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Pensioners lose their money as travel agency liquidates

August 27, 2014 Corporate, Headline News 3 Comments Email Email

egtmedia59Bad publicity about a travel agency collapse has hit the media in Queensland and nationally after five women pensioners in Bundaberg reportedly lost almost AUD 15,000 when the company they were planning a holiday with went into liquidation.

The case, relating to Australian Specialty Tours Pty Ltd, was reported in local papers in Bundaberg and Gladstone as well as by the Australian. It has been described by consumer group Choice as an important test case for consumer protection following the deregulation of travel agents.

The liquidation of Australian Specialty Tours Pty Ltd follows an earlier, separate and unrelated alert last Friday from consumer affairs authorities in two states about a travel scam in which consumers were apparently duped into paying for flights and accommodation in Bali – only to later discover they were never booked with an airline or hotel. See: Alert! First big travel scam since end of agent licensing.

In this week’s case, the Bundaberg News-Mail and Gladstone Observer ran a photo showing one of the elderly pensioner victims looking forlornly at a travel brochure, under the caption: RIPPED OFF.

The story said Bundaberg woman Judith Hayhoe was one of five local pensioners “left looking for answers” after she made a final payment on a trip before receiving an email informing her their nine-night Kimberley holiday was off.

Hayhoe said it had been hard saving for the trip. She was giving herself the holiday as a 75th birthday present.

“But both the trip and the money now look to be gone as their travel agent, Victorian based Australian Specialty Tours Pty Ltd went into liquidation,” the paper reported.

The pensioners all paid a deposit of AUD 1000 to the company, a firm they had used previously, the report said.

The final payments were due by 15 August 2014 – the same day the company went into liquidation.

Hayhoe told the paper the company had emailed and requested payment be made on that date, in case Qantas increased its fares.

“We just hope we can possibly do something about getting our money back,” she said.

The paper reported that Australian Speciality Tours Pty Ltd company was now in the hands of receivers Philip Newman and David Charles Quin of PCI Partners Pty Ltd in Victoria. A creditors meeting will be held tomorrow (Thursday 28 August 2014).

The Australian newspaper reported that the liquidation was likely to leave dozens of consumers “thousands of dollars out of pocket”.

Choice spokesman Tom Godfrey confirmed to the Australian that only consumers who had bought products before 1 July 2014 would be eligible for compensation from the Travel Compensation Fund (TCF) “which provided compensation in the event of travel agency collapses until it was wound down last month”.

Godfrey said those who paid via credit card might be able to get a chargeback from their bank or they could “try their luck with their travel insurance – if they have any”.

Godfrey said the collapse served as a “timely warning” to other travellers to take extra steps to protect themselves now the TCF was being wound down. They should find a reputable agent, preferably one with AFTA ATAS accreditation, and be sure to ask the agent what steps they had taken to protect client funds.

Paying by credit card was also recommended.

The Australian report quoted AFTA chief executive Jayson Westbury expressing confidence that consumers would be better off as a result of deregulation and stressing that the insurance industry was coming up with “a range of remedies”.

Choice’s website advises: “Accredited travel agents will be required to provide ATAS with some regular reports showing their ability to meet their financial obligations.

“However taking out insurance policies protecting consumers in the event that the travel agent goes bust, the main function of the old compensation fund, is only optional. That is why it is worth asking your travel agent what steps they have taken to protect your funds.”

This latest travel insolvency follows the reported collapses of All Travel, Toukley and Dial-a-Holiday, Woy Woy on 25 June and 25 July 2014 respectively, as well as the warning issued by Western Australian and Queensland Consumer Affairs last week over Bali Indulgence.

Several travel industry figures have for some months been arguing for the retention of the TCF, or for ATAS to include some form of mandatory consumer protection for consumer funds while those funds are in the hands of travel intermediaries.

They warned about the sort of situations that have just occurred.

Written by Peter Needham

Currently there are "3 comments" on this Article:

  1. There is no doubt that the Australian travel consumer has been let down by the fair trading authorities when it comes to protection for the travel moneys they pay to travel agents. I feel sorry for the Bundaberg pensioners, and for every travel consumer who pays their travel agent good money for travel, and loses it when the travel agent goes bust.
    Reputable travel agents will include insolvency cover in their PI Insurance.
    But rogue travel agents will not – they will take money and not pay for the travel arrangements.

    My view is that it is time for the Australian Consumer and Competition Commission – the ACCC – should step in. They have power under the Australian Consumer Law to regulate deceptive conduct, and should issue a warning to travel agents not to accept money from the public unless they have a PI policy in place with insolvency cover.
    With proper publicity, the ACCC would be well placed to force the travel industry to comply.

  2. Mark C says:

    As the dodgy operators become more sophisticated (the internet enables this also) the protection for consumers is wound back – that aint progress !

  3. AgentGerko says:

    Well done AFTA for your pushing the govts to close the TCF. The ATAS is a flop and would not have helped these people anyway. But the question should be, did the customers take out travel insurance with insolvency cover? The final risk lies with them. Most people now take out travel insurance but so many buy everything and then take it out a few days before they go. Consumers must be taught that travel insurance costs the same whether bought six days or six months ahead. It should be taken out at the same time as you make your first payment.

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