Easier travel refunds demanded for consumers

CHOICE proposes five key law reform recommendations

Less than one-fifth of Australian consumers seeking a refund for travel services that were cancelled due to COVID-19 received a full refund, a new report by CHOICE has revealed.

More than 4,400 people responded to the consumer advocacy group’s survey conducted between January-March 2021 , and around 90% want laws changed in Australia to make it easier to get a refund.

“For many people we heard from, refunds or other remedies took more than six months to arrive, and Australian travellers aren’t happy about travel businesses holding on to their money for so long – or about not getting it back at all,” CHOICE said.

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The survey found that many “players” in the travel industry who provide flights, accommodation, cruises and other services have been “unacceptably slow to respond to customers’ efforts to get their money back, if they responded at all”.

More than half of those polled waited over three months for a refund, credit or some form of resolution.

The most cancelled service (at 86%) was flights, followed by accommodation (65%).

Buck passing

CHOICE respondents cited numerous examples of “buck passing” between travel providers and booking agents as to who was holding a client’s money. Some also questioned the value of travel insurance when policies don’t cover ‘force majeure’ events.

Consumers also faced challenges in recovering refunds from businesses which operated entirely abroad.

“In many situations, money paid by consumers to travel agents (less any agent fees or commissions) are paid by agents to overseas intermediaries or suppliers within a short period of time. This means that agents – especially small businesses – may be unable to provide refunds unless they are in turn able to recoup them from the overseas businesses involved.

“This is a problem that requires cross-sectoral and international collaboration to resolve. That is why CHOICE is advocating for the Federal Government to work with industry groups, consumer organisations and foreign governments to establish mechanisms that enable Australian-based consumers to obtain refunds,” CHOICE said.

Consumer Protection for Australian Travellers

CHOICE is now calling on collaboration between Federal, State and Territory governments to implement a suite of recommendations in order to improve consumer confidence.

Among the recommendations are Law Reforms aimed at:

  • making it easier to obtain a refund when a service isn’t provided;
  • make travel credits and vouchers fairer; (a minimum of three years, ability to transfer to another person);
  • lift standards of customer service (including a “mandatory industry code”);
  • make it easier to have disputes heard and resolved (a travel and tourism industry ombudsman);
  • and improve information provided at the time of booking (including providing details on refunds available to consumers, how to lodge a complaint, breakdown of fees and commission.

Further, the group is seeking to have the Australian Competition and Consumer Commission conduct a market study into the travel and tourism sector, “with a particular focus on travel agents and intermediaries”.

“The market study should consider issues of competition, independence, contracting practices, pricing transparency, and risk allocation through the supply chain,” CHOICE said in its Travel Report.

CHOICE has also sought for the Australian government to create a website that publishes information on domestic COVID-19-related restrictions.

AFTA’s response

In a statement, the Australian Federation of Travel Agents said it is committed to the protection of consumers and travel agents.

To date, travel agents have secured $7 billion worth of credits and refunds for COVID-impacted travel from hotels, airlines, tour operators, cruise liners and other suppliers on behalf of their clients. An estimated $3 billion (the majority of which is now in credits) is still outstanding.

Tom Wanwaring, AFTA Chair

“The process of getting these refunds and credits is incredibly time-consuming, complex and often frustrating with the suppliers’ Terms and Conditions determining whether a credit or refund is available. Agents have been providing this support to consumers despite agents experiencing revenue falls of 90% plus from the imposition of the international travel ban in March 2020,” AFTA said.

AFTA Chair Tom Manwaring said: “We commit to continuing to do what we can as an industry to support consumers through the multiple challenges and frustrations of both securing their refunds and credits on COVID-impacted travel and managing travel in times of COVID, especially once international travel opens up.”

“Consumer confidence in and reliance on travel agents remains strong and has in fact been boosted by the incredible support agents have provided during these times. Many of our member agents have reported a surge in customers who had initially made their bookings direct with suppliers and who have then turned to their local agent to help manage their bookings.”

“There’s no doubt that consumer confidence has been dented by the ramifications of COVID restrictions including snap border closures and travel bans and any measures that can restore confidence levels are definitely worth exploring,” said Manwaring.

To view CHOICE’s 36-page Travel Report 2021, click here.

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