Getting your money back from a business after it goes bust is not something consumers often consider having to deal with. But last week, over 750,000 people had their travel plans pulled out from under them, with 110,000 Monarch Airlines passengers stranded overseas and thousands more left in the lurch as a result of the company going into administration. The announcement has prompted the UK’s largest peacetime repatriation in history, and left many customers scratching their heads.
What does all this mean for those who’ve paid for a flight (or two or three), with no ticket to show for it? The good news for Australian consumers is that if such an event were to occur in Australia, they have a number of chargeback rights, regardless of whom they booked their travel with.
Australian Consumer Law provides a number of protections and broad guidelines for consumers in the event of insolvency. These are practically outlined for consumers by CHOICE, Australia’s largest independent consumer advocate body. CHOICE advises that how you pay will often determine whether you will get a return should the company go under, which is why it’s important to know some of the basic ways you can safeguard your interests.
Know Where You Stand
When a company goes into administration, the role of the appointed external administrator is to achieve the best outcomes for those to whom the business owes money, in order of priority.
According to Australia’s Corporations Act 2001, consumers will generally be considered ordinary unsecured creditors and will only be paid after monies owing to other classes of creditors, such as employees and shareholders, have been repaid. This means that getting your money back requires you to first register with the external administrator as a creditor to determine your eligibility for a chargeback.
Your Payment Method Matters
The way you paid for the goods or services has big implications for your chargeback eligibility. If a consumer paid by way of credit card, they are generally protected more comprehensively than when paying by cheque or cash, and consequently more likely to have a successful chargeback case.
Launching a chargeback claim in this instance will involve your card issuer seeking a refund from the bank of the folded company. This right also applies to customers that have used the “credit” option on their debit card at the time of purchase.
It’s important to be aware that time limits for chargebacks apply, and these may vary between financial institutions, so it’s important to contact your bank or credit union as soon as possible once you hear of any changes.
How to Make a Claim
To make a claim for any unfulfilled purchases, you must first register as a creditor with the external administrator using a “proof of debt” form to notify them of the claim. The next step is to launch the chargeback process with your card provider within 120 days (this may vary between providers), from either discovery of the problem or the purchase date. For future purchases, you can also claim after these timeframes, which in the case of Monarch Airlines would come into effect from the date of the scheduled flight.
The insolvency process will ultimately determine the outcome of your chargeback, and whether you receive the refund amount in full, partial payment, or in some instances, nothing. If you made a payment with cash or cheque (including debit cards), you will need to wait for the outcome of the administration process before reaching any resolution.
Your Money, Your Rights
Luckily, many of those affected by this recent announcement do have options to retrieve their money. However, the difficulty lies in understanding what those options are and how you can move forward with them.
The demise of Monarch Airlines has caused mass disruption, job losses and the loss of the UK’s fifth largest airline company. Despite the many issues and unfortunate customers left out of pocket, there is a faint silver lining. The incident has brought to light the importance of understanding your rights as a consumer when it comes to protecting your payments.