Banks have blocked £7 billion in holiday refunds - these are your rights to your money back

Has your holiday been affected by coronavirus? (Photo: Shutterstock)

Banks across the UK have been blocking billions of pounds worth of refunds for holidays cancelled due to the coronavirus outbreak.

It is estimated that the public is collectively owed around £7 billion from travel firms. Forced instead to turn to their banks for help, many customers have now been told they are not eligible for a refund.

Why aren’t travel firms giving refunds?

Consumer watchdog Which? recently revealed that 20 of the UK’s largest airlines and travel firms are illegally withholding refunds which should be paid to customers within 14 days.

Instead, most customers have been offered vouchers or credit notes, with many complaining that they have been unable to claim a refund online, or get through to customer services on the phone to ask for their money back.

Should I ask my bank for a refund?

Customers who have been refused a refund by travel firms and paid for their trip using a credit card can claim the money back from their provider under Section 74 of the Consumer Rights Act.

Credit card providers are jointly liable with the retailer or trader for any breach of contract for misrepresentation, providing the value is more than £100 and less than £30,000.

However, Which? has warned that some credit card customers have been told by their provider that they're not eligible for a refund through the scheme. Others have been informed that their claim won’t be processed until they have tried to claim the cash from the travel firm first, even though this is not a legal requirement.

Customers are also able to claim through a process known as chargeback, which allows a transaction to be reversed if you are unable to resolve a dispute, including services not delivered.

This covers all card payments and is a process agreed between financial institutions and the relevant card scheme, such as Mastercard and Visa.

What are Mastercard and Visa’s chargeback rights?

Mastercard said there is a chargeback right where firms have cancelled goods or services, even where this is due to government restrictions, insolvency or other exceptional circumstances.