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When travel companies go out of business … Good advice for travellers

Tens of thousands of travellers stranded as Thomas Cook goes into liquidation

Recent events have sent shock waves through the travel industry.

Thomas Cook, a business founded 140 years ago, went into liquidation leaving 600,000 travellers stranded around the world. The British government launched the greatest repatriation exercise since World War II to bring travellers home, assisted by Qantas and other airlines.

Thomas Cook customers stranded

Thousands of travellers have been stranded by the collapse of Thomas Cook



Australian travel companies go into voluntary administration too

Shortly afterwards, Australian travel wholesalers, Tempo Holidays and Bentours both entered voluntary administration. The owner of these travel companies, Cox & Kings had been in business for 261 years.

AFTA Chargeback scheme may provide compensation

Australian travel agents were able to deal with some of the fallout. The Australian Federation of Travel Agents (AFTA) runs an AFTA Chargeback Scheme (ACS). If travellers booked through an ATAS accredited supplier (travel agent), they will receive financial compensation.

… but not everyone is covered by the scheme

Tempo Holidays and Bentours were not covered by the AFTA Chargeback Scheme. The AFTA Chargeback Scheme will only be valid for Tempo Holidays and Bentours bookings made by credit card before 22 August 2019. The insurance scheme will not apply for holidays booked after 22 August or paid for by other payment methods.



Paying by credit card can be a good idea

If a traveller paid for a holiday with an ATAS travel agent after 22 August 2019 with a credit card for payment, the client can ask their credit card company for a chargeback because they did not get what they paid for. The credit card company will debit the merchant’s bank account so the money is paid out of the travel agent’s bank account.

Where payment was not made by credit card but by electronic transfer instead, there is no chargeback available. The traveller may have a claim against the travel agent under the Australian Consumer Law, depending on the terms of the agreement with the travel agent. If the terms provide that the refund claim is to be made against the principal travel company, the traveller could become an unsecured creditor of a company under external administration.

When travel bookings are made, it is safest to pay by credit card in case anything goes wrong. Also, many credit cards provide free travel insurance if you pay for your travel by credit card.



Legal help available

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Please note that this article has been prepared by Margaret Miller, partner of Bell Legal Group, for information purposes only. It is not legal advice nor should it be relied upon as such.