Chargebacks are all too common but can be fought, argues Krystene Bousfield, partner at Travlaw
I have spoken many times about my frustrations at the chargeback process, especially when chargebacks are erroneously, ignorantly and sometimes fraudulently made against agents.
Agents have no legal or contractual liability for the provision of travel services yet end up on the receiving end of the chargeback process. Time and time again, banks and card providers overlook the facts (and the law) and simply rule ‘Computer says yes’, resulting in recovery for the consumer and a double loss for the agent.
I’m an advocate of the industry fighting back in these types of scenarios and pursuing customers who abuse the chargeback process. This month, we saw one such case.
Southall Travel is an award-winning travel company, selling packages and independent travel services. Like many travel companies, depending on how they sell their services, Southall can act in the capacity of either an organiser or an agent, as is made clear in its terms and conditions.
In this instance, the customer made a flight-only booking for return flights to Karachi. The flights cost a total of £752.64. Being a single travel service, the booking was not a package and Southall made perfectly clear at all stages of the booking process that it was simply acting as agent on behalf of the airline – Turkish Airlines.
The outbound flight went ahead without issue. However, the return flight was cancelled by the airline.
The carrier failed to provide the customer with assistance, resulting in the customer having to source additional accommodation and their own return flights, incurring significant cost.
Southall Travel, in its role as agent, did all that it could to assist the customer in returning home, but maintained it was not responsible for any financial loss. This responsibility lay with the airline.
Upon returning home, the customer raised a chargeback against Southall Travel and received a refund for both the outgoing and return flight. The chargeback was upheld even though Southall had acted as an agent, had never received the sum of £752.64 (paid direct to the airline) and the customer had travelled on the outgoing flight.
Many agents would simply have let this go. It was a reasonably small sum and perhaps not worth arguing over.
But Southall Travel commenced a legal claim against the customer in the small claims court, arguing that a) The chargeback should never have been awarded against Southall as it acted only as agent, and b) The customer had been unjustly enriched, having taken the outbound flight on the booking yet had claimed for and received a refund for this.
The customer counterclaimed against Southall Travel, seeking the sum of £2,868.30 to cover the costs of the replacement return flights and accommodation.
The matter was heard before Romford County Court on August 2, where judgment was awarded in favour of Southall Travel.
The counterclaim was dismissed in its entirety and the customer was instead ordered to reimburse Southall for the cost of the flights which had previously been awarded under the chargeback process.
In their judgment, Deputy District Judge Greenwood stated: “It seems to me clear that the contract between Southall Travel and [the customer] is limited to Southall Travel facilitating a further contract with Turkish Airways . . . I find that there is no basis in law for which [the customer] may obtain compensation which they seek from Southall Travel. Any contract that would provide for compensation would be between the customer and Turkish Airways.
“On behalf of Southall Travel, it was submitted that they [the customer] have essentially been unjustly enriched. It seems to me that Southall Travel’s position in respect of the law must be correct.”
Cases like this are far too common; and what is just as common is travel companies feeling they have no recourse, especially when the cost of doing so may well outweigh the value of a claim. In this case, the claim value was under £800.
Southall made numerous attempts to liaise with the customers to settle the matter without the need for formal action. But when this proved impossible, Southall stood up for what is right and brought the matter before the courts.
It is great to see a company such as Southall Travel fight back and others in the industry should be encouraged to do the same.
Krystene Bousfield is a partner at specialist travel law firm Travlaw.