Need to know
- Travel insurance probably won’t cover you for a travel agent that goes broke
- If your travel agent goes under, contact your bank ASAP and ask for a chargeback
As travel agencies confront the challenges of an online world, it's inevitable that not all will survive. Since online travel agency Bestjet went bust, there's been a regular trickle of collapses - One World Travel, Bentours and Thomas Cook to name a few.
If your travel agent goes broke, can you get your money back?
If you paid your holiday by credit or debit card, you can probably get your money back
Ask for a credit card chargeback
If you paid your holiday by credit or debit card (and you selected 'credit' when you paid), you can probably get your money back, but you need to act fast.
You can ask your bank for a chargeback. Your bank reverses a disputed transaction back to the merchant's bank in accordance with card scheme rules set by Visa, MasterCard or American Express. This means the money goes back onto your credit card.
There are time limits imposed on your bank by these card schemes, so act fast if you realise something has gone wrong.
- Stay in contact with your travel agent after you've booked so you're the first to know when the phone line has gone dead.
- Keep documentation of your payment and correspondence with the travel agent.
- Ask your bank for a chargeback as soon as you notice something is wrong. Write to them asking for a chargeback and include a copy of all the documentation.
How long do you have to ask for a chargeback?
The time frames differ depending on your bank, the card issuer and the transaction type. The credit card terms and conditions of most banks will simply instruct you to let them know as soon as possible, noting your right to a chargeback will expire after a time frame imposed by the credit card scheme. But beware that some banks set their own shorter time frame, such as 30 days after the date of the statement on which the transaction is recorded.
The reason for a chargeback request can also determine the amount of time you have before your right to chargeback expires. Some of the top chargeback reasons are:
- Unauthorised mail/telephone transaction – a telephone salesperson got your credit card number and used it without your permission.
- Duplicate processing – you were charged two or more times for a single purchase.
- Merchandise not received by purchaser – your credit card statement claims you bought something but you've got nothing to show for it.
- Posting direct debits – you cancelled a credit card direct debit but the debits are still happening.
- If the reason for your chargeback is "services not provided or merchandise not received" under the Visa card scheme rules, for example, you have 120 calendar days from the transaction processing date until your chargeback rights expire.
CHOICE awarded a shonky to Jetset Travelworld Group
Travel agents cannot require you to give up your right to chargeback. Consumer protection agencies are likely to treat this as an unfair contract term.
CHOICE awarded a shonky to Jetset Travelworld Group in 2012 when we found their booking terms and conditions required you to waive your right to chargeback. They subsequently amended their T&Cs to remove any mention of the word 'chargeback'.
To be safe, don't accept any contract terms that require you to give up chargeback rights.
Will travel insurance cover you if your travel agent goes broke?
Travel insurance probably won't cover you if your travel agent goes broke. In our travel insurance review, only a couple of policies will cover you for this - AussieTravelCover and CHI. But those policies are generally sold through their namesake's travel agencies.
What if your hotel or airline goes broke?
There are more travel insurance policies that will cover "insolvency of a travel provider". AIG, AussieTravelCover, Bupa, CGU, CHI, Defence Health, Go Insurance, Good2Go, Insure4Less, InsureandGo, RACV, Travel Insurance Saver, Travel Insuranz, TravelCard, Webjet and World2Cover say they cover this, but you'll need to check the fine print in your policy.
If your insurer doesn't cover a travel provider going broke, you've still got a right to chargeback within the specified time frames.