Thousands of people receiving refunds for cancelled flights and holidays should check their credit card statements, as they may find they get less back than expected.
Britons who book trips with holiday rental listing sites often find themselves being charged non-sterling transaction fees, with their cards billed in foreign currency.
But many may be surprised to discover banks and credit card providers also levying fees on refunds, meaning a double whammy of charges on trips hit by coronavirus.
If they are charged, they should contact their bank or credit card firm and ask for fees to be waived.
Credit card lottery: While Amex (inset) charges foreign exchange fees on refunds, M&S Bank (main picture) waives them
A time when more people are chasing or receiving refunds for cancelled holidays than ever before, this leaves many facing something of a lottery.
Whether to charge fees is up to individual credit card providers – and while some will waive them on refunds that is not the case for all credit card firms and banks.
A This is Money reader who booked an apartment in France over Easter through the booking site HomeAway was charged €968, which he paid using an American Express card. He was also charged a £24.66 non-sterling transaction fee.
When he got the money back after it was clear he would be unable to go on holiday due to the coronavirus pandemic, he was also charged a further £25.49 on the refund.
The increased fee was due to the fall in the pound against the euro.
American Express’ terms and conditions say: ‘If you make a charge or if we receive a refund in a currency other than pounds we will apply a fee of 2.99 per cent’, although it doesn’t specify refunds are subject to fees on its website FAQs.
He said: ‘I’m not happy about the first set of non-sterling transaction fees, but can understand why American Express charged them, but to do it again on my refund feels very unfair. Why is American Express profiting off the back of refunds?’
But this is not a situation all holidaymakers face.
Another This is Money reader, who booked a trip to Canada for late March, which also ended up being cancelled, had £63 in non-sterling transaction fees charged on her refund waived by M&S Bank, part of HSBC.
The bank told This is Money it didn’t charge non-sterling transaction fees on refunds.
We also spoke to Barclaycard and Lloyds Banking Group, which runs credit card provider MBNA as well as Lloyds and Halifax, to ask for their stance on refund fees.
Barclaycard said it had waived non-sterling transaction fees until the end of April, for both purchases and refunds. It said in a statement: ‘As a responsible lender, we are committed to providing the right support to our customers. We are therefore offering a number of options to help customers with reduced incomes as a result of coronavirus.
‘These include repayment holidays for up to three months, stopping late payment and cash advance fees, and removing foreign exchange fees for any customers still abroad throughout April. The best way for customers to apply for a payment holiday if their income has been impacted is to use our simple online form.’
And Lloyds told us that if a merchant refunded a transaction, it would refund any non-sterling transaction fees, where these fees have been charged.
Many booking sites, including Booking.com and HomeAway display their prices in pounds, but can ultimately charge customers in foreign currency, leaving them to subject to foreign exchange fluctuations as well as fees in some cases.
Meanwhile an investigation last year from consumer group Which? found not only did budget airline Ryanair bill customers in foreign currency, one of the few airlines to do so, but it did so using an exchange rate which inflated fares by around 6 per cent.
Can consumers challenge these charges?
Thousands may be being billed these fees which eat into their refunds, at a time when they may be struggling financially.
Gareth Shaw, head of money at Which?, said: ‘Most credit and debit card providers charge a foreign transaction fee when you make a purchase in another currency, however, some may also charge a fee if this money is refunded due to a cancellation, for example.
‘Before making a purchase in another currency, it is important to read the terms and conditions of your card provider so you are aware of what costs may be involved. To avoid these transactions fees in the future, consider using a travel credit card which has no specialist fees.’
For those who didn’t use or didn’t have access to a fee-free credit card like the Halifax clarity or Santander zero cards, there are a couple of options for recourse.
Credit comparison site Totally Money said if a customer has been charged fees they feel are excessive or are against the terms and conditions, they should contact their credit card issuer.
Alternatively, they could try and claim money back through chargeback.
Customers need to contact their bank within 120 days of making their purchase, which would only work with holidays booked in 2020 that have been cancelled or look unlikely to go ahead; and provide evidence to support that request.
However, they said there was no guarantee that this would work as it’s not a legal protection.
Finally, those struggling financially amid the coronavirus who could really do without being charged these fees could try the Financial Conduct Authority’s advice on treating people fairly during the crisis.
The FCA’s guidance said: ‘We expect firms to provide strong support and service to customers during this period, bearing in mind customers’ individual circumstances and the challenges coronavirus poses.
‘We welcome firms taking initiatives beyond usual business practices to support their customers. When doing so, firms should notify us so we can consider the impacts and offer support as appropriate.’
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