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.


MoreTravel agents warned chargebacks are ‘not going away’

Advice: What you need to know about Chargebacks and Section 75 of the Consumer Credit Act

Advice: At-a-glance guides to Refund Credit Notes and chargebacks


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.”

MoreTravel agents warned chargebacks are ‘not going away’

Advice: What you need to know about Chargebacks and Section 75 of the Consumer Credit Act

Advice: At-a-glance guides to Refund Credit Notes and chargebacks

Banner23July