A leading industry lawyer believes consumer victims of Lowcost Travel’s collapse may have grounds for claims against the Balearics government.
The company ceased trading last month after quitting the UK’s Atol scheme in 2013 and relocating online agency business Lowcost Holidays to Majorca, where it was registered with the local government protection scheme, as required by EU law.
Lowcost Holidays’ terms advised consumers the company acted as an agent, but “if you book a flight with accommodation, we voluntarily accept this is a ‘package’”.
It claimed: “We have fully complied with financial protection requirements . . . with the Spanish authorities. These arrangements ensure payments made by you for your package will be refunded.”
But the company had a financial guarantee of just €1.2 million.
Former group chief executive Paul Evans conceded last week: “Customers will have to pay for and reclaim their accommodation and transfers.”
Stephen Mason, senior partner at Travlaw, said: “Lowcost claimed to consumers that all its holidays were protected. There are two scenarios. Did they tell the Spanish authorities ‘we’re selling all these holidays across Europe and want them covered’, or did they say ‘we’re selling to Spanish consumers’.
“If it was the first and the Majorcan authorities said ‘this will cover you’, European Court of Justice case law [suggests] the Balearics government may be liable. If the company misled the Spanish authorities, then the CAA or trading standards may have a case under the Consumer Protection from Unfair Trading Regulations.
“One of the two propositions must be true. Either the Majorcan government knew and must be liable, or it was misled.”
Evans claimed last week: “People will be able to reclaim their money.” But consumers who booked holidays on Visa Debit cards or accommodation on credit cards look set to miss out.