Travel agent reimbursement controversies prompt demand for trust accounts to protect customers

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Chief liquidator Jason Tracy said around 35,000 customers had either paid in full or made a deposit for their trip by the time of his appointment.

The liquidator’s report sent to creditors in June says it recovered $1.2 million in refunds for 587 customer reservations.

“I work shifts and I’ve saved a lot for it and I can’t give up and I’m not giving up.”

Lara Collin, who has $15,000 in her pocket

Deloitte holds this money in trust and asked the court to be able to allocate it to these individual clients, rather than combining it into the general pool.

Tracy said that in a number of cases travel suppliers did not receive the money from STA Travel.

His position was that since STA Travel was acting as the authorized ticketing agent, the financial risk was legally on the travel suppliers, and they had to honor the bookings anyway. Some travel suppliers had joined us, while others disputed this.

Some customers were able to arrange a chargeback with their credit card company or claim their travel insurance.

But Tracy said an unknown number of customers have not received refunds and are believed to be unsecured creditors. They would have no money left after legally protected groups such as employees received their rights.

Tracy said trust accounts could have helped protect clients’ money.

“Trust accounts linked to deposits would have been very useful because the funds then could not be used for general working capital purposes,” he said.

“However, that could have meant that the company wasn’t actually solvent sooner, because it wouldn’t have had that free cash flow and therefore couldn’t have traded for as long as it did. “

Lara Collin, 25, of the Central Coast is among the unlucky customers whose reservation is not one of the 587 listed.

Lara Collin on a Contiki tour in Europe in 2019.

Collin, who works in elder care, has paid $15,000 for two Contiki tours in the United States due to take place in 2020, having previously toured with them in Europe.

Collin’s trip had to be canceled due to the travel ban during the COVID-19 pandemic and she requested a refund, which she wants to put into a security deposit. But he wasn’t even told if STA Travel or Contiki had his money.

“I work shifts and have saved up really hard for it and I can’t give up and I’m not giving up,” Collin said.

“I will never book through a travel agency again. I know we can’t help a pandemic, but I don’t think they handled it the right way at all. »

The Federation of Australian Travel Agents declined to comment on trust accounts, but chief executive Dean Long said one in three travel agencies had closed during the pandemic, and “almost all handled this process in a orderly and appropriate and with minimal disruption to consumer reservations transferred to other agencies”.

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Travel companies had secured more than $9 billion in refunds and credits for Australian travelers during that time.

The Australian Competition and Consumer Commission declined to comment, while NSW Fair Trading did not provide comment by the deadline.

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