Travel firms which have failed to refund customers after holidays were cancelled during the coronavirus crisis will face legal action, it was announced today.
The Competition and Markets Authority said it will take companies to court after it was revealed thousands of British holidaymakers are owed up to £7billion from companies refusing to reimburse customers.
The authority said four out of five complaints it gets every day are from British consumers being denied refunds for cancelled trips.
Airlines including British Airways, easyJet, Jet2, Virgin Atlantic, Ryanair and TUI were accused of flouting the law and pushing customers to accept credit-note vouchers which have little consumer protection and could prove worthless if a carrier went bust.
The CMA said: ‘If it finds evidence that companies are failing to comply with the law, the CMA will take appropriate enforcement action, including moving quickly to court if a firm does not address its concerns.
‘Individuals can also take their own legal action against unfair terms should they choose to.’
Jo Lemmon Sparkes, 39, and wife Kirsty, 33, from Cambridge, had a birthday trip to Budapest cancelled two days before they were due to jet off are still fighting for their £700 refund – and claim 18 attempts to contact Ryanair have gone unanswered
A devastated couple are one of many who have had holidays worth hundreds of pounds cancelled without being able to secure a refund.
Jo Lemmon Sparkes, 39, and wife Kirsty, 33, had a birthday trip to Budapest cancelled two days before they were due to jet off are still fighting for their £700 refund – and claim 18 attempts to contact Ryanair have gone unanswered.
How airlines bend the rules
British Airways: The refund option has been removed from its website but the option to claim a voucher remains. The customer service line is frequently engaged or puts callers on hold for hours.
Customers are being encouraged to apply for a voucher equal to the value of their flight but must pay more if it ends up being more expensive.
BA says customers should call to rebook, refund or choose a voucher. Refunds can be requested up to 12 months after the original departure date.
EasyJet: The refund option was taken off the website, but reinstated after customer complaints.
The airline is trying to refund customers within 28 days, but admits it could take longer. A spokesman says: ‘We assure customers these entitlements will be available long after their cancelled flight was due to fly.’
Ryanair: Offered full reimbursement within 30 working days, then did a U-turn and is ‘highly recommending’ customers apply for a voucher instead. Says customers will be able to exchange vouchers for cash after a year.
A spokesman says: ‘Customers who choose a voucher but don’t redeem it within 12 months may still apply for and obtain a refund.
Customers who choose not to accept a free move or voucher will be refunded in due course, once this crisis is over.’
Virgin Atlantic: Credit notes are being issued but can be rejected in favour of a full refund, with claims processed within 90 days.
A spokesman says: ‘The credit [equal to the value of the cancelled flight] can be used to rebook on alternative dates, allowing for a destination and name change, for travel until May 31, 2022.
If the rebooked date is before November 30, 2020, we’ll waive any fare difference.’ Refunds will take longer than normal.
Tui: Customers can choose a refund or credit note but can only apply for their money back once their refund credit has been received — up to four weeks after the departure date.
A spokesman says requested refunds will take about four weeks.
Jet2 is offering cash refunds but with delays because of an ‘unprecedented’ number of calls.
They had been planning the Hungary holiday with five friends to celebrate Jo’s birthday for a whole year and were ‘gutted’ when the flights were cancelled just two days before they were due to fly on March 20.
The frustrated pair have being trying to contact Ryanair, who they were flying with, since March 19 but claim almost 20 separate efforts to reach out via Facebook, phone call and email have still elicited no response more than a month later.
Coffee shop worker Jo, from Cambridge, said: ‘It’s just gutting because we’d all been looking forward to it for so long and it had been a nightmare trying to find a weekend when we’re all free.
‘We understand it’s nobody’s fault, but the communication has been awful.
‘I spent 17 minutes on hold, which ended up costing me £10, and an hour and a half on the live chat on their website – and didn’t get through either way.
‘They haven’t even acknowledged that they’ve received the messages or that they know we’re still waiting.
‘It’s so frustrating because I’ve literally had no contact with anyone.
‘We’ve been left in the dark, we don’t know what’s going on.’
Jo had booked the flights for five of her friends who had all booked time off work for the special occasion, for £150 each.
With the coronavirus lockdown putting huge strain on the economy, she said some of them just can’t afford to lose the money due to being furloughed.
Jo said: ‘At a time like this, I don’t even know if my job will still be there at the end of it.
‘If it was just a £60 flight, I might just let it go but it’s a lot of money and some of us aren’t in a position to just let £150 go.
‘Getting the money back is vital for some of us so I’m determined.’
The group started planning the trip in June 2019 and now worry that they’ll never get to celebrate in Budapest as finding a suitable time for all five of them was a ‘total nightmare.’
Jo said the situation was made even more confusing as she still received emails from Ryanair after the flight was cancelled asking her to check in.
She added: ‘I’ve heard that Ryanair are offering vouchers, but we don’t want vouchers.
‘I can’t split a voucher five ways and I don’t think I’d want to fly with Ryanair again because now I know this is how they handle these kind of situations and they’ve caused us all this stress.
‘We were all really looking forward to it.
‘One of our friends was coming up the day before we flew all the way from Plymouth.
‘We haven’t seen her since Christmas so it’s just so disappointing.
‘I won’t let it go.
‘We and everyone else in this situation deserve a full refund and I’ll be the first in the queue when they start handing them out.’
Jo and Kirsty planned the Hungary holiday with five friends to celebrate Jo’s birthday for a whole year and say ‘communication’ has been awful since it was cancelled by Ryanair
Ryanair said: ‘For any cancelled flight, Ryanair is giving customers all of the options set out under EU regulations, including free moves and refunds in the form of cash or vouchers.
‘The process time for cash refunds is taking longer due to the fact we are having to process 10,000 times the usual volume of cancellations and have fewer staff available due to social distancing measures.
‘Ryanair is offering vouchers and free moves as these are automated and would give customers an alternative. Customers who choose a voucher but don’t redeem it within 12 months may still apply for and obtain a refund after this 12 month period. This also includes partial redemption, as the portion of the unused voucher will be refunded.
‘Customers who choose not to accept a free move or voucher will be refunded in due course, once this unprecedented crisis is over.
‘We apologise for any inconvenience this may cause and we thank our customers for bearing with us.’
In its warning to firms the CMA said it has identified three sectors of particular concern – weddings and private events, holiday accommodation, and nurseries and childcare providers.
It will tackle these areas as a priority and then move on to other sectors, based on the information received by the taskforce.
However, it added that most businesses are acting reasonably in what are unprecedented circumstances, and the crisis is placing everyone under pressure.
Andrea Coscelli, chief executive of the CMA, said: ‘Our Covid-19 taskforce is shining a light on some of the big issues facing consumers in the wake of this pandemic. Alongside price-gouging reports, we’re now seeing cancellation issues in their thousands.
‘So far, the CMA has identified weddings, holiday accommodation and childcare as particular areas of concern.
‘The current situation is throwing up challenges for everyone, including businesses, but that does not mean that consumer rights can fall by the wayside. If we find evidence that businesses are failing to comply with consumer protection law then we will get tough – that means launching enforcement cases and moving to court action where there is a strong reason to do so.’
Adam French, a consumer rights expert at Which?, said: ‘We’ve heard from many distressed people who risk being left out of pocket for significant sums of money as they struggle to get refunds for cancelled weddings, private events or holiday accommodation.
‘It’s right the CMA investigates sectors that are skirting their legal responsibilities on refunds and cancellations by trying to rely on unfair and unenforceable terms and conditions.
‘The regulator must be prepared to step in and take strong action against any businesses found to be breaching consumer law and taking advantage of consumers during these unprecedented times.’
Retired teacher says she has not been offered a refund by TUI for cancelled £10,000 trip to Disney World with grandson
Jan Schneider, 64, planned to take grandson Isaac, seven, to Disney World in Florida but has been unable to secure a refund for the £10,000 trip booked with TUI
Jan Schneider, 64, planned to take her son and grandson for a special trip to Disney World in Florida but has now lost more than £10,000 without being offered a refund by TUI.
The retired special education teacher saved for the trip so she could spend time with seven-year-old Isaac and Ben, 37.
They had been looking forward to the trip, which was booked before Christmas as a present for Isaac’s birthday on Boxing Day.
The holiday was booked for April 5 to 16 but was cancelled due to the global pandemic and Jan has been unable to get in contact with TUI on the phone to get a refund since.
Jan donated her kidney to her son Ben, 37, who required proper medical cover for the trip
She also had to pay for World First travel insurance, having donated her kidney to Ben who needs proper medical cover, and paid for ESTA visas.
Jan, a retired special education teacher, booked the trip for Isaac’s seventh birthday
Jan from Morden, Surrey, said: ‘What I can’t seem to do us to get any response from the company at all.
‘There has been absolutely no contact from them at all despite trying to get through on the phone.
‘I am either told call back or when I do they are closed even if it’s between 9am and 5pm.
‘I haven’t been offered anything at all let alone a credit note. I just need my money back or at least the thought that I might at some point be contacted by them.
‘I don’t know who else to turn to and am finding this very distressing.
‘I’m a retired special education teacher and saved up for this trip so we could all spend some special time together.
‘The holiday has cost me just under £10,000 and so quite a sum when on a teacher’s pension alone. Also, then the insurance was on top of that and Esta visas.’
TUI, the UK’s biggest tour operator, extended the suspension of its holidays for the next six weeks yesterday , having previously suspended operation until May 14.
The company announced that all trips would be cancelled up to and including June 11, and warned customers wanting cash refunds that their call centres are ‘incredibly busy’.
British Airways said on Tuesday it is making up to 12,000 workers redundant and last week Richard Branson asked the government to bail out for his struggling Virgin Atlantic company, for around £500million.
EU member states want airlines to be allowed to issue vouchers for cancellations
A dozen EU member states have asked the European Commission to allow airlines to give vouchers instead of cash refunds for cancelled flights.
The group, which includes France, Ireland, the Netherlands and Portugal, issued a joint statement calling for a temporary amendment to consumer law because carriers ‘continue to incur high running costs’ despite most planes being grounded due to the coronavirus pandemic.
Enabling airlines to issue vouchers rather than cash refunds would be ‘a solution for current cash flow constraints of airlines’, they wrote.
The group called for a common level of consumer protection in relation to vouchers, including the right of reimbursement if a new booking is not used by the end of their validity.
Under the regulation commonly referred to as EU261, which continues to apply in the UK, passengers are entitled to a full cash refund within seven days after the cancellation of a flight due to depart from an EU airport.
It also covers flights operated by an EU-based airline from outside the EU to an airport within the bloc.
But many carriers are refusing to offer refunds or are not making payouts within the legal timeframe.
Rory Boland, editor of consumer magazine Which? Travel, said: ‘It’s incredibly concerning that a number of EU member states are asking to temporarily suspend consumers’ legal right to cash refunds for cancelled flights amid the coronavirus outbreak, not least when so many people are now in difficult financial situations of their own and need their money back.
‘Not only would this move be bad news for consumers, it would be a disaster for tour operators waiting for payments to be returned by airlines in order to fulfil their own legal obligations to refund customers.
‘The UK Government must urgently confirm that it will continue to support consumers’ right to cash refunds, and step in with support for the industry to allow them to fulfil this legal obligation.’
While travellers who booked breaks using credit cards are also struggling to get cash back from banks, despite Section 75 of the Consumer Credit Act enshrining refunds in law.
Instead lenders have told their own customers they are not eligible for cash refunds, or demanded they pursue the cash from the travel firm first, which is not a legal requirement.
The Association of British Travel Agents (Abta) has lobbied ministers to relax rules requiring airlines to issue refunds within a set timeframe — although most have ignored them anyway and appear to have been using underhand behaviour to avoid paying.
Airlines are using underhand tactics to make it almost impossible for holidaymakers to claim refunds for cancelled flights.
Hundreds of readers have contacted us to complain major airlines are illegally withholding refunds that should be paid within a week.
Many say they have been convinced to accept credit-note vouchers which have little consumer protection and could prove worthless if an airline went bust.
Others describe refund processes as unclear, complex or time-consuming, forcing them to give up.
On Tuesday night, the powerful Commons transport committee of MPs confirmed plans to investigate the issue in a series of hearings with aviation bosses next week.
Under EU law, passengers are entitled to a full refund on the cost of a cancelled flight within seven days, or 14 days if they have booked it as part of a package.
But carriers are delaying issuing refunds for fear of going bust — so holidaymakers’ cash is essentially being used as interest-free loans for crisis-hit airlines.
This is having a knock-on effect on package holiday companies, who are also waiting for airlines to repay them before they can issue their own refunds.
Critics say a lack of government action on the issue has turned the travel industry into the Wild West, leaving families out of pocket at a time when many are under financial strain. Industry estimates suggest companies are sitting on £7 billion in unpaid refunds.
The committee chairman, Tory MP Huw Merriman, said: ‘Yes, airlines have a need for cash but this should be drawn from their lenders, not from passengers who are legally entitled to a refund.
‘Many people have their own financial worries and may not be able to use a future travel voucher.’
BA has been accused of acting disgracefully by removing a refund option from its website, while retaining the option to receive a credit-note voucher towards a future flight.
Passengers are told to call a customer service number — but the line is frequently blocked. When we called this week, it played an automated message, then cut out.
Will the rules be changed on refunds?
Industry insiders have suggested that the Department for Transport (DfT) is set to make an announcement on the issue after weeks of inaction.
The Association of British Travel Agents (Abta) has been lobbying ministers to relax rules requiring airlines to issue refunds within a set timeframe — although most have ignored them anyway.
They want credit notes to retain Atol protection, giving reassurance to holidaymakers who fear their money will disappear.
The situation has been worsened by uncertainty about when flights will resume. The International Air Transport Association (IATA) has warned that the industry is facing an ‘apocalypse’ and more than half the world’s carriers could go bust.
EasyJet has received a £500 million emergency loan from the Treasury. But the future looks less hopeful for Virgin Atlantic, whose request for state aid was refused.
Even BA boss Alex Cruz has warned that the nation’s flag-carrier faces a fight for survival. In a dramatic announcement to staff yesterday, the company said it was making up to a quarter of them — 12,000 people — redundant.
But an Abta spokesman says: ‘Customers whose holidays have been cancelled because of the pandemic absolutely have the right to a refund, and where cash refunds are requested they should be given as soon as possible.’
EasyJet customers have also described endless waits to speak to customer service. It is, however, easy for customers to claim a credit note valid for a year.
Ryanair, Virgin Atlantic and TUI are also offering credit notes automatically. These can be rejected in favour of a full refund.
However, Ryanair has warned that passengers who want their money back will be ‘placed in the cash refund queue until the Covid-19 emergency has passed’.
Virgin Atlantic is in crisis and could collapse at the end of May unless a buyer is found. This would render any credit notes worthless, unless the Government steps in to protect vouchers under Atol. Then, even if an airline folded, customers would get their money back.
Wizz Air has resumed flights from Luton to several destinations in Europe this week, meaning passengers who do not wish to travel are denied the right to a refund.
Consumer champions Which? say the move was ‘nothing more than a cynical cash grab’.
Simon de Broise, a lawyer specialising in banking and financing disputes, said while usually claims Section 75 of the Consumer Credit Act work quite well, reports that banks are refusing to process claims are concerning.
The Senior Associate at Collyer Bristow said: ‘In the current climate, suppliers, particularly those in hard-hit sectors such as travel, need to preserve as much cash as possible and so are understandably trying to offer alternatives to cash refunds, such as vouchers or credit notes.
‘There is no problem with this per se, but consumers do not have to accept these alternatives and, subject to meeting certain requirements, are usually entitled to a refund.
‘The reports of banks making claims more difficult, and even refusing to process them, is very surprising and quite concerning.
‘Whilst it is correct that the right to a refund is not automatic – for instance under s.75 of the Consumer Credit Act there needs to be breach of contract or misrepresentation – the cases we are concerned with at the moment, for example a flight cancelled by an airline, will not be disputed and so claims should be being processed in the normal way.
‘If this is not happening, then the regulator may need to step in.’
Couple’s dream Caribbean cruise holiday for a 60th birthday turns into £3,500 nightmare after Holiday Gems denies refund
Carol, 55, and Christopher Avery, 60, are owed £3,500 for a cancelled Caribbean holiday by Holiday Gems. The couple from Swindon booked the dream holiday to celebrate Christopher’s birthday
Carol Avery, 55, is out of pocket nearly £3,500 after booking a dream holiday to the Caribbean to celebrate her husband Christopher’s 60th birthday.
The couple from Swindon booked two hotel stays in Punta Cana, the Dominican Republic, with Holiday Gems, but have been refused a refund by the travel agency
Initially, Carol, an internal project manager, planned to take environmental air test engineer Christopher on a Caribbean cruise on March 15 for 12 nights, before heading to Punta Cana for a further 12 nights.
However, this was cancelled due to the coronavirus crisis, so the couple bought a new hotel stay in the Dominican Republic for ten nights from March 17 with the travel agency.
They planned to then head to the original hotel, but on their flight to Miami it was announced that the US had closed their borders to British tourists.
Carol and Christopher were able to have their flight rearranged to come back to the UK on March 17, rather than head to the Dominican Republic as originally planned.
However, on return they were told they would be unable to refund the first hotel booking – as they were down as a ‘no show’ – and could only be given a credit note for the second hotel.
Carol said: ‘We received a phone call from a representative for Holiday Gems, stating that we would be offered a credit note for the second 12 nights hotel accommodation.
‘When we mentioned the first 10 nights we were told that there was no record on file for refund and that it was listed as a ‘no show’ on our part.
‘This was incredible when we couldn’t even fly to DR and they had sent emails out saying that anyone there should return as soon as possible as the resorts would be closing.
‘We informed the Holiday gems rep that we did not want to accept a credit note, and wanted a full refund at which point he started to get annoyed and said ‘there is no way you will get a refund’.
‘We informed him that we knew our rights and we would pursue all avenues to get a refund, even taking it to a small claims court if need be, to which he replied ‘we would definitely get nothing and we would probably have to pay their costs as well’.
‘At this point he was totally annoyed and promptly hung up on us.’