NEWS
‘Chargebacks will cause cash crisis’
Ian Taylor
Credit card chargebacks may now pose the biggest risk to agents struggling to meet consumer demands for refunds. Companies following Abta
mps up pressure We need to find a
way through. It would be logical for the UK to provide guidance
to manage this on the basis of a rolling date. “People are converting a lot of
consumers to future bookings by incentivising these. It’s the sensible thing to do, particularly if you only carry a deposit forward. For others, it’s about issuing refund credit notes.” Abta continues to press for a
decision from BEIS amid growing alarm at companies’ prospects for survival.
UK airlines also await government
guidance on refunds despite a growing number of EU states taking action. Germany became the latest to sanction the issue of vouchers in place of refunds for cancelled
travelweekly.co.uk
flights in all but “cases of hardship”, setting aside the requirements of EU Regulation 261 on air passenger rights. The German vouchers are valid until the end of December 2021. The Dutch government has also
set aside refund rules until June 30, instructing regulators not to enforce Regulation 261 on condition “vouchers are valid for a maximum of 12 months”. Dale Keller, chief executive of the
Board of Airline Representatives in the UK, said: “We need to find a way through. A number of EU states have offered guidelines. It would be logical for the UK to provide guidance. That is what the industry needs.” A senior aviation source added:
“Refunds are a huge issue, but there is tension in government between the interests of consumers and those of
airlines and travel agencies.” i ‘Summer is a write-off’, page 7 i EC voucher ruling fears, page 32 i Companies flout PTD, page 34
9 APRIL 2020 5
guidance to issue refund credit notes in place of cash refunds to avoid going bust may simply find frustrated consumers reclaim payments on credit cards which card-issuing banks refund and then charge back to the travel firm. A senior industry source said:
“Chargebacks are the great danger. That is why it’s essential to get refund credit notes on a legal footing. It’s not disastrous yet, but chargebacks are coming through and will get a whole lot worse. It will cause a real cash crisis.” Abta is speaking to financial
services association UK Finance on chargeback guidance to card issuers and contacting banks taking an aggressive stance. A source confirmed: “Abta
has made its views on behalf of members very clear to UK Finance, and has spoken direct to large card issuers like Barclays.” Travel Weekly was awaiting
a UK Finance statement on its guidance at the time of writing. The pressure is exacerbated by
airlines issuing vouchers in place of refunds for cancelled flights, with Iata confirming vouchers would be issued via its Billing and Settlement Plan last week. However, card giants Visa and
Mastercard offered some comfort with guidance to card issuers “to have cardholders attempt to resolve disputes before processing a chargeback”. Mastercard gave notice it
supports “merchants offering ‘reasonable alternatives’ [to refunds] . . . to reduce chargebacks”. Visa likewise noted: “Merchants
can offer a credit or voucher for future use if that is acceptable to the cardholder.” However, government action
is required to forestall chargebacks fully. Mastercard noted: “Reasonable alternatives cannot be imposed on the cardholder in lieu of a refund. [But] the cardholder may need to accept a voucher in lieu of a refund if a government issues legislation or regulations that enables a merchant
to provide a voucher.” i Chargeback insolvency fears, page 32
PICTURES: Shutterstock
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