LoveHolidays, one of the UK’s biggest online travel agents, has been ordered to refund £18m to more than 40,000 customers after their trips were cancelled due to the coronavirus outbreak.
The Competition and Markets Authority started investigating the firm after receiving hundreds of complaints from people waiting to get their money back.
When customers asked LoveHolidays for a refund, they were told they would only get money back for their flights once the firm had received refunds from the airlines.
However, online travel agents are legally bound to refund customers for package holidays cancelled due to coronavirus, regardless of whether or not the agent has received money back from suppliers, such as airlines.
LoveHolidays has now signed formal commitments that ensure customers get a full refund. More than £18m will be refunded to 44,000 customers. Of this, so far £7m has been returned to 20,000 customers.
The company and another large online agent, On the Beach, left the Association of British Travel Agents in September following disputes over customer refunds. LoveHolidays, which is licensed to carry 1.1 million passengers a year, said then that the package holiday regulations, which oblige companies to issue a refund within 14 days, had not been designed to deal with disruption on the scale since March.
The watchdog has accepted LoveHolidays’ commitment to repay customers in full by the end of March at the latest, after reviewing the firm’s financial information.
Refunds will be made in two parts. Refunds for the cost of hotel accommodation and transfers must be made by 31 December for holidays cancelled before 1 November. From January, customers will receive refunds for accommodation and transfers within 14 days of a holiday being cancelled. Customers will have to wait longer to have their flights refunded, until the end of February or March depending on when their holidays were cancelled.
If the firm fails to repay customers by the dates set, the CMA is prepared to take the company to court.
Andrea Coscelli, chief executive of the CMA, said: “Travel agents have a legal responsibility to make prompt refunds to customers whose holidays have been cancelled due to coronavirus.
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“Our action today means that LoveHolidays’ customers now have certainty over when they will receive their money back and they will receive this without undue delay.
“We are continuing to investigate package travel firms and where we find evidence that businesses are breaching consumer law, we will not hesitate to take enforcement action to protect consumers.”
The watchdog has written to more than 100 package holiday firms to remind them of their obligations under consumer protection laws, and has secured refund commitments from Lastminute.com, Virgin Holidays, Tui UK, Sykes Cottages and Vacation Rentals.