Smart Money: ‘Showdown’ as US villa holiday cancelled – Gareth Shaw

Have you been denied a refund? Consumer Credit Act’s Section 75 is best bet, says Gareth Shaw

Which? has been urging regulators to take action on companies that aren’t giving customers their money back for holidays in the likes of Florida that cannot go ahead (Picture: Getty)

Q I’m making a claim under Section 75 against a villa rental company in the US which has refused to refund us, even though all flights to Florida were cancelled. The terms and conditions state that if chargeback is used it would take me to court to get the money back. Can it do this?

A Sadly, you are one of thousands of people who are currently battling holiday companies, airlines and hotels to get their money back as a result of cancelled holidays caused by coronavirus. While, of course, the pandemic has wreaked havoc on the travel sector, by refusing to refund customers many firms have been breaking the law. Which? has been campaigning on this issue, urging regulators to take action on firms that aren’t giving customers their money back for holidays that cannot go ahead and calling on the Government to intervene so that holidaymakers’ money isn’t used to prop up the travel sector.

We’ve had many reports about villa companies refusing to play fair with cash refunds, particularly those bookings which are “villa-only”, which tend not to be Atol-protected (a scheme that protects your money for packaged holidays). While regulators in the UK have been telling accommodation firms to refund customers, local laws in other countries mean they have little enforcement power outside of the UK.

So you have decided to pursue a refund through some of the helpful tools that are available to you. You mention that you are pursuing a Section 75 claim, and this is a powerful protection that people in your situation should consider using.

Under Section 75 of the Consumer Credit Act 1974, your credit card company is jointly and severally liable for any breach of contract or misrepresentation by the retailer or trader.

This means it is just as responsible as the retailer or provider for the goods or service supplied, allowing you to also put your claim to the credit card company if you want a refund. You don’t have to reach a stalemate with the provider before you can contact your credit card provider – you can make a claim to both the provider and credit card provider simultaneously, although you can’t recover your losses from both.

This right is particularly useful if the retailer or trader has gone bust, or it doesn’t respond to your letters or phone calls. Helpfully, Section 75 also applies to foreign transactions as well as goods bought online, by telephone or mail order for delivery to the UK from overseas.

There are some limitations to when a card company is liable. The goods or service you bought must have cost over £100 and not more than £30,000 but you don’t have to have paid more than £100 or the full amount on your credit card – the card company is liable even if you made only part of the payment (a deposit, say) on your card. It’s the value of the goods you’re buying that is key – not the amount paid on the card.

This is not to be confused with chargeback, which is something slightly different. Section 75 is enshrined in law, and is a statutory right under the Consumer Credit Act. Chargeback is a voluntary scheme governed by the rules of your card provider, which sees them taking money directly from the company and putting it into your account.

So, can the company pursue you for doing this? I asked our experts at Which? Legal for its view. With a Section 75 claim, the villa company would have no grounds to bring a legal claim against you as your refund would come from your credit card provider, which may then seek to recover costs from the company.

With chargeback, the company could appeal and, in theory, bring a claim against you.

Such a claim would likely be based on the doctrine of “unjust enrichment”, for example where you have accepted vouchers but have also received a full refund. But as you haven’t accepted either, such a claim would be likely to fail.

Gareth Shaw is head of money at Which?