The Competition & Markets Authority (CMA) has warned Truly Holdings, the company that operates Teletext Holidays, it could face legal action over its failure to repay customers in the wake of the Covid-19 pandemic.
In May, the government body secured undertakings from the company committing it to address failures to refund package holiday customers for cancelled holidays.
A similar document was signed by sister company, the travel operator Alpharooms.com.
These undertakings required Truly Holdings to use all reasonable endeavours to pay outstanding refunds to passengers at the latest by the end of August, and going forward to ensure that refunds due for package holidays cancelled after the date of the undertakings are paid promptly and no later than 14-days after cancellation.
After a review, the CMA said it was concerned that some customers whose package holidays were cancelled since it signed up to the undertakings have not been repaid within the 14-days required by the law.
Although Truly Holdings has paid back a significant number of customers within this two-week period, too many have been left waiting longer for the refunds due to them.
The CMA is also concerned that Truly Holdings has not done enough to repay customers who were already owed refunds at the time the undertakings were given.
As a result of the action, Truly Holdings has paid £7.2 million of the £7.8 million owed to package holiday customers, but almost £600,000 in refunds remains outstanding.
Truly Holdings has reported that the outstanding amount is owed to customers whose current bank details it does not have and whom it has been unable to refund through their original payment method because the purchases were made more than a year ago.
The CMA said it does not consider that enough has been done to ensure that Truly Holdings is able to provide refunds to package holiday customers with outstanding claims.
In addition, the CMA does not consider that Truly Holdings has done enough to make sure that it pays all refunds that may in future become due within 14 days, as required by law.
The CMA has therefore written to notify Truly Holdings that it will take court action unless the firm takes immediate steps to rectify the situation and to ensure that, in the future, customers who are entitled to a refund are repaid in the timeframe specified by law.
Andrea Coscelli, chief executive of the CMA, said: “It is unacceptable that some package holiday customers are still not receiving refunds within the timeframe that they are legally entitled to.
“While we are pleased that many consumers have now received the refunds they were due because of our intervention, we are clear that Truly Holdings must comply with the law.
“Unless it urgently takes steps to address the failures we have identified, we will take court action.”
Rory Boland, Which? Travel editor, called for the CMA to do more.
He explained: “We have received countless complaints from Teletext Holidays customers who have been battling for refunds for cancelled holidays.
“It’s hugely concerning that Teletext has not yet paid all outstanding refunds to its customers and it’s still failing to comply with the 14-day period required by law.
“We welcome the action taken by the regulator to enforce consumers’ rights.
“Teletext is one of many holiday providers that has attempted to shirk its legal responsibilities to refund customers for cancelled trips, highlighting the need for industry-wide reform.
“The government must ensure there are better protections for holidaymakers’ money, while the Competition & Markets Authority must be given stronger powers to take action against companies which break consumer law – including the ability to impose fines if necessary.”