Jo Swinson is seeking stronger legal protection for consumers who make debit card purchases, after she was contacted by one constituent who lost over a thousand pounds worth of flights when airline Zoom ceased operating last month.
An estimated 40,000 passengers were affected when the airline collapsed, with many of those who had bought tickets using debit cards having no way of claiming their money back. The subsequent collapse of travel company XL has also hit hundreds of thousands of holidaymakers.
“Unlike purchases made with debit cards, credit lenders can be legally liable under the Consumer Credit Act, so that if goods or services bought on credit for over £100 are not provided, money can be recovered.
“When Zoom Airlines went bust last month, many of those customers who had bought flights using debit cards were left with no way of recovering the money they had lost. This included one Kirkintilloch resident who contacted me after losing £1,300 worth of flights.
“In many cases, innocent customers have been left seriously out of pocket through no fault of their own. I will be raising this issue with the Treasury and the banks in order to ask why people using credit cards are given protection against situations like the Zoom collapse, while those using debit cards are not. I will also ask what they can do to make the situation fairer for those who cannot or choose not to buy on credit.
“At a time when many rising food and fuel costs are causing many people to struggle to balance the household budget, giving people incentives to spend on credit rather than within their means is simply irresponsible.”
• Under the Consumer Credit Act, credit lenders can be held as equally liable as service providers, if faulty goods or services are purchased. Customers can be entitled to compensation if goods or services are purchased for between £100 and £30,000.
• Some travel agents hold an ATOL (Air Travel Organisers Licence), which should entitle customers to a full refund in the case of an airline going bankrupt. However, ATOLs generally only cover travel purchases when a flight has been bought together with a hotel or other travel product, and others exclude bookings made with low cost airlines.