The consumer watchdog was preparing to launch court action against Flight Centre for charging $300 fees to process Covid-19 refunds before the company agreed to end to the practice.
Flight Centre angered many of its customers by charging the $300 fee to each person for each element of their trip that was cancelled due to the pandemic and associated travel restrictions.
The policy led to absurd situations. In one case, a Gold Coast family were asked to pay $2,100 in cancellation fees to process a hotel refund of $1,600 for their seven-person Disneyland trip.
Flight Centre on Saturday announced it will no longer charge the fee if the travel provider cancels its service. In other words, if an airline or tour operator cancels a trip, a customer who booked through Flight Centre will no longer be charged the $300 fee.
Flight Centre is applying the waiver retrospectively to any bookings on or after 13 March, according to Flight Centre executive general manager, Allisa O’Connell.
“The decision to waive fees will impact our business, nevertheless we have heard your feedback and we believe this step is the right one for the current economic conditions where stand downs and job losses are a daily occurrence for many Australians,” O’Connell said.
On Sunday, the Australian Competition and Consumer Commission revealed the change was made in the face of looming court action.
ACCC chair Rod Sims said the regulator’s next step would have been to take Flight Centre to court, if it did not change its position. Sims said the company’s decision would allow the issue to be dealt with more quickly than legal proceedings.
“This is a very welcome move made by Flight Centre for thousands of customers impacted by Covid-19 travel cancellations,” Sims said on Sunday.
“We are continuing to discuss issues in relation to refunds and cancellations with the travel sector, and encourage travel providers to treat consumers fairly in these exceptional circumstances.”
The sector has been thrown into crisis by travel restrictions. The industry’s peak body has lobbied government for additional support and made representations to the Australian Competition and Consumer Commission that stressed the sector’s reliance on giving credit notes, rather than refunds, in the case of cancelled travel.
In some cases, the crisis has prompted questionable behaviour from tour operators. Topdeck, the youth travel operator, altered its refund policy and applied it retrospectively in a way that denied customers refunds.
Intrepid also altered its refund policy and applied it to past bookings, and told some customers who still wanted a refund to wait three months before asking again. The company says it is not denying refunds and is still working with individuals to resolve their concerns.
The ACCC has received more than 6,000 complaints from consumers about the travel sector more broadly, and said thousands more had contacted their local state or territory fair trading agencies.
But Sims called for consumers to remain patient, given the devastating impact Covid-19 has had on the sector.
“We ask consumers to remain patient and be mindful of the significant pressures on businesses at this time and, where possible, contact the business by email or website, rather than by phone,” Sims said.
“These are very complex issues and may take smaller businesses more time to respond.”
The ACCC has previously issued guidance warning the travel sector against changing their refund policies and applying them to old bookings.
“Travel providers must honour the terms and conditions agreed to at the time the consumer purchased their flights, cruises, tours or accommodation,” a spokesman told the Guardian last month.
“Informing consumers that they have no right to a refund when in fact they do is likely to constitute misleading conduct in breach of the Australian Consumer Law.”