Mark Pestronk
Mark Pestronk

Q: For months, some airlines, cruise lines and tour operators have taken the position that they do not owe, and will not make, refunds to my agency's clients, even though the clients are clearly entitled to a refund under the terms and conditions of each supplier. Now, however, we are seeing a new phenomenon: suppliers that are promising to make refunds but are just not doing it, despite our numerous requests for updates. For example, in mid-March, one supplier promised a future cruise credit or a refund, at the client's choice, and although the client chose the refund, no payment has been received after almost five months. The supplier's refund department has stopped answering or returning calls or emails. What can we do to help clients get those promised refunds?

A: Lengthy delays of promised refunds are an obvious sign of the supplier's financial distress, so the chances are good that the supplier will file for bankruptcy before your clients get their refunds. Unfortunately, there is not much you can do for your clients.

Filing complaints with government agencies and the Better Business Bureau, asking fellow agencies to boycott the supplier, writing to the CEO, exposing the issue in social media, asking for local TV coverage -- all routes that might well work in prosperous times -- are probably going to be useless today, if the supplier is out of money.

The surest route to getting a refund is to dispute the credit card charge. If the client does not know how to dispute the charge, you can advise him on how to do so.

Even if the client disputes the charge, a refund is not guaranteed. Unless the supplier promised a refund within X number of days, the credit card company could decide that your request is still premature. Conversely, if the client waited too long before disputing, the card company could deny the dispute.

You could assist the client to file a small claims lawsuit, or you could file one yourself if you were the credit card merchant and remitted your own money to the supplier or if the client assigns his claim to you. Unfortunately, if the supplier files for bankruptcy, such lawsuits will be dismissed.

If your client thinks that he should have chosen a future cruise credit instead of a refund, you can assure him that, if the company does go bankrupt and creases operations, he would be better off with a promised refund.

A bankrupt company must give priority to consumer payments of up to $2,850 per person, so there is always hope for a refund in bankruptcy. However, that limit does not necessarily mean that your clients will get that much. After higher-priority creditors such as employees are paid, there may not be anything left over for consumers.

I realize that my list of possible ways to help the client is pathetically limited and that the best an advisor can probably do is to keep trying to contact the supplier, even though it means extra work for no extra remuneration. 

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