Aggrieved Clients looking to card providers to refund Lowcost bookings maybe disappointed. Ian Taylor reports
Consumers hit by the collapse of Lowcost Holidays will largely depend on card providers for refunds, but there is no certainty they will get their money back if they booked by debit card.
Lowcost Travel ceased trading on July 15 with financial protection for almost 300,000 customers of Lowcost Holidays provided by a €1.3 million bond lodged with the Balearic Islands government.
The company quit the UK Atol scheme in 2013, leaving consumers unprotected by the Air Travel Trust fund, which underwrites Atol and stood at £139 million in March. Lowcost’s administrators say consumers can expect no more than about 1p in the pound on what they are owed from the Balearics bond.
The Lowcost website last week advised customers who booked holidays to check with their travel insurance provider first, then with the Balearics and then with their credit card provider. Those with accommodation-only have been told to check with their insurer or credit card provider.
However, few insurers are likely to pay out, with Abta warning: “Most standard travel insurance policies do not include travel organiser failure.”
Claiming on cards is also not straightforward. The UK Cards Association suggests consumers are more likely to have paid by debit than credit card – data for the 12 months to March shows 60% of online travel transactions in the UK were by debit card – and refunds on debit-card payments are voluntary.
Bookings by credit card are protected under the Consumer Credit Act which makes the card provider jointly liable with the supplier and means refunds are guaranteed. However, this only applies to transactions above £100 so if elements of a holiday, such as transfers, cost less and have been separately purchased or invoiced they won’t be covered.
Debit card refunds are only available as ‘chargebacks’, which require a consumer to make a claim to their card issuer – Visa or MasterCard – which then makes a chargeback request to the retailer’s (Lowcost’s) bank. There is no legal right to this and the UK Cards Association notes: “There are no guarantees your issuer will be able to recover the money. Card issuers will consider all claims on a case-bycase basis.”
When Travel Weekly sought clarification on the criteria likely to apply, an association spokesman said: “This will largely depend on the card scheme.” When we put the same question to Visa, we were told it would depend on the bank issuing the card.
When a payment is made to an agent like Lowcost Holidays there is also a doubt as to whether a bank will process a chargeback. The Cards Association said: “This will depend largely who the card is with and what their rules are.”
The association could provide no data on debit-card chargebacks and no guidelines on their application.
The contrast with Atol protected holidays could not be sharper. The Air Travel Insolvency Protection Advisory Committee (Atipac) revealed on Monday that Atol failures in the 12 months to March saw the repatriation of 339 holidaymakers and full refunds to 795 at a cost of just under £4.8 million to the Air Travel Trust fund.