With travel, wedding and other life plans thrown into disarray by the Covid-19 lockdown, consumers have been told to accept vouchers instead of refunds, even though suppliers are unable to perform the service for which they have been paid.
That’s not in line with the Consumer Protection Act (CPA).
The tourism sector is one of the hardest hit by the outbreak, with millions of jobs lost the world over. In aviation, airlines are bleeding: SAA’s business rescue practitioners have thrown in the towel, while previously profitable airlines are grounding planes and laying off staff.
Earlier this month, International Air Transport Association chief executive Alexandre de Juniacthe said the once-thriving industry had been brought to a “shuddering halt”.
He stressed that passengers had the right to refunds, having paid for a service that could not be delivered. “And in normal circumstances, repayment would not be an issue. But these are not normal circumstances.”
Consumer Goods and Services Ombudsman Magauta Mphahlele said consumers should not be penalised for cancellations due to illness or death – and the restrictions imposed by the government essentially treated everyone as “ill”.
Therefore, “consumers are entitled to full refunds when they cancel due to the travel bans and restrictions on gatherings”.
Since travel in the foreseeable future is forbidden, and many have legitimate concerns about health risks, vouchers instead of refunds might well prove worthless. For some, the window of opportunity to travel might even have closed firmly.
And yet, they’re being held to terms and conditions that don’t account for the fact travel at a later date might no longer be an option.
Travel agencies have been at the forefront of customer anger, and Association of Southern African Travel Agents chief executive Otto de Vries has chastised airlines for forcing consumers to accept vouchers rather than refunds. “The airline, is in effect, holding on to ticket monies without being able to fulfil the service purchased.
“We are working with our international trade association partners to call for strong action against airlines which are flouting the law by withholding refunds due following the cancellation of flights,” De Vries said.
The withholding of refunds was a violation of the CPA, consumer lawyer Trudie Broekmann said. “The basic rules from the CPA are: if the supplier can’t deliver, they can’t charge.”
Broekman says if you can’t deliver services as a result of force majeure, then you can’t charge for those services. Some contractual force majeure clauses will probably say “even if we can’t deliver services due to force majeure, the consumer still needs to keep paying”, she points out, and if the force majeure continues for a long time, then either party may cancel the contract, but these clauses may not be valid if they conflict with the CPA.
What to do:
Travel agents have advised customers to lodge claims through their travel insurer. However, “refund for any reason” policies which refund costs in full are expensive. Instead, consumers could approach their banks for relief. If you’ve paid via Visa or MasterCard, via direct debit – not EFT, as such payments are irrevocable – you must do so within 120 days.
I asked the banks about their policies relating to this:
Senzo Nsibande, FNB’s head of card fraud, said clients could address transactional disputes through the banking app: “Should a card-holder purchase goods or services which are subsequently cancelled by the merchant for any reason including bankruptcy, the customer has dispute rights. The exception is cancellations due to government prohibition, as government regulation and/or law supersedes association rules on dispute rights. In these instances, customers are encouraged to engage with merchants to resolve disputes in addition to engaging with the bank with all supporting documentation.”
A Nedbank spokesperson advised clients unable to fly to contact their bank.
“Card-holder disputes, however, cannot be initiated with the bank where the travel company or airline have undertaken to honour the flight or accommodate the card-holder in a mutually acceptable manner.”
Capitec advises customers to contact their call centre. “Our card disputes department will then investigate the matter. Capitec is bound by MasterCard’s policy on this and will issue the charge-back if necessary.
“We are doing all we can to facilitate this process with MasterCard. The current environment is challenging and unique, and regular MasterCard and Visa rules are in place.
“All banks and the Payments Association of SA are engaging with the card associations on this matter to consider how dispute or charge-back rules can be best applied during this time.”
But Absa’s Cowyk Fox warns that customers purchase tickets under the T&Cs of the travel supplier and these are binding. “Most tickets are non-refundable and non-transferrable. Most airlines have been accommodating where customers are not/have not been able to travel and would provide customers with a credit to take up for a date when travel is possible.
“In cases where the refunds are not processed, customers can email the details of flights cancelled. Customers should be very careful when voluntarily cancelling their trip, as they may lose their ability to claim.”
* Georgina Crouth is a consumer watchdog with serious bite. Write to her at firstname.lastname@example.org, tweet her @georginacrouth and follow her on Facebook.
By Georgina Crouth