Package holiday providers suggest they will break the law on refunds again

5 May 2021

With hopes of a return to holidays abroad within weeks, some package providers that broke the law last year are still misleading customers over their right to a refund and other financial protections, according to a new investigation from Which?.

Ahead of the government revealing the ‘green’ list of countries that travellers can visit without the requirement for quarantine on their return, Which? mystery shopped six of the UK’s biggest package travel operators to find out if customers making new bookings will get their money back if lockdowns or quarantine prevent them from travelling.

Which? spoke to three agents each from Love Holidays, On the Beach, Teletext Holidays, Trailfinders, TravelUp and Tui.

Of the six companies, only Trailfinders and Tui consistently answered Which?’s questions in line with the law and in line with the company’s official policy. Agents at all of the others either suggested to the consumer champion’s researchers that they were willing to break the law over refunds, or misled them about how their holiday would or wouldn’t be protected.

Which? asked the travel companies:

Whether customers would get their money back if the government banned international travel before they were due to depart;
Whether they would get a refund for both their flight and accommodation together if the holiday was cancelled by the provider;
Whether customers could cancel for a full refund if they are told they will have to quarantine on arrival at their destination;
And how they would be refunded under the Atol scheme if the company were to collapse.

When asked about the government banning travel before they were due to leave, only Trailfinders, TravelUp and Tui repeatedly gave assurances that they would be entitled to a refund. Love Holidays, On the Beach and Teletext were all inconsistent in their responses.

Legally, customers may not be entitled to a refund if they cannot travel because of a national or regional lockdown. However, Which? only recommends booking with companies that have committed to paying out in this scenario.

While On the Beach officially told the consumer champion it would refund customers in the event of a travel ban, two of its agents said otherwise. Teletext also gave mixed responses and when Which? approached the company for clarification, it refused to comment.

Love Holidays told Which? that customers would only be able to receive a full refund in this scenario if their airline cancelled their flight – and while it agreed this was unfair, it would still deny full refunds on this basis.

By law, customers whose package holiday is cancelled by their provider should be entitled to a full refund within 14 days, regardless of whether the airline cancels the flight or not. However, some companies have been denying full refunds on the basis they have not been able to secure refunds from airlines for the flight portion of the booking.

Airlines require full payment for the flights from the package holiday provider in advance, meaning that when flights booked as part of a package are not cancelled, it can be difficult to recoup the money from the flight carrier.

When Which? investigated, only Trailfinders and Tui committed to reimbursing both flights and hotels within the 14 days legally required. Trailfinders guarantees customers will receive a full refund if their holiday is cancelled by ‘ring-fencing’ customer payments, meaning when refunds were due, their money would be returned to them in full and without delay – a model not replicated by the other providers. All the other companies suggested that full refunds would depend on whether or not the airline cancelled the flight.

Love Holidays said it would wait to be reimbursed by suppliers before passing the money onto customers, even though it has already faced an intervention from the Competition and Markets Authority (CMA) for withholding refunds from customers while it chased money from airlines.

Similarly, Teletext has also been investigated by the CMA for withholding refunds, and is now facing court action if it fails to refund over £7 million in customer payments. Despite the company being under investigation at the time, an agent still told Which?’s undercover researcher that customers could expect to wait up to two months for their money back while it chased suppliers for refunds.

While TravelUp said it was refunding within 14 days “wherever possible”, agents told the undercover researcher it relied upon receiving refunds from suppliers, and that it charges customers an admin fee – a minimum of £50 – to chase their refunds for them.

The researcher also asked if customers would be entitled to their money back if they were required to quarantine on their arrival. Denying a refund on this basis is in breach of the Package Travel Regulations, as having to quarantine on arrival should be considered an ‘unavoidable and extraordinary circumstance’ that will significantly affect the performance of a package holiday, meaning customers should be offered the choice between a reasonable alternative or a refund.

Only Tui and Trailfinders said they would provide refunds for customers in this scenario. Agents at all the other companies Which? spoke to said customers would only receive a full refund if the airline cancelled their flight.

However, official responses from Loveholidays, On the Beach and TravelUp all contradicted the advice their agents had given on the phone, insisting that customers would be due a full refund if they cancelled because of instruction to quarantine on their arrival.

The consumer champion also questioned agents about how holidays were protected under the Atol scheme. Atol protection ensures customers will receive the option of a full refund if their provider goes bust before their package holiday takes place or while they are abroad.

Nearly every agent answered correctly when asked if their package holidays were Atol protected. But some agents provided misleading information when asked whether Atol protection applied if a flight and hotel were booked one week apart.

In this situation, while the flight might be covered by Atol if booked through a tour operator, the hotel and transfer would not be. But all three agents for Teletext Holidays incorrectly implied customers booking their flights and accommodation separately would be fully covered.

Which? is urging those considering a package holiday this summer to do their research, and read the terms of a company’s flexible booking policy carefully before booking. All Which? Recommended Providers have committed to offering full refunds in the event of coronavirus related disruption, and all abide by the Package Travel Regulations. Consumers should avoid companies that cannot guarantee to offer a full refund in the event of further disruption.

The consumer champion is also campaigning for major travel industry reform to ensure greater protection of travellers’ money and enforcement of their existing consumer rights when they book a holiday or a flight.

The CAA has launched a consultation on reforming Atol protections and the protection of customer money which the consumer champion will be submitting evidence to. Meanwhile the CMA is also currently investigating refunds in the package holiday sector, and it should not hesitate to take enforcement action against any companies that continue to break the law on refunds when mass international travel resumes.

Rory Boland, Editor of Which? Travel, said:

“Holiday companies are quick to offer promises that you can book with confidence this summer, but unfortunately many of them won’t be so quick to refund your money if coronavirus prevents you from travelling – and that’s if they refund you at all.

“Whether you can book with confidence ultimately comes down to who you book with. Many of the companies that broke the law last year have suggested they may do so again, so regulators must be ready to take strong action against any operators found to be misleading their customers or breaking the law.

“Travellers considering a holiday this year should only book with companies that guarantee in their flexible booking terms that they will be able to get all of your money back if lockdowns, quarantine and other disruption should strike.”

Notes to editors:

Which? Recommended Providers: https://www.which.co.uk/reviews/travel-agents/article/travel-agents/best-and-worst-package-holiday-providers-agVuo5r7eV33
How do I know whether my holiday is Atol protected? https://www.which.co.uk/consumer-rights/advice/how-do-i-know-whether-my-holiday-is-atol-protected-aKTwJ5y8Vtt6#atol-protection-exceptions
More on Which?’s campaign to reform travel: https://campaigns.which.co.uk/travel/
Which?’s submission to Global Travel Taskforce: https://www.which.co.uk/policy/travel/7400/dft-global-travel-taskforce

Rights of replies:

Love Holidays:

“A customer’s right to a refund under the PTRs varies depending on whether the holiday is cancelled by the customer or the operator and the circumstances giving rise to the cancellation.

“As noted previously, legislation against travel abroad such as a national lockdown / Tier 4 restrictions which imposes legal restrictions on the customers ability to go on holiday does not automatically entitle customers to a full refund under the PTRs.

“We continue to meet our commitments as agreed with the CMA regarding refunds. The undertakings relate to refunds which arise in certain specific circumstances, and more details on the undertakings can be found on the CMA website.

“With regards to international quarantine requirements on arrival at destination, our customer support agents do not handle these concerns because we keep this under constant review and, where applicable, will cancel the holiday in those circumstances. However, if an agent has miscommunicated this approach we will ensure our customer service team receives additional guidance so that it does not happen again.”

TravelUp:

“It is important to understand the difference between a package holiday and a flight only booking where TravelUp acts as an agent for the airline. This has an impact on the solution and service TravelUp can offer their customers.

“TravelUp’s policies around package holiday refund rights abide with the current law as we outlined to you in our formal responses. In the event of cancellations or disruption, the refund or rebooking would be handled by our experts in the package holiday customer service team. They would ensure that each case is handled according to the correct procedures for their specific type of booking and that customers receive the appropriate refund in the relevant time scale.

“Due to the current pandemic TravelUp is operating with a limited number of package holiday specialists and it is possible that some of the calls may have overflowed to our flight only or accommodation only team. During these exceptional circumstances the rules have changed frequently and in some cases here, when put under pressure, the overflow team may have not provided the correct answers about TravelUp’s policies. We welcome the feedback from the Which? investigation and we will undertake a fresh programme of cross training to ensure all of our sales team effectively communicate the latest package holiday refund rules.”

On the Beach:

“The Covid-19 pandemic continues to challenge the travel industry as a whole and the way we are able to offer our customers holidays.

“We have adapted our policies to reflect – and provide regular training and updates for our agents with regards to – the changing landscape that Covid-19 provides and it is our priority to ensure we are always giving our customers clear and accurate information. In addition, all information available on our website is correct, up to date and reviewed regularly.

“In the event of a travel ban or a national lockdown where travel outside of the UK is prohibited and flights are cancelled, we will fully refund customers in cash within 14 days. This is a critical part of our Covid Promise, which launched in 2021, where, if a holiday cannot be provided due to Covid-19, a full cash refund will be provided within 14 days of an airline cancelling a flight.

“We want to ensure customers have the option to rearrange their holiday should their plans change due to Covid-19. Under our Covid Promise, our customers can move their holiday dates or select a new destination without paying an additional amendment fee (there may be additional charges if the holiday value changes). However, if they elect to request to move their holiday where Covid-19 restrictions do not prevent provision of the package and the flights still operate, flight costs will be non-refundable as per the airline’s T&Cs. On the Beach will amend the holiday and waive any admin fees, though any differences in costs from suppliers may need to be paid by the customer.

“As individual countries amend their rules and regulations in regards to mandatory quarantine we will support our customers as much as possible with the most up to date information and any possible amendments to their holiday. Should a mandatory quarantine period be imposed upon arrival in a foreign country, we will look to offer our customer an alternative destination package or provide a cash refund within 14 days.

“Our customers can be assured that all package holidays booked with On the Beach are fully ATOL protected.

“We welcome any and all feedback that ensures we continue to offer our customers the best possible service and will be revisiting training needs within our team to ensure that the information we provide customers with is always accurate, clear and consistent.”

Teletext did not supply a comment for publication.

About Which?:

Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.

Press Release