The common issues faced by agents regarding COVID-19-related cancellations and refunds, including SAA refunds, were addressed in an Asata webinar on June 25.
Asata’s legal counsel, Elizabeth de Stadler gave some advice about one of the most common challenges faced by agents – when a client insists that they don’t want a voucher from a supplier. “I advise you to do as much as you can, and to communicate regularly with the consumer about what you are doing to get their money back. If they insist on getting their money back and you are not in a position to assist them, then you advise them of their rights.” She suggests that agents use templates provided on Asata’s website to help them advise clients.
“They can try and go the alternative dispute resolution (ADR) route, but even the Consumer Goods and Services Ombud (CGSO) is finding it difficult to mediate these disputes, and they will probably be escalated to the National Consumer Commission, which is a lot like going to court. This is an issue of enforcement, and you have to have sympathy for consumers, because at the moment, due to a massive backlog and the sheer volume of the problem, it is unlikely they will get their money back,” Elizabeth said.
She said, according to the Consumer Protection Act (CPA), in principle the consumer is entitled to have their money back. “If your contract (as intermediary) is directly with your client (the passenger or the traveller), and you in turn have a contract with the service provider, in principle the consumer can insist on a refund (from you, the intermediary), even if you did not get a refund. I realise how unfair that sounds, but that is how consumer law is designed. That is the law.”
If a booking is cancelled due to the travel ban, an intermediary is not entitled to charge a cancellation fee, said Nicky Stetka, complaints manager at CGSO. Elizabeth agreed: “No cancellation fees, no damages, just full refunds.” An intermediary can, however, still charge a service free. “You provide advice and services when things go wrong, and you are entitled to get paid for that – but only if terms and conditions are clear. We can never charge it if they haven’t agreed to pay for it. You have to say “I will help you, but it is subject to a fee,” Elizabeth said.
On the topic of whether it is it legal for an airline to ADM a travel agency if a client does a charge back on their credit card, Elizabeth said: “In a base scenario coming across my desk – it’s the consumer’s credit card, and the credit card company is reversing the transaction for services not rendered – airlines shouldn’t be issuing an ADM to the travel agent. But I can’t find an actual rule saying this.
“MasterCard and Visa have taken a stance that they won’t reverse these transactions if there is a dispute. The dispute is the customer asking for money back, and the airline saying they’ve issued a voucher. They (the card companies) have pleaded for the dispute to be settled first. But we’ve seen that these chargebacks are happening despite the airline saying that they’ve issued a voucher.” She suggests lodging a dispute with everyone in the value chain.
Asata ceo, Otto de Vries, added: “Also leverage your access to the Travel Agency Commissioner. Whilst they don’t generally accept and work through ADMs, if they are directly in conflict with any of the resolutions, they will take up the issue. There needs to be a lot more flexibility from the airlines and Iata.”
On the topic of SAA refunds, Otto said it was down to two scenarios. “The first relates to pre-business rescue, and whether you are owed money by SAA as a result of them having gone into business rescue and not being in a financial position to pay that money. You would have then made an application to be identified and recognised as a creditor of SAA. Between you and the business rescue practitioners, it would have been financially defined in terms of how much is owed to you. The business rescue plan currently speaks to the arrangement that will deliver 7,5c in the rand in terms of pay-outs owed – so there are a lot of creditors unhappy because that is a substantially reduced amount in terms of what is owed.
“The second part is what has happened post-business rescue, but pre-COVID. In that context, we have had a mixed bag of people getting refunds from SAA prior to COVID, but not all applicants. Then, of course, it was SAA following lockdown under COVID, when they stipulated that they were not offering any refunds – vouchers only. In that case, the argument is that money was collected by the airline, through the travel agents or direct passengers, and that services cannot be rendered. That money doesn’t belong to the airline – it belongs to the passengers and they have the right to get the money back. The problem is that the money is not flowing backwards. So, all they’re offering is vouchers as part of the business rescue plan that they’re asking us to approve,” said Otto.
“And this is where it starts to get messy. They have said that they have made provision, and part of the money that they are asking from government in order to implement the business rescue plan will be to cover the costs related directly to the ‘unflown’ ticket liabilities. So, in other words, they are not identifying ‘unflown’ ticket liabilities as creditors, because they see that if the business rescue plan is approved, they will have access to money that will afford them the chance to provide refunds, should the passengers then choose refunds over vouchers,” concluded Otto.