Refund Credit Notes

Get to grips with Refund Credit Notes and chargebacks by downloading Travel Weekly’s at-a-glance guides based on Abta guidance and Travlaw advice


Many customers accept bookings cannot proceed as planned at present and are prepared to accept a change to their dates of travel or a Refund Credit Note. Unfortunately, some customers remain adamant a cash

refund must be paid. The most common route customers take is a chargeback or a Section 75 request under the Consumer Credit Act. The two processes are distinct. A chargeback enables a customer to get their money back from a bank, but involves a voluntary agreement between card providers and card issuers.

What to do: Section 75 claims

Example 1: A customer booked a package with a tour operator. Their holiday can’t proceed. They refuse to amend the dates and threaten a Section 75 request. The customer is protected by the Package Travel Regulations. If a suitable alternative can’t be agreed, they are entitled to a refund within 14 days. However, compliance is not possible for a lot of companies. Offer a Refund Credit Note (RCN) which can be used

towards a future booking and, when issued correctly, is financially protected and can be exchanged for a cash refund at a later date. Ask the customer whether they have sought repayment

from their travel insurer. Many will have travel insurance which covers this. Note that several card providers, including Mastercard and Visa, have issued guidance stating Section 75 requests will not succeed if a customer is unable to prove they have attempted to address the issue with their holiday provider.

Example 2: You offered a change of dates, a Refund Credit Note and asked that the customer claim through their insurer. They raised a Section 75 request anyway. You can dispute the Section 75 request if unable to pay. Note the date by which your dispute must be raised and comply. You should also issue a RCN. First, it ensures the customer’s money is financially protected, and the customer may have a change of heart. Second, you can state you have refunded the customer. Attach evidence of the RCN with your dispute to show you have complied to the best of your ability.

Example 3: You act solely as an agent. A customer booked flights which have been cancelled and you receive a Section 75 request. Any Section 75 refund brought against an agent in these circumstances is likely to fail provided you make clear you act solely as an agent in your T&Cs. Any claim has to be made against the airline direct.

This is an abbreviation of advice provided by Travlaw LLP, which should be consulted in full. Travel Weekly accepts no liability for consequences attributed to this guidance. © Travel Weekly Group Ltd 2020

Section 75 of the Consumer Credit Act 1974 is a UK law which protects credit card purchases of between £100 and £30,000. There is no limit on a chargeback – a customer can claim

the sum paid on the card within 120 days of payment. The card company takes the money straight out of a company account. With Section 75, there is a time limit of six years. A customer can claim the full value even if they made only a part payment on the card. The card company pays out first and then recovers the money.

What to do: Chargebacks

Example 1: A customer booked a package to China with travel due on February 28. You receive a chargeback notification. Make sure you offered the alternatives – a change of dates, RCN and claim on insurance. Several card providers have advised chargeback requests won’t succeed where a travel provider cancels a booking due to government prohibition. Check with your merchant services provider whether they offer similar guidance.

Example 2: A customer booked a package to depart on July 17. A chargeback request is raised. The customer would not be entitled to a chargeback as the holiday has not been cancelled. It’s reasonable to believe government advice will change by July 17. If the customer chooses to cancel, it’s their decision. Standard cancellation terms apply.

Example 3: You receive a chargeback request from a client who already accepted a RCN. A chargeback should not succeed. You should respond by stating an agreement has been reached with this customer and provide evidence.

Krystene Bousfield associate solicitor,

Download the two one-page guides at



Abta’s updated guidance on Refund Credit Notes spells out clearly how to deal with refunds for bookings cancelled due to coronavirus travel restrictions. It notes many businesses “do not have the cash to immediately provide refunds” as required by the Package Travel Regulations (PTRs). But Abta believes Refund Credit Notes (RCNs), correctly issued, can “help operators and agents remain viable while honouring their obligation to refund customers”. The guidance confirms Atol-protected bookings and Abta-

protected holidays will remain financially protected and it extends the expiry dates of RCNs – when cash refunds fall due if no holiday has been taken – from July 31 to early 2021 for most Abta members.

Issuing Refund Credit Notes

A RCN must: O Be equal to the amount paid for the original booking, or less where a part refund has been paid.

O Exclude any rebooking incentive, which must be documented separately and the consumer made aware it is not covered by financial protection.

O Identify the original booking reference and, where appropriate, Atol Certificate reference number.

O Be issued within 14 days and include the option of a refund, albeit this is delayed.

O Contain an expiry date (see box, right). The customer can use the credit note to make alternative arrangements or seek a cash refund by this date.

O Tell the customer to retain all booking documentation and proofs of payment.

Briefing frontline staff

The Abta guidance includes briefing notes for frontline staff. It notes:

O “The RCN must be equal to the amount paid by the customer.” O “It must clearly identify the original

booking, with booking details and booking reference [and] customers should be told to retain all previous

booking documentation.” O “Organisers may offer an incentive for customers to rebook but that is not financially protected.”

What to tell customers:

Why a Refund Credit Note? “Refund Credit Notes are being used in response to the coronavirus crisis because travel companies can’t provide cash refunds immediately to all customers.

“If you accept a Refund Credit Note, you can rearrange and amend your booking for a future date.”

How long does the RCN last? “The Refund Credit Note will have an expiry date. You should use the RCN

This guidance is an abbreviation of Abta guidance, which should be referred to in full. Travel Weekly accepts no liability for consequences attributed to this guidance. © Travel Weekly Group Ltd 2020

RCNs “allow the customer to amend their holiday for a later date . . . under the same package travel contract as the original booking and therefore retain the protections of the PTRs”. They are not the same as holiday vouchers, which “are not

generally protected by Abta or under the Atol scheme”. The guidance provides standardised rules on issuing RCNs since if “not done right, travellers lose protections”. Abta confirms it will protect RCNs for bookings originally

protected under the Abta scheme but affected by Covid-19, saying: “This protection will last for the period of the financial- protection arrangements in place for individual members, driven by the expiry period of the bonds [they provide].” The guidance also confirms: “Refunds for Atol-protected bookings are covered.”

Refund Credit Note expiry

The expiry date must be within the period that financial protection arrangements are in place. For Abta members...

O Still to renew bonds for March 2020, the expiry date remains July 31, 2020.

O Due to renew bonds in September 2020, it is January 31, 2021.

O Who renewed their bond in March 2020, it is March 31, 2021. Organisers using financial security other than Abta’s must seek approval from the relevant provider. Businesses must state how the protection is provided

and the period of validity, and notify Abta they are issuing RCNs. The guidance includes wording that must be included in a Refund Credit Note. Abta notes it will review and amend the guidance “in the event the Package Travel Regulations are amended temporarily” by the government. Abta continues to lobby hard for this.

to rebook by then. If you do not want a different travel service or can’t decide you will receive a full refund. This must be before the expiry date.”

Is the RCN protected? “Refund Credit Notes provide evidence of ongoing protection against the insolvency of the travel organiser.”

The guidance is available to Abta members in the member zone at

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