Firms failing to offer refunds for trips cancelled during pandemic face legal action amid claims banks and airlines are blocking up to £7billion owed to tourists - as couple fight Ryanair for £700 over ruined Budapest holiday

Travel firms which have failed to refund customers after holidays were cancelled during the coronavirus crisis will face legal action, it was announced today.

The Competition and Markets Authority said it will take companies to court after it was revealed thousands of British holidaymakers are owed up to £7billion from companies refusing to reimburse customers.  

The authority said four out of five complaints it gets every day are from British consumers being denied refunds for cancelled trips.

Airlines including British Airways, easyJet, Jet2, Virgin Atlantic, Ryanair and TUI were accused of flouting the law and pushing customers to accept credit-note vouchers which have little consumer protection and could prove worthless if a carrier went bust. 

The CMA said: 'If it finds evidence that companies are failing to comply with the law, the CMA will take appropriate enforcement action, including moving quickly to court if a firm does not address its concerns. 

'Individuals can also take their own legal action against unfair terms should they choose to.'

Jo Lemmon Sparkes, 39, and wife Kirsty, 33, from Cambridge, had a birthday trip to Budapest cancelled two days before they were due to jet off are still fighting for their £700 refund - and claim 18 attempts to contact Ryanair have gone unanswered

A devastated couple are one of many who have had holidays worth hundreds of pounds cancelled without being able to secure a refund.

Jo Lemmon Sparkes, 39, and wife Kirsty, 33, had a birthday trip to Budapest cancelled two days before they were due to jet off are still fighting for their £700 refund - and claim 18 attempts to contact Ryanair have gone unanswered.

They had been planning the Hungary holiday with five friends to celebrate Jo's birthday for a whole year and were 'gutted' when the flights were cancelled just two days before they were due to fly on March 20.

The frustrated pair have being trying to contact Ryanair, who they were flying with, since March 19 but claim almost 20 separate efforts to reach out via Facebook, phone call and email have still elicited no response more than a month later.

Coffee shop worker Jo, from Cambridge, said: 'It's just gutting because we'd all been looking forward to it for so long and it had been a nightmare trying to find a weekend when we're all free.

'We understand it's nobody's fault, but the communication has been awful.

'I spent 17 minutes on hold, which ended up costing me £10, and an hour and a half on the live chat on their website - and didn't get through either way.

'They haven't even acknowledged that they've received the messages or that they know we're still waiting.

'It's so frustrating because I've literally had no contact with anyone.

'We've been left in the dark, we don't know what's going on.'

Jo had booked the flights for five of her friends who had all booked time off work for the special occasion, for £150 each.

With the coronavirus lockdown putting huge strain on the economy, she said some of them just can't afford to lose the money due to being furloughed.

Jo said: 'At a time like this, I don't even know if my job will still be there at the end of it.

'If it was just a £60 flight, I might just let it go but it's a lot of money and some of us aren't in a position to just let £150 go.

'Getting the money back is vital for some of us so I'm determined.'

The group started planning the trip in June 2019 and now worry that they'll never get to celebrate in Budapest as finding a suitable time for all five of them was a 'total nightmare.'

Jo said the situation was made even more confusing as she still received emails from Ryanair after the flight was cancelled asking her to check in.

She added: 'I've heard that Ryanair are offering vouchers, but we don't want vouchers.

'I can't split a voucher five ways and I don't think I'd want to fly with Ryanair again because now I know this is how they handle these kind of situations and they've caused us all this stress.

'We were all really looking forward to it.

'One of our friends was coming up the day before we flew all the way from Plymouth.

'We haven't seen her since Christmas so it's just so disappointing.

'I won't let it go.

'We and everyone else in this situation deserve a full refund and I'll be the first in the queue when they start handing them out.'

Jo and Kirsty planned the Hungary holiday with five friends to celebrate Jo's birthday for a whole year and say 'communication' has been awful since it was cancelled by Ryanair

Ryanair said: 'For any cancelled flight, Ryanair is giving customers all of the options set out under EU regulations, including free moves and refunds in the form of cash or vouchers.

'The process time for cash refunds is taking longer due to the fact we are having to process 10,000 times the usual volume of cancellations and have fewer staff available due to social distancing measures.

'Ryanair is offering vouchers and free moves as these are automated and would give customers an alternative. Customers who choose a voucher but don't redeem it within 12 months may still apply for and obtain a refund after this 12 month period. This also includes partial redemption, as the portion of the unused voucher will be refunded.

'Customers who choose not to accept a free move or voucher will be refunded in due course, once this unprecedented crisis is over.

'We apologise for any inconvenience this may cause and we thank our customers for bearing with us.'

TUI, the UK's biggest tour operator, extended the suspension of its holidays for the next six weeks yesterday , having previously suspended operation until May 14.

The company announced that all trips would be cancelled up to and including June 11, and warned customers wanting cash refunds that their call centres are 'incredibly busy'.      

British Airways said on Tuesday it is making up to 12,000 workers redundant and last week Richard Branson asked the government to bail out for his struggling Virgin Atlantic company, for around £500million.

While travellers who booked breaks using credit cards are also struggling to get cash back from banks, despite Section 75 of the Consumer Credit Act enshrining refunds in law.

Instead lenders have told their own customers they are not eligible for cash refunds, or demanded they pursue the cash from the travel firm first, which is not a legal requirement.

The Association of British Travel Agents (Abta) has lobbied ministers to relax rules requiring airlines to issue refunds within a set timeframe — although most have ignored them anyway and appear to have been using underhand behaviour to avoid paying. 

 Airlines are using underhand tactics to make it almost impossible for holidaymakers to claim refunds for cancelled flights.

Hundreds of readers have contacted us to complain major airlines are illegally withholding refunds that should be paid within a week.

Many say they have been convinced to accept credit-note vouchers which have little consumer protection and could prove worthless if an airline went bust.  

Others describe refund processes as unclear, complex or time-consuming, forcing them to give up.

On Tuesday night, the powerful Commons transport committee of MPs confirmed plans to investigate the issue in a series of hearings with aviation bosses next week.

Under EU law, passengers are entitled to a full refund on the cost of a cancelled flight within seven days, or 14 days if they have booked it as part of a package.

But carriers are delaying issuing refunds for fear of going bust — so holidaymakers' cash is essentially being used as interest-free loans for crisis-hit airlines.

This is having a knock-on effect on package holiday companies, who are also waiting for airlines to repay them before they can issue their own refunds.

Critics say a lack of government action on the issue has turned the travel industry into the Wild West, leaving families out of pocket at a time when many are under financial strain. Industry estimates suggest companies are sitting on £7 billion in unpaid refunds.

The committee chairman, Tory MP Huw Merriman, said: 'Yes, airlines have a need for cash but this should be drawn from their lenders, not from passengers who are legally entitled to a refund. 

'Many people have their own financial worries and may not be able to use a future travel voucher.'

BA has been accused of acting disgracefully by removing a refund option from its website, while retaining the option to receive a credit-note voucher towards a future flight. 

Passengers are told to call a customer service number — but the line is frequently blocked. When we called this week, it played an automated message, then cut out.

EasyJet customers have also described endless waits to speak to customer service. It is, however, easy for customers to claim a credit note valid for a year.

Ryanair, Virgin Atlantic and TUI are also offering credit notes automatically. These can be rejected in favour of a full refund.

However, Ryanair has warned that passengers who want their money back will be 'placed in the cash refund queue until the Covid-19 emergency has passed'.

Virgin Atlantic is in crisis and could collapse at the end of May unless a buyer is found. This would render any credit notes worthless, unless the Government steps in to protect vouchers under Atol. Then, even if an airline folded, customers would get their money back.

Wizz Air has resumed flights from Luton to several destinations in Europe this week, meaning passengers who do not wish to travel are denied the right to a refund. 

Consumer champions Which? say the move was 'nothing more than a cynical cash grab'. 

Simon de Broise, a lawyer specialising in banking and financing disputes, said while usually claims Section 75 of the Consumer Credit Act work quite well, reports that banks are refusing to process claims are concerning.

The Senior Associate at Collyer Bristow said: 'In the current climate, suppliers, particularly those in hard-hit sectors such as travel, need to preserve as much cash as possible and so are understandably trying to offer alternatives to cash refunds, such as vouchers or credit notes. 

'There is no problem with this per se, but consumers do not have to accept these alternatives and, subject to meeting certain requirements, are usually entitled to a refund.

'The reports of banks making claims more difficult, and even refusing to process them, is very surprising and quite concerning. 

'Whilst it is correct that the right to a refund is not automatic - for instance under s.75 of the Consumer Credit Act there needs to be breach of contract or misrepresentation - the cases we are concerned with at the moment, for example a flight cancelled by an airline, will not be disputed and so claims should be being processed in the normal way. 

'If this is not happening, then the regulator may need to step in.'