Special Report: Cards body clarifies rules for Lowcost compensation

Special Report: Cards body clarifies rules for Lowcost compensation

A clearer picture is emerging of who will be entitled to a refund from their bank and it's not necessarily good news for customers left out of pocket, Ian Taylor reports

There will be no blanket entitlement to refunds for customers of Lowcost Holidays who lost bookings when the company failed on July 15.

Credit card payments for accommodation-only bookings will not be covered, and Visa Debit will not refund payments in full for flight-plus-hotel bookings where the air fare was paid – as is the case for 98% of Lowcost flight bookings.

Lowcost Travel Group ceased trading with 112,000 forward bookings through its Majorcabased OTA Lowcost Holidays, leaving almost all the 270,000 customers involved without accommodation.

The UK Cards Association updated its guidance for cardholders hit by the collapse last week following Travel Weekly’s warning that consumers who by debit card could miss out on refunds.

Travel Weekly highlighted the fact that more online travel purchases in the UK are made by debit than credit card, meaning there is no statutory right to a refund (Travel Weekly, July 28).

Debit-card purchasers must rely on the banks’ voluntary chargeback system for any refund rather than Section 75 of the Consumer Credit Act which covers credit cards. However, there is also a problem for those who paid by credit card for accommodationonly or for separate flights and accommodation because Lowcostholidays acted as an agent.

Credit cards: The UK Cards Association advises consumers with credit card claims: “You are legally entitled to get your money back . . . [But] the company you bought the goods or services [from] must be the supplier of those goods and services.”

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