Holiday plans gone south?
If your online or bricks and mortar travel agent has taken your money, but gone broke before they handed the funds over to the airlines and hotels you've booked, which travel insurance policies will reimburse you for lost funds?
The answer is: none. And since the Travel Compensation Fund is being wound down, there's even less protection for consumers if travel agents go bust. Travel agents can take out their own insolvency insurance, but this is optional, so ask what steps they've taken to protect your funds.
If your travel agent goes broke and leaves you out of pocket, and they didn't have insolvency insurance, are you able to get your money back some other way?
Credit card chargeback
If you've booked using a credit or debit card (and you selected 'credit' when you paid), 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 be on your guard as soon as you've handed over your cash and 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?
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, such as HSBC, set their own shorter time frame of 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.
What if the travel provider goes broke?
So what happens if your travel agent doesn't go broke but your hotel or airline does? You've still got a right to chargeback within the specified time frames and there are some travel insurance policies that will cover "insolvency of a travel provider", but you'll need to check the fine print in your policy. In our most recent travel insurance review, only eight out of 30 insurers covered this situation.
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 Ts&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.