Travel agency clients should not have to rely on credit card chargebacks as a form of de facto consumer protection.
That’s the opinion of consumer advocacy group CHOICE, which goes on to give its reasons.
“Firstly, paying by credit card can be expensive for consumers who will be charged interest on their debt (which can often be set at extremely high levels) and who may also have to pay a surcharge,” CHOICE states.
“Secondly, chargebacks can be confusing. Not all banks and credit card providers follow the same procedure for claiming chargeback. Thirdly, some claim procedures have time periods for making claims that are inappropriate for travel.
“Commonwealth Bank for examples requires that ‘to request a chargeback, tell us you want to chargeback the transaction within 30 days of the date of the statement which shows the transaction and provide us with any information we ask for to support your request’.
However for travel purchases it is not uncommon for consumers to book service many months in advance.”
Consumers trying to use Australian Consumer Law (ACL) in the case of travel agent insolvency also faced big hurdles, CHOICE pointed out.
“The use of the ACL for compensation has a major flaw in that an insolvent business can’t pay compensation to consumers even if liable to do so.
“A consumer seeking to use ACL to recoup costs will find themselves one of many creditors in the event of an agent’s collapse. The use of ACL is not a genuine solution to the lack of protection caused by the winding down of the Travel Compensation Fund (TCF).”
Casting its eye over the whole travel scene, CHOICE says that following the decision of governments to deregulate Australia’s travel intermediary industry and abolish the Travel Compensation Fund that provided protection, “it is crucial that consumers are left, at the very least, no worse off.
“Therefore it is important to acknowledge the different ways the industry’s deregulation has impacted consumer protection,” CHOICE states in its newly released submission to the First Year Review of the ATAS Charter and Code of Conduct.
“The reforms commencing on 1 July 2014 had two primary effects: to wind down the Travel Compensation Fund (TCF) and to abolish mandatory licencing for travel agents.
“The TCF provided financial compensation for consumers in the event that their travel agent became insolvent. Following its repeal, consumers have limited avenues available to recoup funds already paid for their travel in the event of an agent’s collapse. Mandatory licencing attempted to mitigate agent insolvency and other forms of consumer detriment by seeking to ensure that only fit and proper persons operated travel agencies.
“Without licencing requirements the industry is at risk of attracting people with little industry knowledge or business skills, increasing the likelihood of travel agent collapse or fraud.”
Accordingly the Travel Industry Transition Plan identified several different approaches to ensuring that consumer protection was maintained following deregulation and ATAS was one of those measures, CHOICE observed.
CHOICE reminded readers that the Travel Industry Transition Plan had noted: “An accreditation scheme that does not feature a compensatory function would be of little use in the event of agent insolvency.”
Using ACL to obtain compensation shifted the burden of seeking a refund or damages onto consumers, CHOICE said.
“Unless relief can be obtained through a low-cost tribunal or alternative dispute resolution or conciliation, legal action can potentially be time-consuming and costly.
“The absence of an automatic compensatory mechanism highlights the importance of choosing carefully when transacting with a particular agent.
“Consideration of ancillary regulatory mechanisms such as IATA accreditation, AFTA membership, brand awareness and market presence will become a necessary step for consumers who buy travel services.”
Written by Peter Needham