LOVEHOLIDAYS, one of the UK's biggest online travel agents could face legal action if it does not refund £18m to more than 40,000 customers for trips cancelled due to Covid-19.

The Competition and Markets Authority (CMA) said LoveHolidays had agreed to give out-of-pocket customers their money back in full by next March at the latest.

But it has also warned it can take LoveHolidays to court if it fails to repay by the agreed dates.

The CMA was forced to intervene after receiving hundreds of complaints from LoveHolidays customers who were left waiting for their money back.

When customers contacted LoveHolidays to request a refund for a cancelled holiday, they were told they would only get their money back for their flights once the firm had received refunds from airlines, according to the CMA.

LoveHolidays was said to have been locked in a dispute with Ryanair over who is responsible for refund delays, with the firm last month insisting the airline was dragging its heels.

But online travel agents are legally bound to refund customers for package holidays cancelled due to coronavirus, regardless of whether or not the agent has received money back from suppliers, such as airlines LoveHolidays has now signed formal commitments that ensure customers get a full refund. More than £18m will be refunded to 44,000 customers. Of this, so far £7m has been returned to 20,000 customers.

HeraldScotland:

The company and another large online agent, On the Beach, left the Association of British Travel Agents in September following disputes over customer refunds. LoveHolidays, which is licensed to carry 1.1 million passengers a year, said then that the package holiday regulations, which oblige companies to issue a refund within 14 days, had not been designed to deal with disruption on the scale since March.

The watchdog has accepted LoveHolidays’ commitment to repay customers in full by the end of March at the latest, after reviewing the firm’s financial information.

Refunds will be made in two parts. Refunds for the cost of hotel accommodation and transfers must be made by 31 December for holidays cancelled before 1 November. From January, customers will receive refunds for accommodation and transfers within 14 days of a holiday being cancelled. Customers will have to wait longer to have their flights refunded, until the end of February or March depending on when their holidays were cancelled Chief executive Andrea Coscelli said: “Travel agents have a legal responsibility to make prompt refunds to customers whose holidays have been cancelled due to coronavirus.

“Our action today means that LoveHolidays customers now have certainty over when they will receive their money back and they will receive this without undue delay.”

LoveHolidays said it has made the equivalent of 10 years’ worth of refunds in eight months, but admitted it still has “more to do”.

It said pressure on package holiday firms had been “exacerbated by certain airlines refusing to meet their legal obligations with regards to refunds” and insisted money paid for flights was transferred straight to carriers on booking.

A spokesman for LoveHolidays said: “We sincerely thank our customers for their continued patience, and apologise that it has taken much longer than normal to process their refunds.

“Whilst we’ve made significant progress, there is clearly more to do, especially on airline refunds, and we urge all parts of the tourism sector to work together to ensure that customers are refunded as quickly as possible.”

But consumer organisation Which? slammed LoveHolidays as being “one of the worst culprits” for failing to refund customers.

Rory Boland, editor of Which? Travel, said: “While it’s right that the regulator has stepped in, customers – who are legally due a refund within 14 days – will be angry that, having already waited months, the CMA is allowing the online travel agent to delay these refunds for several more months.

“LoveHolidays is one of countless holiday operators that have let customers down on refunds this year, highlighting the need for widespread reforms across the travel industry.”

It marks the latest action taken by the CMA against holiday firms over failed refunds for trips cancelled due to the coronavirus crisis.

The CMA has already secured refund commitments from Lastminute.com, Virgin Holidays, Tui’s UK business, Sykes Cottages and Vacation Rentals.

It has also written to more than 100 package holiday firms to remind them of the consumer protection laws.