Failing chargeback scheme heaping further misery on agents, ABTA warns

ABTA has waded into the controversy surrounding credit card chargebacks amid fears agents are refunding passengers and then having cash swiped from their account by credit card companies.

TravelMole revealed today that some agents are threatening to sue customers who submit fraudulent chargeback requests having already been refunded.

One agent has reported a customer to Action Fraud who filed a successful chargeback request weeks after being refunded.

ABTA said it has written to Paul Scully MP, Minister for Small Business, Consumers and Labour Markets, sharing evidence of the issues.

It has also requested the Government hold urgent talks with representatives of UK Finance.

The key issue that has infuriated agents is that of ‘double dipping’ where customers receive a refund from the travel company, but also from the the credit card provider by way of a chargeback. It means agents are forking out twice.

ABTA’s Director of Public Affairs, Luke Petherbridge said: "The chargeback system is failing reputable travel companies, with the dispute resolution system appearing to be at risk of systemic collapse under the volume of Covid-related claims.

"All too often banks and merchant acquirers are applying insufficient checks to ensure that chargeback claims are justified. The wide-ranging problems with chargebacks are adding to the extremely difficult trading conditions and are being acutely felt by our travel agent members in particular.

"The additional cost is putting the future of some travel companies at risk.

"We are continuing to lobby the Government and finance industry on this issue and members now have access to free advice from our Partner phoneline."

Other concerns raised with the Minister for Small Business, Consumers and Labour Markets is the late notification of a chargeback claim, including some cases where the trader has been notified of the claim after the deadline supplied for appealing the decision.

There are also concerns chargebacks are being lodged against the wrong trader, with the consumer pursuing travel agents rather than the principal of the contract, the tour operator.

Additionally, ABTA said there are a very high number of reports of difficulties with the dispute process, which is ‘frequently resulting in large financial losses, even where traders can provide evidence that chargebacks are ill-founded’.

‘There is strong evidence that the dispute resolution system behind the scheme is failing, and that proper scrutiny is not being applied during the Covid-19 crisis," ABTA said.