Roadmap to Recovery

Chargeback fears as July 31 looms

Ian Taylor

Confirmation that refund credit notes (RCNs) have Atol protection should bring relief from the threat of chargebacks on card payments for many travel businesses. But pressure could increase

sharply on companies that issued RCNs with a July 31 expiry, as refunds fall due next week. Travlaw solicitor Krystene

Bousfield described the government announcement as “helpful”, pointing out card issuers advise against chargebacks where a customer has been offered “a reasonable alternative” to a cash refund. But she said: “If you promised

cash refunds by July 31, you need to pay or face chargebacks. If you can’t repay, you need to speak with customers to see if they will rebook now travel is restarting.” She said the volume of

chargebacks had “slowed” since the early days of mass cancellation when “everyone seemed to be issuing them left, right and centre”. But Bousfield warned: “We could

see chargebacks soar again.” Alan Bowen, advisor to the

Association of Atol Companies, agreed, saying: “The risk is getting

greater. The banks’ view initially was that if they start giving everyone their money back, businesses would fail and the banks would have to pay. Now they see the travel industry has survived, consumers have more chance of getting their money via chargebacks.” Bowen insisted: “It’s very positive

the government has said it sits behind RCNs, but if the expiry is the end of July you have to repay.” He warned: “An awful lot of

people who issued RCNs with a July 31 date don’t have the money. A lot of consumers may go for the nuclear option, the chargeback. “Tour operators and airlines will

be under most pressure, especially online tour operators. They don’t appear to have the resources to cope and consumers are losing patience.” Bousfield pointed out travel

agents operating as agents, not as travel organisers, aren’t liable for refunds or chargebacks. She insisted: “It’s important people

understand the legal position. Some agents disputing chargebacks have been told by merchant acquirers they have to pay. That is not legally correct. If you’re an agent, you should not be paying chargebacks. Make clear you’re an agent and contact a lawyer.”

Transport secretary Grant Shapps

Finally...minist Ian Taylor

Government confirmation that refund credit notes for cancelled holidays are Atol-protected has drawn praise for Abta’s “genius idea”. But CAA guidance issued

following Saturday’s announcement drew competing interpretations and confirmed Atol-holders must pay the £2.50 Atol Protection Contribution (APC) on bookings a second time when customers holding RCNs rebook. The confirmation came in a

insisted RCNs were protected for months and said: “All the CAA has done is put out guideline notes.” Alan Bowen, advisor to the

Association of Atol Companies, said: “The government has said RCNs are valid legal documents. It’s just a pity it took such a long time. “Whatever you say about Abta,


Travlaw’s Krystene Bousfield

4 23 JULY 2020

joint statement by transport secretary Grant Shapps and business secretary Alok Sharma, with Shapps saying: “We want to send a clear message to passengers that they can book summer holidays with confidence.” Leading industry accountant

Chris Photi of White Hart Associates described it as “helpful, but not an elixir”. He pointed out Abta had

RCNs was a genius idea – the best thing Abta has done for years. Without RCNs, I’m not sure many of us would be here.” A senior industry source

said: “It has been a long haul. Apart from the appalling

delay, it’s positive. [However],

there is nothing about the conditions [attached to RCNs] that explains why it has been so difficult.” One leading industry figure

described having to pay the £2.50 APC a second time as “outrageous”. The CAA guidance states: “APC

is payable for every licensable sale irrespective of a refund, cancellation or issuance of an RCN. [Where]

Costa Brava, Spain. The government has confirmed that RCNs are Atol-protected

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