Travel firms ‘strangled’ by Barclays threats: Payments withheld over collapse fears
The travel industry has accused Barclays of ‘strangling’ firms by demanding they hand over millions of pounds in case they collapse.
While the High Street giant has signed up to the Government-backed emergency loans scheme to help firms survive the pandemic, the ruthless approach taken by its Barclaycard division has been laid bare in a leaked letter.
It shows how the card giant threatened a large travel agent – which employees about 450 people – that it would withhold all card payments from customers unless it handed over close to £10m within 24 hours.
Mixed message: Barclays has signed up to the Government-backed emergency loans scheme to help firms survive the pandemic, but its Barclaycard division is taking a ruthless approach
The tour operator, which does not want to be named for fear of scaring off potential customers, said it received the ultimatum in a letter from Barclaycard which informed it that it had already stopped settling customer card payments a few days earlier because it believed it was close to collapse.
Quoting its terms and conditions, it added: ‘We now require you to pay a sum… to cover your present and future liabilities to us.’
Under chargeback rules, customers who pay more than £100 for goods or services on their card can claim it back from the card company if they do not receive it. The boss of the travel agency, which has been a Barclaycard customer for 21 years, said: ‘Barclaycard have behaved atrociously.
They did not consult us and then asked for a king’s ransom of millions of pounds because they thought we were going to go bust. ‘Turning off card payments – this is like turning off the oxygen. They were essentially saying we’ll put you out of business unless you pay millions tomorrow.’
The Association of British Travel Agents (ABTA) said firms throughout the travel industry have received similar ultimatums from banks as the Covid-19 pandemic has devastated the tourism industry.
It has reported the behaviour to the Government as well as to the City watchdog, the Financial Conduct Authority.
John De Vial, ABTA’s head of financial protection, said: ‘This kind of knee-jerk action will kill businesses. Banks are strangling businesses that are trying to get through this crisis.’
A Barclays spokesman said: ‘We are a major provider of services to the travel sector, and in some instances we are looking for additional security in case trips aren’t delivered so that we can protect consumers should a refund be required.’