere for 30 days, so an official delay statement would be better than changing our policies every hour.”