Hit by the Lowcostholidays collapse? Your right to a refund explained

Hi, I’m Martin Lewis of moneysavingexpert.com
and I’m afraid many of you have been getting in touch with me due to the collapse of Low
Cost Holidays. There are 137,000 people in the UK affected, 27,000 people already on
holiday, 110,000 with bookings and this is a really difficult and tricky situation.
What I want to do now is talk through calmly what your options are but I’m not going
to do all the technical. For that, please go to the printed guide on the website at
moneysavingexpert.com/lowcost where you’ll find template letters and more information
to help you. But let’s talk through the issue. If you’re
on holiday right now, well the Civil Aviation Scheme means that your flight back should
be fine, so you’re able to come back. The big problem is the hotel may not have been
paid because Low Cost Holidays while at the point that you book tend to pay for the flights,
but it didn’t pay the hotels until up to 30 days after you had stayed, so they may
not have had the money and they may ask you to pay, and there’s not very much you can
do about that. I’m going to go through later routes that you may be able to try and get
your money back from your initial booking of Low Cost Holiday, but it isn’t guaranteed.
It’s a very tricky situation I’m afraid but you’re a bit stuck. Talk to the hotel,
ask if there’s anything it can do to help, can it be considerate, but it will be very
difficult. If you’re at home and you haven’t gone
yet, you have more flexibility and choice but it’s a difficult choice. The point is
the likelihood is your flight will be fine. You need to make sure that you’ve got your
booking confirmation. If so, your holiday flights will be fine generally and you should
be able to go on them, but the hotel is unlikely to have been paid for. So you need to ask
it two questions: one – does my booking still stand? And two, will I have to pay you?
In most cases, the answer will be yes, you’re booking standing stands. No, we haven’t
been paid, you’ll have to pay us and that puts you in a tricky position.
At this point, while I’m going to talk through methods that you may be able to get your money
back, they’re maybe’s, they’re not guaranteed. You’re going to have to work out if you
can afford to go on that holiday, hard as it sounds. I know you saved up for it before.
I know it’s difficult but you don’t want to put yourself in a position where you’re
paying out twice and you can’t afford to do so.
Other options you can look at – could you go at a different time of the year? Maybe
talk to the airlines, see if they can move the flights or if the flights are cheaper
another time of the year, go then. Maybe try and stay in a cheaper hotel or consider a
different holiday altogether. I know that’s not what you want to do but think carefully
about your finances before you get yourself in a position, especially getting yourself
in debt, something you won’t be able to afford to do in the future.
So my strategy, as always, plan for the worst – i.e. you won’t get any money back – and
hope for the best that you will. But you can’t guarantee that.
So what do you do to get your money back from the original booking? Well the primary route
depends on how you paid for the booking. Your strongest chance is if you paid on a credit
card but you don’t have to have paid the entire amount on a credit card. Even if you
paid a deposit on the credit card, then Section 75 of the Consumer Credit Act says the credit
card company is liable for the entire amount jointly with the firm that you booked with.
Well that firm’s gone, collapsed, that means you’re reliant on the credit card company,
but even a penny deposit on a credit card for a £10,000 holiday, credit card company
is liable for the entire amount. There are a couple of wobblers in this though.
Wobbler number one: Section 75 doesn’t work where there is an intermediary agency that
breaks the link between the debt and the purchase and travel agents can count as an intermediary
agency. Now my thought on this, confirmed by the Financial Ombudsman but that’s not
a guarantee, it’s just an opinion from it, is that the likelihood is in this case if
you got a package like flights and hotels together, then that counts as a product so
Section 75 should work. If you bought a flight or a hotel separately, then it might count
as an agency so Section 75 wouldn’t work. The other wobbler here is if you booked for
a large group that aren’t you family, then that indirect booking for somebody else can
also break Section 75, but you should at least be covered for your portion of the booking.
That’s credit cards although there is another option for credit cards coming in a moment,
but that’s the main power, the legal power of Section 75 and there are template letters
on the site for that. Next step: If you paid on a debit card or
even a portion on the debit card, then while you don’t have legal protection, there’s
a scheme called Chargeback run by MasterCard, Visa and Amex, they all have slightly different
terms how they do it, but effectively what Chargeback does is it says your card company
will ask the company who took the payment, the bank who took the payment from Low Cost
Holidays for the money back and if you do it quick enough, within roughly 120 days,
that can happen. Now it’s worth noting you can do a Chargeback
on both the debit and a credit card. So if you’re trying Section 75, just in case it
doesn’t work, it’s also worth saying if that doesn’t work, I want to start a Chargeback
procedure as well because, for example, if you had that intermediary issue, then you
would be trying to get your money back through the credit card Chargeback system. So debit
cards, credit cards can work on Chargeback and that’s a strong method.
If you paid on PayPal, then PayPal are saying that the PayPal protection scheme should cover
you if you booked Low Cost Holidays through them. Any other method – cash, cheques,
bank transfer – as always, there’s very little protection and not much you can do.
Now as well as all those payment methods, we’re going to go into the lesser chances
here but things you might want to try anyway. Number one: travel insurance – unlikely
to cover you unless you bought a specific holiday company collapse add-on policy that
most people don’t do. This is something that is excluded from most travel insurance
policies, so not a good one there. Next, well the big problem with Low Cost Holidays
is it wasn’t ATOL protected which would have meant that none of this was such an issue.
It is protected by something called Govern de les iles Balears but they’re saying they’ll
put aside €1.2 million to pay out. There are 110,000 people who haven’t gone on holiday
yet. You do the maths, it’s a little over €10 if everyone were to claim. So I would
go for that. That only works if you got the flight and hotel together. It doesn’t work
for separates but I’d still have a go at that because it might help a little bit and
if less people claim, then the potential pay out pots will be bigger.
And very similar is saying you’re a creditor to Low Cost Holidays is in administration
so you may be able to divide all the assets, get some money back from that, but from past
experience, that tends to be pennies in the pound. It’s worth doing anyway.
Those are your main routes. Your payment methods are the stronger ones, the other ones are
lesser but are worth doing anyway. There are no guarantees here but I hope some people
will get your money back and do let me know and let moneysavingexpert.com know. Faye’s
standing over there who’s done a lot of work on this and done great work on the guide
working with me on exactly how to do this one and we do want to hear from you because
your experience if you succeed, we may be able to hone that to help others.
So keep us in touch on this one. I’m so sorry that this company has ruined your holiday,
and again, if you’re not on holiday yet, be sensible with your finances. Don’t push
yourself into something for a week away that’s going to leave you in debt for a long time
and struggling after that. Thanks.

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