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Clients shouldn’t have to rely on credit card chargebacks

September 23, 2015 Business News, Headline News 3 Comments Print Print Email Email

egtmedia59Travel 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.http://www.thavornbeachvillage.com/phuket-hotel-promotion-package/

“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


Currently there are "3 comments" on this Article:

  1. bruce weston says:

    you paid by card , agent absconds how can card be reversed HEY IT CANT the agents bank has no money to refund and your credit card issuer is not Santa Claus . Only possibility is if your card is a ‘gold’ or similar with insurance built in as part of its deal with you .

  2. Returning to a comprehensive scheme like the TCF is retrograde – CHOICE’S nostalgia for the old TCF style scheme conveniently ignores the reality of that scheme – it was an expensive financial burden on the travel industry, it covered only agents not suppliers, and it was so miserly with its payouts that when it was would up it had cash reserves of $28 million of the travel agents money.
    Instead, CHOICE should be working with the travel insurers, including credit card travel insurers, and with AFTA to ensure that all travellers who take out travel insurance or who pay by credit cards which provide travel insurance to be covered for travel agent and supplier insolvency.

  3. Andris says:

    Submissions and lobbying need a bit of panache , Choice could consider as part of a activist campaign a direct approach to all the State and Territory ministers seeking that they use there share of the TCF ,now apparently totaling $28 m to fully compensate the victims of various TA collapses in full as per the TCF payment criteria . After all it is not government revenue but consumer money contributed to the TCF by consumers via there purchases using TA’s as intermediaries . So far the cost to do so is minimal , maybe $1.5 m out of $28 m. The $28 m of TCF funds used to pay compensation should last maybe 15 years if wisely invested

    The ministers and bureaucrats would be well aware by now that to say there are options like credit card charge back is a nonsense and one that with every collapse were that view is trotted out has resulted in the messenger being subject rightly to public ridicule

    The view expressed by some in the industry that the abolition of the TCF is good for the industry overlooks the evidence . 39% of the industry has had a decline in business and appear to take the view that it is due in part to consumer’s voting to take there business elsewhere , be it the net or corporate TA’s .

    To claim without any evidence that the abolition of the TCF is a benefit to the industry raises questions , if one save $1 on each $100 of turnover by not contributing to the TCF and instead the $1 goes direct to the bottom line as pre tax profit . All well and good . But if my turnover is reduced by $1000 my bottom line profit pre tax is reduced by $10 not forwarded to the TCF but also by the lose of profit on $900 .If my margin is 10% , that’s 90 quid I am down the drain for a pre tax profit gain of $1

    Does that $1 makes sense .As a business man I would prefer to retain the extra turnover than have it reduced by $900 to gain an extra $1 of pre tax profit .

    The view that the TA industry has no role to play in consumer protection and is not responsible to consumers is a nonsense . Screw the market , the consumer and take no individual or industry responsibility to purchasers of goods and services is not only antiquated and retrograde it is a recipe for industry oblivion in the disruptive digital age we now live in

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