Agents seek card chargeback support

Ian Taylor

Suppliers are being urged to cover the costs of chargebacks to agents as customers seek refunds through credit cards, with Abta poised to issue guidance on handling charge- backs asTravel Weekly went to press. Voluntary agreements between

card companies and card-issuing banks leave it largely up to the banks to decide how to process chargebacks and it often suits them to hit agents. Section 75 of the Consumer

Credit Act makes credit card issuers and suppliers jointly liable to refund payments for cancelled holidays. Agents served with a Section 75 chargeback can challenge this. But card issuers frequently process claims as ‘normal’ chargebacks outside of Section 75 and take the money from an agent’s account. Angus Kinloch of Ski Line in

Beckenham suffered a £40,000 chargeback last week, having expected a Section 75 request he could defend. He said: “We’re going to be hit with a load more of these. “Why should agents carry the

can? Why should we refund the full amount? I’ve never had a chargeback in 25 years. Our agency agreements have a clause saying tour operators will indemnify us, but I’m concerned

Farina Azam

the tour operators will go bust. This is an issue for every agent.” Lawyer Farina Azam of Kemp

Little said: “Agents are not subject to Section 75 chargebacks and there is a straightforward defence. [But] it’s administratively easier for the banks to chargeback under their normal [voluntary] scheme.” Conflicting guidance from card

issuers is also complicating attempts to resist. Azam said: “You can’t get a straight answer on whether card issuers will treat a Refund Credit Note as an alternative to a refund if the customer won’t accept it. If card issuers don’t accept them it’s a refund by the back door.” Visa and Mastercard state in

Covid-19 guidance that merchants “can offer a credit for future use” in place of a refund “if acceptable to the cardholder”, but should process a re- fund if the cardholder declines. Visa allows an exception where “cancella- tion is due to government prohibi- tion” as this “supersedes Visa rules”. Mastercard says the opposite. Advantage Travel Partnership

chief executive Julia Lo Bue-Said has written to suppliers “reminding them our members are agents on their behalf.” She said: “If customers put in a chargeback we expect them to process it.”

Ministers to pro Ian Taylor

Government confirmation that Refund Credit Notes (RCNs) for cancelled holidays will retain insolvency protection was expected this week, allowing the CAA to issue guidance at last. But sources confirmed the

government would balk at changing package travel rules to make credit notes a lawful substitute for cash refunds, required within 14 days under the Package Travel Regulations (PTRs). A Sunday Telegraph report

that the sector was in line for a £4 billion government ‘lifeline’ to fund consumer refunds increased the pressure but was dismissed as “ludicrous” by senior industry sources, as operators and agents struggle to make repayments and consumer anger grows. Consumer publication Which?

added to the pressure on Wednesday 4 23 APRIL 2020

when it accused “the UK’s 20 biggest travel operators and airlines of openly breaking the law on refunds” and argued: “Credit notes may prove worthless.” In fact, Abta has guaranteed


Refund Credit Notes against insolvency and confirmed Atol-protected bookings will also remain protected. One source told Travel

Weekly: “There may be clarity on this issue in the coming days which would allow the CAA to expand on

what is acceptable in terms of Refund Credit Notes. People understand the industry is vulnerable and nobody wants to push businesses over.” A second, senior source said:

“We’re not expecting any change to regulations because of lobbying by consumer groups. “The government will simply

say ‘If you accept a Refund Credit Note, we will pick up the tab if the company becomes insolvent’.”

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