She and her husband also put a deposit on a tour to Spain scheduled for late May. The tour operator canceled the couple’s trip in April and offered only a credit.
“We would rather get the money back,” says O’Sullivan, a retired federal employee from Andover, Mass. “But that won’t happen.”
O’Sullivan has every reason to be pessimistic. As cancellations mount, travel companies are doing everything they can to hold on to your money. If you don’t know your rights, you could end up with a worthless credit.
“When a vendor cancels and doesn’t provide the service for which they contracted, you certainly have a right to a refund,” says Mike Putman, CEO of Custom Travel Solutions, a travel technology company. He says the standard response is an offer of a future credit or a refund. “Some vendors are offering a credit worth 125 percent of what you originally paid for future travel, which may be more enticing than simply getting your money back,” he adds.
You should get a full and fast refund for any travel product that’s canceled. But travel companies want to keep your money, so they’re making it easy to accept a credit and, sometimes, exceedingly difficult to get a refund.
For example, if an airline cancels your flight, it owes you a full refund under federal law. If you paid by credit card, you should receive the money in seven business days. This also applies to tickets booked through travel agents or online travel agencies. If you paid by cash or check, federal law says the refund must be made within 20 business days.
But at a time when governments are bailing out the airlines, many passengers are struggling to get their money back.
Cruise lines, which have canceled sailings through the end of September after the extension of a federal no-sail order, are promising refunds for canceled cruises. Their preferred compromise: a cruise credit worth 25 percent more than the amount of the original ticket. If you say yes, you receive it instantly. But it can take 90 days or more to get your money back.
“It’s a waiting game,” says Lindsey Holmes, owner of Kingdom Destinations, a travel agency based in Hoschton, Ga. Some of her clients have run out of patience, Holmes says, and asked about a credit card chargeback, which happens when a consumer asks the card issuer to force a merchant to return the money. That’s one possible shortcut to a refund.
Most chain hotels have flexible policies for handling reservations canceled by the hotel or the customer because of the coronavirus. Smaller hotels tend to offer either a refund or a credit, according to Silvana Frappier, owner of the Virtuoso-affiliated North Star Destinations, a travel agency.
“If you accept a credit, hotels may offer extra benefits on top of what you already receive, like a guaranteed complimentary upgrade to the next room category, complimentary airport transfers or a VIP welcome basket,” Frappier says.
But, by far, the most irritating cancellations are those of tours such as O’Sullivan’s. Some tour operators are refusing to offer refunds, referring to the fine print in their contracts. Others have changed their refund policies during the pandemic to make it impossible to receive a full refund.
The reason? Tour operators have “force majeure” clauses that give them the right to withhold refunds and offer only credit in situations that are not under their control. They are trying to be flexible by offering up to 24 months of credit or the ability to transfer the credit to a family member, says Adrienne Sasson, a travel adviser with Rubinsohn Travel in Jenkintown, Pa. But they’re less likely to bend to a refund request.
“It’s important to understand the terms of contract and cancellation policy before you place a deposit for a trip,” Sasson says.
Tour operators that do offer refunds are sometimes adding cancellation fees of several hundred dollars or more. And since travelers sometimes pay for their tours by check, they don’t have the option of a chargeback.
But there’s a way around that. Some states have strict regulations that require refunds. For example, under title 940 of the Code of Massachusetts Regulations, a tour operator must refund in cash an amount equal to the fair market retail value of any undelivered travel service. Many consumers have used state laws to get refunds even when contracts don’t allow it.
That might have been an option for O’Sullivan, who lives in Massachusetts. But her problem appeared to resolve itself shortly before this story went to press. After another appeal to her tour operator, it offered a full refund.
There’s a better chance than ever that your airline, tour operator or hotel will cancel your vacation this summer. If it does, you have the right to a quick refund. How quick? Give the company two weeks, then send a friendly reminder. After a month, consider a credit card dispute. And if your travel company is insolvent, don’t delay. File a chargeback now.
Elliott is a consumer advocate, journalist and co-founder of the advocacy group Travelers United. Email him at firstname.lastname@example.org.
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