Businesses Behaving Badly ➲ COVID-19 Travel Credit Shenanigans

18/3/2022

Litigation + Dispute Resolution

Businesses Behaving Badly ➲ COVID-19 Travel Credit Shenanigans

This article highlights the bad business practices that some travel companies have adopted during the COVID-19 pandemic. They appear to be avoiding paying cash refunds when bookings are cancelled. Then they are making it virtually impossible to use the travel credits they offer or placing restrictions on their use so they are worth much less than the original travel. Please contact us if you have had similar experiences and are interested in being part of a potential class action.

James D. Ford GAICD

Founder, M.D. & General Practice Lawyer

Contents

Has your travel has been cancelled due to COVID-19?

Has your Travel Provider made it impossible to use your Travel Credits? or offered Travel Credits worth much less than a cash refund?

Expedia # 1 ➲ If you don't use the travel credit in full, any balance is forfeited

Expedia # 2 ➲ Disconnect your call before you can redeem your travel credit

ACCC investigates allegation Qantas's flight credit policy "unfair and unworkable"

What are your legal rights when your travel is cancelled due to COVID-19?

ACCC Best Practice Guide for the Travel Industry (COVID-19 related travel cancellations)

Credit Card / PayPal

Standard Terms & Conditions

Force Majeure Clause

Australian Consumer Guarantees

What if your Travel Provider is based overseas?

Frustrated Contracts Act 1978 (NSW)

Potential Class Action

Has your travel has been cancelled due to COVID-19?

After having to cancel travel plans due to COVID-19 you have more than likely discovered that your travel provider has a blanket policy NOT to provide a cash refund.

It appears that such a blanket policy is being implemented no matter how long before the travel you have cancelled, and even if cancellation is beyond either parties control (due to a Government COVID-19 lockdown, travel restriction, border closure or regulation).

This approach might be due to the fact that your travel provider is actually an intermediary and therefore must abide by other travel company policies, but this is not determinative.

As an alternative to a cash refund you are offered a travel credit.

The problem is that all travel credits are not equal, and it appears many are designed to frustrate your attempts to use them and expire worthless.

Has your Travel Provider made it impossible to use your Travel Credits? or offered Travel Credits worth much less than a cash refund?

Does the following experience attempting to use travel credits sound familiar …

At first being provided a travel credit seems acceptable.

At least you have not had to consult a lawyer, and you are being provided with some benefit which you assume will be equivalent to the value of the price you originally paid for the travel.

Unfortunately, it appears that the conditions which are being attached to the redemption of the travel credits effectively mean that you will most certainly be far worse off than you would have been if you had your cash refunded.

Here are some examples:

Expedia # 1 ➲ If you don't use the travel credit in full, any balance is forfeited

Expedia have advised that the travel credit is structured in such a way that it can only be used for one travel booking.

Any excess credit will be forfeited and effectively lost.

With this example, the airline involved no longer operates internationally, when Expedia advise that the most expensive domestic flight is less than a quarter of the cost of the original international flight, the financial loss to the consumer is substantial.

The original international flight was scheduled to be operated by a partner airline which is still operating and is not insolvent.

If this partner airline was paid the airfare it would be liable to refund the airfare as the flight never left the ground, it was cancelled due to COVID-19.

If the partner airline was not paid the airfare, then Expedia would have had the cash sitting in a bank account (pending payment to the partner airline), which begs the question: Where did this money go?

This situation has been explained by Expedia are being effectively caused by the flow-on effects of the administration of Virgin Australia.

The actual situation is not known.

Discussions with a customer who was dealing directly with Virgin Australia (and had purchased tickets prior to Virgin's administration) advised that they were able to use the entire amount of their travel credit with no amount being forfeited.

If this is in fact the case, the only logical conclusion that can be reached is that Expedia have misrepresented the situation with regard to the use of the travel credits.

If the travel credit is not used, or a large portion is forfeited, the only beneficiary would appear to be Expedia.

Expedia # 2 ➲ Disconnect your call before you can redeem your travel credit

In this example, the travel credit for the cancelled booking related to more than 1 person.

Expedia advised that the travel credit could only be used to book a flight in exactly the same names (this effectively means the travel credit cannot be transferred between family members).

With Expedia, you cannot claim your travel credit online, they can only be redeemed by calling the Expedia customer service centre.

After waiting nearly an hour on the phone an Expedia customer service representative answers your call.

The Expedia customer service representative asks for your phone number so they can return your call if you get disconnected.

You get disconnected (at exactly the 1 hour call mark - it seems the system is designed to drop calls automatically after 1 hour).

The Expedia customer service representative does not return your call.

You call the Expedia customer service centre again and wait almost another hour for a different Expedia customer service representative to answer your call.

The above process repeats, and you get disconnected again right on the 1 hour call mark.

You give up as you have better things to do than to spend your entire weekend on hold only to have your call automatically disconnected before you can redeem your travel credit.

As using the travel credit represents real money, you try one last time.

This time you ask to make a formal complaint as your patience has worn thin.

You are told to send an email.. no email address is provided.. you are again promptly disconnected right on the 1 hour call mark.

You are emailed a customer satisfaction survey.

No-one returns any of your calls from the Expedia customer service centre.

You have no other way to redeem your travel credit so if you take no further action.

The end result is that your travel credit is effectively worthless.

ACCC investigates allegation Qantas's flight credit policy "unfair and unworkable"

By way of update this article by  business reporter Samuel Yang was published by ABC News today 12 April 2022:

ACCC investigates allegation Qantas's flight credit policy "unfair and unworkable".

Some relevant extracts from the article have been copied below.

A consumer advocacy group has lodged a formal complaint with the Australian Competition and Consumer Commission (ACCC) about Qantas's flight credit policy.
Key points:
➲ Choice says the Qantas flight credit policy may have unfair contract terms
➲ Qantas currently holds $1.4 billion in flight credits
➲ The ACCC is investigating the policy and has sought information from consumers 
Choice said the airline's flight credits scheme was "unfair and unworkable" and it might involve "potential unfair contract terms and misleading and deceptive conduct".

Choice spokesperson Dean Price said Qantas was placing unreasonable barriers in the way of travellers trying to redeem their credits or get a refund from cancelled travels.

"This includes forcing many people to spend extra money, limits on available flights, problems with online services, unfair expiry dates, and long wait times in their call centres," Mr Price said.

Others …

Please let us know about your experiences with Travel Credits (both good and bad) so we can share with the public.

What are your legal rights when your travel is cancelled due to COVID-19?

Each situation will vary depending upon its own circumstances, however the following considerations will help you to begin the process of understanding your legal rights and potential steps you can take to enforce them.

ACCC Best Practice Guide for the Travel Industry (COVID-19 related travel cancellations)

First check to see whether your travel provider is implementing best practices, and note where they are falling short (if applicable)!

The ACCC + Australian Consumer Law (ACL) Regulators released a best practice guide for the Travel Industry in July 2020 for COVID-19 related travel cancellations.

You can download a copy here.

Credit Card / PayPal

If you have paid for the travel by credit card or PayPal then one avenue to pursue in the first instance is a claim via your Credit Card company / PayPal to have your account credited due to the fact the product or service has not been delivered.

You will need to take prompt action to maximise your chances of success.

Standard Terms & Conditions

Failing a credit via your payment service, the starting point is to read the standard terms & conditions of your booking and of the travel credit itself.

Although the standard terms & conditions may specify that no cash refund is available, or restrict any travel credit redemption this is not the end of the matter.

Where unforeseen events such as the COVID-19 pandemic make it impossible to perform the contract, what you are looking for in the standard terms & conditions is a Force Majeure Clause which will specify what will happen in such a situation.

It is also worth noting that just because the standard terms & conditions specify a certain outcome it does not automatically mean that the outcome is enforceable.

When assessed by a Tribunal/Court the standard terms & conditions could be found to be void and unenforceable, or Australian Consumer Guarantees or local NSW legislation such the the Frustrated Contracts Act 1978 (NSW) (refer discussion below) could be applied to change the outcome.

Force Majeure Clause

To learn all about Force Majeure Clauses please read our blog article Force Majeure & Frustration: Why COVID-19 is a Wake-Up Call.

Australian Consumer Guarantees

The Australian Consumer Guarantees are the promises +/or assurances that automatically apply (imposed as protection for consumers by Australian Consumer Law) to the sale of products and services to consumers in Australia.

Australian Consumer Guarantees apply regardless of anything the seller states to the contrary, including their standard terms + conditions, or warnings on their website or the place of purchase of the product or service.

Who is a Consumer?

From 1 July, 2021:

👨‍💻 A consumer includes any purchaser (including a business) where the purchase amount is less than a monetary threshold of $100,000 (previously the monetary threshold was $40,000); or

🏡 Consumers of goods or services (for any price) if the goods or services are of a kind ordinarily purchased for personal, domestic or household use; or

🚚 A vehicle or trailer purchased primarily for use in the transport of goods on public roads.

Scope of Protection

➲ Bundled products and services;

➲ Gifts with proof of purchase;

➲ Sale items;

➲ Online products and services bought from Australian businesses; and

➲ Second-hand products from businesses, taking into account age and condition.

Exceptions do apply.

Consumer Rights

If a business fails to deliver any of these guarantees, consumers are granted the following legal rights:

⚖️ Repair, replacement or refund

⚖️ Cancelling a service

⚖️ Compensation for damages & loss.

Consumer Service Guarantees

Services must be:

✅ Provided with acceptable care and skill or technical knowledge and taking all necessary steps to avoid loss and damage;

✅ Fit for the purpose or give the results that you and the business had agreed to; and

✅ Delivered within a reasonable time when there is no agreed end date.

Source: ACCC website.

What if your Travel Provider is based overseas?

We collaborate with AirHelp as our strategic alliance partner to assist our clients with their travel/flight-related compensation claims globally

Click here to find our more.

By entering your Flight Departure + Destination you can check your compensation rights online 24/7.

Source: Airhelp.com

AirHelp has helped over 16 million happy passengers globally with their claims against the airlines.

By way of full disclosure Blue Ocean Law Group℠ are an affiliate of AirHelp and will be paid a € ‎16.00 commission per claim made on your behalf.

Frustrated Contracts Act 1978 (NSW)

Where your travel provider has no standard terms & conditions, or the standard terms & conditions do not cover the rights of the parties in the event that COVID-19 or something similar frustrates the performance of the contract, then the Frustrated Contracts Act 1978 (NSW) may apply.

FRUSTRATED CONTRACTS ACT 1978 - SECT 7

Promise not performed

(1) Where a promise under a frustrated contract was due to be, but was not, performed before the time of frustration, the promise is discharged except to the extent necessary to support a claim for damages for breach of the promise before the time of frustration.

FRUSTRATED CONTRACTS ACT 1978 - SECT 14

Recovery of money as a debt

A person entitled under Division 1 or 2 to be paid an amount of money by another person may recover the amount from that other person as a debt in a court of competent jurisdiction.

Potential Class Action

Please contact us if you have had similar experiences and are interested in being part of a potential class action.

Social Sharing Image: Courtesy of Marten Bjork on Unsplash

Credits: This blog article was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This blog article is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.