21 October 2017 : 

The collapse of Lowcost Holidays on 15th July 2016 just before many of their customers were preparing to jet off to higher climbs, has once again underlined the value that section 75 protection offers UK consumers in an uncertain world.

Over 100,000 customers, lured by promises of cut-price travel are thought to have been affected by Lowcost’s demise. Now, as revelations surface that customers may get as little as £7.50 back from the operator, many are rightly furious. The pitiful refunds available are the result of Lowcost Holiday’s decision to circumvent the UK Government backed ATOL protection scheme, instead choosing to operate under the Spanish legal framework, which only required a bond of around £1 million (a drop in the ocean compared to the millions owed by Lowcost Holidays).

Cashless casualties

Some fortunate customers will, of course, get the cost of their holiday reimbursed by their travel insurance company. But, for many, the saga is likely to mean dreams of summer sun are unlikely to be fulfilled in 2016.

Not unlike the collapse of XL Airways UK, in 2008, the Lowcost has once again demonstrated the value of booking using a credit card. This is because each and every purchase of £100 or more, made using a UK credit card is protected by section 75 of the Consumer Credit Act.
This protection, developed before credit cards were even available in the UK, ensure that suppliers of credit are fully liable for the goods and services bought with them.

This law was originally developed to prevent unfortunate customers having to make ongoing payments for defective white goods on hire purchase deals, where a third party supplied the credit and had no obligation to ensure the goods were of sufficient quality. However, it is now equally applicable to credit card purchases. Indeed, people who bought from Lowcost Holidays using their credit card would now be entitled to a full refund for their purchase from their card issuer.

Admittedly, there is usually a cost associated with using a credit card for travel purchases, but the use of a cash back card can offset much of this, and mean that consumers can sleep, safe in the knowledge that their holiday is fully protected.

Mark Scott - IMG Mark - Signed
Mark is Managing Director of compareandsave.com, having previously worked for a number of financial brands in various marketing, media and advertising roles.

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