personal finance

Flight refunds: will credit card companies pay out?

Are you battling to get a refund from an airline or travel company for a flight or holiday that has been cancelled?

Globally, consumers have paid some $35bn (£28bn) for flights that cannot now take place, according to the International Air Transport Association.

Some travel companies are making it extremely difficult for customers to obtain cash refunds they are legally entitled to, fobbing them off with vouchers for future flights or holidays, or insisting that refunds can only be processed via call centres whose switchboards are permanently jammed.

EU officials are trying to find ways of making vouchers a more palatable option for consumers by protecting them against the insolvency of the carrier or organiser. 

In the meantime, more grounded travellers in the UK are turning to their credit and debit card providers to get their money back.

Claiming on a credit card

For more than 45 years, credit cards have given protection to customers who have been failed by retailers and service providers by paying compensation if the goods or services fail to be delivered.

Section 75 of the Consumer Credit Act 1974 gives all credit card customers the legal right to compensation when they spend between £100 and £30,000 for goods or services — even if their card was only used to pay a deposit.

Card companies are clearly being deluged with calls about travel refunds. If you call your provider to make a claim, it is likely that a recorded message will direct you to an online section 75 claim form.

Most card issuers will ask if the customer has sought a reimbursement from the retailer before pursuing a claim, and may ask for emails or screenshots showing proof of this to be uploaded (even though this is not obligatory under the act).

Claiming on a debit card

Although less well known, debit card customers can also try making a claim through the “chargeback” system offered by Mastercard, Visa and American Express. Chargeback allows a customer to ask for a transaction to be reversed if they cannot resolve a dispute. They have 120 days from the date of purchase or the date when the service should be provided to make a claim, while credit card customers have six years to make their claims.

Unlike section 75 protection, chargeback is not a legal right but it can be applied to any purchase over £10 in value.

Visa and Mastercard recently issued guidance to Which?, the consumer body, stating that customers should be able to pursue a claim for a cash refund against a disputed transaction on a debit card, even if they had been offered a voucher. However, this would change if the government issued regulations saying that businesses can provide vouchers instead of refunds.

What happens next?

It costs nothing to make a claim — but it may take some time for the money to be reimbursed. One FT Money reader who recently submitted a section 75 request was told: “It may take up to 60 days to resolve your claim”.

None of the banks or credit card companies I called while researching this article would give me any data about the volumes of section 75 or chargeback claims they are currently receiving, or the numbers they are refusing or refunding.

UK Finance, the banking trade body, said banks and building societies were receiving “significantly more [section 75 and chargeback] requests than usual and are dealing with these as quickly as possible”.

Which? has a free tool to help card customers receive refunds on their credit or debit cards. In January and February, 1,000 customers used it, but this increased to 10,000 a month for March and April.

Which? has accused the banking industry of taking an inconsistent and confusing approach when dealing with refund claims from customers. Many have been wrongly told that refunds are not possible because they had been offered credit notes or vouchers. I am also receiving plenty of emails from FT Money readers who report having valid claims turned down.

A common sticking point concerns the £100 figure. While the total cost of an item bought with a credit card has to be more than £100 for section 75 to apply, the cardholder only has to pay part of this on their card to get the cover. This generous clause is now increasingly — and wrongly — being turned down by credit card companies. Some customers find that requests to refund holidays with deposits below £100 meet with initial refusal. On appeal, however, the card companies usually comply with the law.

Gareth Shaw, head of money at Which?, said: “There needs to be greater clarity and consistency about claiming through banks, and the industry should ensure that all bank customers have a fair chance of getting their money back.”

The UK’s Competition and Markets Authority launched an investigation last month into reports of businesses refusing to respect consumer cancellation rights following complaints over private events, holiday accommodation and childcare providers.

If your credit or debit provider refuses your requests, you can take your complaint to the Financial Ombudsman Service (FOS).

The FOS said: “Section 75 complaints can be very complex and we need to investigate the specific circumstances of each case to see if we can help. Therefore, we advise consumers to get in touch with the Financial Ombudsman Service if they’re not happy with the way their bank has dealt with their complaint, as we have the powers to put things right.”

Complaints website Resolver also points out that while the card provider must be based in the UK, purchases made from businesses overseas are covered. However, you need to have bought directly from the supplier and not via a third party website.

Martyn James of Resolver said: “Businesses often get section 75 wrong or fundamentally misunderstand how it works. I’ve had quite senior people from card companies openly disagree with me about things like deposits, even after I show them the bit in the act. I guess the moral is, take it further. You don’t lose anything by going to the ombudsman.”

Lindsay Cook is the co-author of “Money Fight Club: Saving Money One Punch at a Time”, published by Harriman House. If you have a problem for the Money Mentor to look into, email

Consumers battle to obtain refunds

Research by (MSE) has revealed that many travel companies are treating their customers with contempt when holidays or flights are cancelled.

The survey of nearly 30,000 customers rated the experiences they had obtaining refunds from 81 airlines and travel firms.

Of the big-name firms, the worst were Ryanair, with a score of minus 82 per cent, and Tui at minus 60 per cent. Travel Counsellors came top with plus 91 per cent and Hays followed with plus 54 per cent.

Martin Lewis, founder of MSE, said people were not just judging whether firms failed to give a refund: “Many of the poor ratings are about difficulties in getting in touch, being given the run around, and terrible management of expectations — such as Ryanair sending vouchers to those who’d specifically requested cash refunds.”

Last week, British Airways revealed that 346,000 customers had accepted travel vouchers although more than 47,000 of its passengers were still awaiting refunds for cancelled flights. It said it had made cash refunds for 921,000 tickets.

Customers of easyJet have been warned to be extra vigilant about emails pertaining to be about flight refunds following a cyber attack where hackers accessed contact details of up to 9m customers.


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