Consumer pursues credit card refund for vacation cancelled due to COVID-19

Key lessons

• Whenever you buy goods and services, especially for future delivery, be sure to pay careful attention to the terms and conditions of the purchase. Return and refund policies vary, so before you agree to buy, it’s important to understand what you will be entitled to if the goods are damaged, or the services are cancelled.
• Many provinces have specific consumer protection laws to protect consumers against improper business practices and give them certain rights when they purchase goods and services with a credit card. These laws set out very specific rules and timelines that need to be met for their protections to apply.

Consumer seeks refund when travel plans are cancelled

In early 2020, Ms. Z booked an all-inclusive family vacation for the upcoming March Break through her travel agency. She paid the travel agency $5,600 using her credit card. A week before Ms. Z’s departure, the travel agency cancelled her trip due to the COVID-19 lockdown that began in mid March.

Ms. Z thought she would get a refund for the cancelled vacation. Instead, the travel agency offered her a voucher for future travel. Shortly afterwards, she contacted them to request a full refund on her credit card. When the travel agency refused, she contacted her bank to dispute the charge. The bank agreed to process a temporary chargeback for the full amount on Ms. Z’s credit card while they investigated.

During the bank’s investigation, the travel agency said that it refused Ms. Z’s request because its agreement with the bank stated that consumers did not have dispute rights when their vacations were cancelled due to a government regulation. Additionally, the travel agency said their refund policy permitted them to provide travel credit for the value of a cancelled vacation.

Bank declines consumer’s chargeback request

After speaking to Ms. Z’s travel agency, the bank declined to refund the charge for Ms. Z’s vacation and reversed the temporary chargeback it had processed earlier. The full amount of the charge for Ms. Z’s vacation was rebilled to her credit card account.

Ms. Z was concerned that her consumer rights had not been respected. She consulted her local consumer protection office about her situation and requested more information about the protections in place for credit card users in her province. Based on the guidance she received, Ms. Z followed the steps required to request a reversal of the charges under her province’s consumer protection law. These steps included sending formal requests to the travel agency and the bank containing specific information within specific time limits.

The bank again declined to reverse the credit card charges, maintaining that Ms. Z was responsible for the transaction because she had authorized it and agreed to its terms and conditions.

Dissatisfied with the bank’s response, Ms. Z contacted OBSI for help. 

Our findings

During our investigation, we interviewed Ms. Z and reviewed the details of the bank’s investigation that led to its decision not to process the chargeback for her vacation. We found that the bank had appropriately applied its own policies and procedures and the rules for credit card chargebacks. However, when we reviewed the applicable consumer protection laws, we found that Ms. Z had complied with all the requirements and timelines for the charge to be cancelled or reversed under her provincial consumer protection law. As a result, we recommended that the bank process a refund for Ms. Z’s vacation along with any associated interest.

The outcome

The bank agreed with our recommendation because it could confirm that Ms. Z had followed all the required steps when she initially requested a charge reversal under her provincial consumer protection law. The bank offered to cancel the $5,600 charge on Ms. Z’s credit card, plus any interest accrued. Ms. Z accepted the bank’s offer.