It’s a sad fact that sometimes, when booking your annual holiday in the sun, things do occasionally go wrong.
And that has certainly been the case over the past week for the near 140,000 holidaymakers who have been affected by the collapse of Lowcostholidays.
News last week that the company was entering administration came as a surprise to those who had booked with the company right up the announcement, with many seeking to take advantage of a summer sale that had been extended just a day earlier.
In such a situation, you’d normally be able to make use of the ATOL scheme to reclaim your money, with UK-based companies selling air holidays required to hold an Air Travel Organisers Licence.
Those companies then pay into a special fund overseen by the Civil Aviation Authority (CAA) for each booking made, with that fund then used to help customers if a travel company collapses.
The issue for those who were either already on holiday via a Lowcostholidays booking, or had yet to travel, is that the company left the ATOL scheme back in 2013 when CEO Paul Evans transferred the business to Spain – a move which led to warnings from the CAA that consumers should be wary about using Lowcost to book their break because of a lack of protection.
Unfortunately, it appears many of those who currently have – or had – bookings with the company were unaware that they weren’t covered by the ATOL scheme and in some cases, weren’t even aware that they were booking with a non-UK business.
The end result now is that Lowcostholiday customers face the real prospect of losing the money they had paid, as well as their holiday – with money that should have been paid by the company to cover accommodation having not been paid and only a limited bond in place with the Spanish regulator; enough to cover around £7 per booking.
As explained in a recent blog, if you book with a ATOL-protected company then you can relax safe in the knowledge that your holiday is protected in the event of a company folding.
The main way to see if a company is ATOL protected is to look out for the logo on the company website or to use the online ATOL checker, which allows you to search for a company and get information on their ATOL number.
But what happens if, as with Lowcostholidays, the company isn’t part of the ATOL scheme?
The first thing to consider is how you booked your holiday.
If you’ve made payment using a credit card, then the Consumer Credit Act could provide you with the security you need to get your money back, with credit card companies sharing liability with retailers – such as your travel company - in the event of something going wrong.
If that is the case, then you can file a claim with the credit card company under Section 75, with the financial ombudsman acting as further back-up in the event of problems with your claim.
Should you have made your payment via debit card, you may be able to reclaim your money via the chargeback scheme, where your bank will reclaim money from a retailer’s bank if something goes wrong.
Unlike the Consumer Credit Act however, the chargeback scheme is a customer service initiative that banks don’t legally have to utilise but there is nothing to lose by trying.
Typically, you have 120 days in which to lodge a claim through chargeback from the moment at which a problem is discovered.
A similar process can be followed for a payment made via Paypal, although any dispute through its buyer protection scheme has to be made within 180 days of payment, which may be an issue if you have booked well in advance of your departure date.
One important thing to consider is that, in many instances, your travel insurance WILL NOT cover you against the collapse of a travel company, unless you have paid extra to add it to your policy.
That’s something that needs to be checked when taking out your policy with it ultimately being your decision as to whether you want to pay the extra to cover you in case something goes wrong.
Should you be unable to reclaim your money through a bank/credit card company/PayPal or via your insurance, the only option you may then be left with is to register as a creditor of the company that has collapsed, although in this case, you can only expect to get a small percentage of your money back (if at all) and are likely to be well down the chain when it comes to getting anything from the company.
Should you be a customer of Lowcostholidays who has yet to travel, your flights should be covered already as airlines require payment up front but any hotel booking is highly unlikely to have been paid, meaning you need to make the decision as to whether you can afford to pay for the room effectively for a second time before knowing if you can get a refund on the payment already made to Lowcostholidays.
If you do elect to cancel however, you may not be able to get the money back from your airline for the flights – it would be at the discretion of the company and again, is something that will probably not be covered as by your travel insurance policy.
The latest update for any customers of Lowcostholidays from the administrator Smith & Williamson can be found here.
