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These FAQs attempt to set out some frequently asked questions about chargeback rights and rights under Section 75 of the Consumer Credit Act (CCA) in the context of holiday cancellations, and difficulties as witnessed in the aftermath of lockdown measures.
They are meant as a general guide only and customers should contact their card issuer for guidance about specific issues. More detailed information about both of these rights can be found here.
We set out below some questions that may arise regarding the application of these rights in the context of flight cancellations and/or, flight delays. This is set against the backdrop of well reported problems currently impacting the travel industry, which are anticipated to be ongoing issues over the summer and autumn months during 2022.
Please note that the Department for Transport (DfT) has also put together an Aviation Passenger Charter Document – which acts as a first port of call for consumers; and will be looked to be updated on a regular basis by the DfT. To reflect the fluidity of many of the practical issues facing consumers and continuing pressures placed on the aviation industry.
As is consistent with any form of cancellation, individual customers may have stronger rights elsewhere (e.g., an insurance policy, a government compensation scheme, or contractually against a provider) in addition to reliance on any protections that may be sourced through their usual and chosen payment method (i.e. debit/ credit card).
We do not cover those alternative options here in any detail, but the following information may assist, and further information can be obtained through the helpful links which take customers through to the Civil Aviation Authority website (“CAA”). The CAA is the UK’s aviation regulator.
Consumers should be aware when booking; or making their travel arrangements that there exists a range of differing rules, regulations and legislation that underpin those arrangements; and effectively sets out what air passenger rights exist in the event of cancellations, delays and/or missed flights.
The type of travel arrangement booked may have an impact on the types of compensation, re-booking options and refunds that may be available.
Airlines are subject to European Regulation EU 261/2004 legislation for ‘flight-only’ booking claims; whereas tour operators/organisers (what might be better described as ‘flight-package’ style arrangements) are subject to the Package and Linked Travel Regulations (PTR).
In a situation where flights have been delayed or cancelled, these legal protections are preserved under The Air Passenger Rights and Air Travel Organisers’ Licensing Regulations 2019.
The CAA provides clear statement of rights for consumers covering certain commonly reported issues/ scenarios– these include the following:
There may be circumstances where consumers will want to consider what legal and statutory protections also exist by virtue of their debit and/or credit cards. These considerations are set out below:
Generally speaking, if the supplier of your goods or services has not delivered what you have paid for through a credit or debit card, then you should be eligible in seeking redress either through the chargeback process and/or when making a Section 75 claim.
However, it is important to note there is not an automatic legal right to receive your money back through chargeback rights or Section 75, as this will depend upon all the relevant facts in each case.
Key facts include the supplier's terms and conditions, the scheme rules under which your card is issued e.g., Mastercard, Visa or Amex, applicable government laws and regulations and the approach taken by your card issuer.
To help resolve your issue as quickly as possible it might be helpful for you to first approach your supplier before making a chargeback or Section 75 claim through your card issuer.
Chargeback exists for both credit and debit card purchases. Chargeback is a well-publicised consumer protection industry scheme that allows credit and debit cardholders the ability to claim a refund from their card issuer in a number of different scenarios, including where you have not received what you have paid for.
However, chargeback rights only cover the amount of your card transaction, so you cannot claim other losses or expenses that have been suffered, generally referred to as consequential losses.
Chargeback claims must also be made within a set time period. This is typically 120 days from the date of purchase or from when you expected to receive the goods or services, though longer periods may apply in certain scenarios. Card issuers seek to claim back, from the merchant, the amounts you are claiming. Merchants can dispute your right to chargeback.
This applies to certain transactions made by credit card. The goods or service you bought must have cost over £100 and not more than £30,000.
"Section 75" is an important consumer protection right that means your credit provider has a legal responsibility if things go wrong with something you purchase using credit. Section 75 rights are only available where the provider has misrepresented something to you or breached their contract with you.
However, as well as the amount you actually spent on the card (such as a deposit), you can also recover your full losses, sometimes including consequential expenses. Claims will be subject to usual legal limitation rules that apply to breaches of contract or misrepresentation claims.
There can be complex legal and factual issues arising and each situation will be considered on a case-by-case basis.
If your flight or package holiday is cancelled, generally speaking you are entitled, under the law, to a full refund from the airline or tour operator.
However, instead of a cash refund you may decide to accept a replacement flight, a package holiday, or a voucher or credit note for when you rebook. If you accept this, then this may well settle your current claim and you may only have a claim if something goes wrong with the replacement arrangements.
If you have rejected a replacement or a voucher/credit and have asked for but do not receive a refund, you may have a chargeback claim or a claim under Section 75. This is due to the travel provider failing to provide you with the services/accommodation you contracted and paid for.
Typically, you are not obliged to accept this.
It is likely that your claim against the travel provider would then be regarded as settled and so you could not change your mind later and make a chargeback or Section 75 claim.
However, in effect, the airline or package holiday provider has then agreed to provide you with a different right instead. If they fail to honour the alternative booking or you are unable to use the voucher when it is still in date, chargeback and Section 75 rights may then be available. However, just like your rights for the original trip, if the cancellation of the rebooked holiday arises because of a future government-imposed restriction then there may not be a breach of contract if the terms and conditions allow for cancellation in these cases. This might impact your ability to make a claim.
However, if you accept a voucher to use to book a future holiday (a bit like a gift voucher) and you are able to use this voucher to book a new trip with a new holiday contract, you will not have Section 75 or chargeback rights if something then goes wrong with that new trip if you didn't pay any of the price of the new trip on a card.
You will generally be entitled to a full refund from your airline for the cancelled flight, but if you didn't book the flight on the card, then you would not be able to claim under Section 75 or chargeback for the amount of the flight.
If the hotel is still open for business and it is the cancelled flight that has stopped you travelling, the hotel will not have broken their contract with you if they are still able to honour your original booking and so there is no Section 75 or chargeback claim for the accommodation costs. However, if the hotel's terms allowed you to cancel and get some of your money back, you might have a claim if they stopped you doing that and refused you a refund.
If you paid for the flight on your card and the flight is cancelled and you have the right to claim for breach of contract you may be able to claim hotel costs as consequential losses so long as these were reasonably anticipated losses and recovery has not been excluded by the terms of any contract.
For Section 75 to apply, there must be a breach of contract or misrepresentation by the airline or tour operator. If there isn't then there is unlikely to be a Section 75 claim. A chargeback claim can only be made where the travel company is the one who has failed to supply you with services (not where you choose not to want them anymore or are unable to travel).
You might, however, have a Section 75 or chargeback claim if you cancel your accommodation booking in line with the provider's terms and conditions but do not receive a refund when you are entitled to something back.
As noted earlier, passengers may have rights against the airline and customers should review the CAA website through the links attached above.
A claim may still be made against your card provider for additional expenses as consequential losses, but this will be considered on a case-by-case basis and will depend upon the contractual terms agreed with the air
Customers are referred to the earlier CAA links to see what their rights are against the airline. If the airline fails to comply with the regulations customers may try to book directly but may also wish to check with the airline first to see if they will be reimbursed.
As to whether Section 75 would cover the cost of flight which is booked directly by the customer this will be determined on a case-by-case basis and will depend upon the contractual terms put in place by the airline.
For a Section 75 claim to be valid, generally yes. But where the cardholder books the holiday for themselves and their family then the cardholder will be able to claim under Section 75 in respect of a breach of contract or misrepresentation.
This can get more complicated when a number of independent individuals (e.g., friends or two couples) go on holiday. If there are two separate holiday contracts, the credit card holder who paid may not be able to claim losses from their credit card company for their friends. This may come down to the detail of the arrangement between the friends and the approach of your credit card company.
For a chargeback claim, if the travel company did not supply the services, the cardholder is generally entitled to get a refund of the amount they paid on their card. So, if a cardholder paid £1000.00, the cardholder could raise a chargeback claim for the full £1000.00 to their issuing bank (assuming there are chargeback rights in the first place).
If you booked through a travel agent your ability to claim under Section 75 depends on exactly who took your payment and what it was for. Section 75 usually only applies when the payment is made directly to the merchant who is actually providing you with services. However, the travel agent may have taken payments as an agent for the travel supplier, and therefore you may be covered.
Where a travel agent sells a holiday package that they have put together then Section 75 will apply as usually the travel agent is a party to the contract.
For chargeback rights, it does not matter if you book via a travel agent or directly with the service provider. If you fail to get what you paid for, it is likely you will be able to claim against the party who you paid, using chargeback.
Yes. If Section 75 applies, it doesn't matter that the transaction was only partly financed by credit and recovery is not limited to the deposit.
Chargeback rights, however, only apply to the amount of the transaction made on the credit or debit card. This means you would only get your deposit back.
Where your credit or debit card provider declines your Section 75 or chargeback claim, they should explain the reasons for this clearly and fairly and explain any further options that you might have, such as cover under a travel insurance policy or packaged bank account
In many cases you may be able to claim either under travel insurance or under a card right (chargeback and/or Section 75). Remember you cannot claim the same loss twice. It is up to you to decide where to make your claim and travel insurers and card issuers must help you and not automatically refer you to someone else. Insurers and card providers should always give you reasons and act fairly.
Some insurers may require you to first seek refunds from other parties, such as a travel provider or from a card provider, before considering your claim. However, they must act reasonably and should not ask you to pursue a Section 75 claim if, e.g., you are clearly not covered by Section 75.
If you are referred to your card provider, your insurer should take reasonable steps to help you understand why you are being referred. If your insurer does not do this, you should ask them to explain.
Paying with a debit or credit card can provide additional protection if something goes wrong.
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