Can You Really Trust the ABTA and ATOL Symbol?

Booking a holiday with any organisation where you see the ABTA, ATOL and AITA symbol is not a guarantee that you're financially secure.

We all know that sending a cheque or making a bank transfer to an individual or business for your holiday, or for anything else prepaid, offers you no security whatsoever: but when it comes to seeing well known association symbols such as ABTA and ATOL appended to brochures or websites, that have historically suggested financial protection, ones defences can be down.

The Guardian's newspaper article back in 2006 entitled End of Travel Protection expelled that myth altogether, for which you can link to the article at the base of this article. In addition, ABTA was forced to withdraw from the Office of Fair Trading (OFT) Consumer Code of Approval Scheme, as reported by Travel Weekly in the same year.

Although the holidaymaker's financial protection effectively ceased back in 2006 with ABTA, the holidaymaker still remains mostly unaware, according to last year's Which Magazine report which found that travellers were said to have an "unwarranted trust" in the level of protection they were offered from associations such as ABTA, AITO and ATOL.

Which Magazine went on to report that more than two thirds (67%) wrongly assumed that if a travel company went into administration, and was a member of one of the associations, their money would be safe.

There is only one way to secure 100% financial protection for your holiday or holiday villa, and that comes from using your credit card, provided the sum paid is not less than 100 pounds sterling (not a debit or charge card like Amex or Diners Club).

Protection comes from the 1974 Consumer Credit Act (section 75), as advised by many organisations that are shown on the financial security page of the villaspain website.

Not only do you get this protection but you get credited immediately from your card issuer, whilst they make their refund claim against the company. A claim can be brought within 6 years (5 in Scotland), although ideally should be claimed as soon as you are aware of the company having gone into liquidation and you are at a loss.

Other European countries' banks that issue credit cards also include the same protection for the public, which allows protection for all Europeans too.

Some companies make a charge for credit card use, so given the straightened times we are currently in, as well as being exposed to more frauds and cons, it is wise to pay it.

Debit and Chargeback cards:

You should also be protected even if you used a Visa debit card or Chargeback card under the Chargeback scheme, which offers similar protection to section 75.

To make a claim from any card issuer, customers must first contact their card issuer, who then contacts the company's payment-processing bank to reclaim the money. This means that even if a company goes into liquidation it is possible to reclaim money, as the claim is made against a bank and not the company.

Sometimes the person you contact at the credit card issuer to make your claim do misunderstand section 75 and Chargeback rules and refuse a claim. Anyone in this situation should argue their case that the holiday has not been provided in part or full, contrary to section 75 of the Consumer Credit Card Act of 1974. If all else fails contact the Financial Ombudsman.

What about getting compensation for other costs or losses?

Can you claim for other losses you have incurred as a result of the failure of the company. Yes, under section 75 you must be put back in the same financial position you would have been in if the breach had not occurred. So should an airline go bust and you have to buy replacement flights that cost more than the original ones, you can claim for the additional cost of those flights.

ATOL:

Now ATOL you can trust, but one must be aware that it applies to the flight element and not necessarily the rest of the holiday package, so you need to check that all aspects of the package you purchased are protected. Also, to be aware that it is not a fictitious company displaying the ATOL symbol fraudulently, so for peace of mind a quick simple check of the members' ATOL registration number can be done on the CAA website, to ensure that the ATOL number is registered and current.

Do note that some holidays that are termed Dynamically Packaged, whereby the flight and accommodation are arranged or sold separately, may not be ATOL protected.

Note too that booking a flight directly with any airline does not give you ATOL protection. One would think that the 2.50 sterling pound per passenger charge that is levied to the tour operator by the Air Travel Trust Fund, and administered by the CAA, in the event a tour operator goes bust, could be included on your overall flight cost when booked direct, but no it isn't. Such a nominal sum allows you to finish your holiday and get a flight home, assuming you are abroad in the first place that is.

Some UK airlines do offer package holidays or flight-plus-accommodation or car hire combinations that include package holiday protection, but they do require checking as to what protection you really have in the event they go bust.

What about Travel Insurance?

Some policies cover airline failure, usually by including Scheduled Airline Failure Insurance (SAFI). However, many policies don't include SAFI and some insurance providers exclude particular airlines, so you need to check what the policy does cover you for.

All in all, many holidaymakers believe they are financially protected in the event of insolvency, when they are not.

What to do?

Use a credit card when booking any holiday, flight or holiday accommodation (min 100 pounds sterling), which then guarantees that all the money you paid is refunded in the event of fraud or the business fails to deliver what you paid for, or goes bust. Should the travel agent or airline go bust whist you are away the credit card firm will refund you. Further, they are obliged to cover any and all loss you incur, as the contract has not been fulfilled. Ensure you keep all your receipts.

In addition, do take out travel insurance that includes SAFI, which then covers you for a host of other situations.

Links to sources;

Guardian article can be viewed here at End of Travel Protection

Travel weekly report on Which findings can be viewed here at http://www.travelweekly.co.uk/articles/1/1/1/38343

Bruce Gibson

Bruce Gibson runs Spanish villas rental company http://www.villaspain.co.uk/ Villa Spain and has lots of tips and advice for your perfect and financially secure holiday to Spain. Why not check out the VillaSpain blog or sign up to our newsletter to stay in touch with insider knowledge.