Collapse of XL and Seguro

Following the collapse of holiday firms XL and Seguro Simeon Linstead, Head of Personal Finance at uSwitch.com, urges consumers to think carefully about protection when paying for holidays.

"The collapse of holiday firms Seguro and XL brings a stark warning to consumers looking to travel abroad over the coming months. Earlier this month we saw the collapse of Zoom airlines which means September has left almost 278,500 holiday-makers stranded abroad, and a whopping 218,500 people with unusable tickets looking for ways to get their money back.

"While those consumers who opted to purchase a package deal will benefit from ATOL (Air Travel Organisers' Licensing) protection. Those who chose to book their own flights and bypass agents (at least 10,000 in the case of XL) will not benefit from this type of protection and could have lost their hard earned cash.

"However, for the fortunate number of customers who purchased their flight using a credit card a refund should be quite straight forward. Credit card purchases are protected by section 75 of the Consumer Credit Act. This protection means the card company is jointly liable for the purchase and you have a legal right to a refund.

"In addition, some consumers may not be aware that should you be the owner of a Visa debit card you have similar rights to those with a credit card, in what is known as a chargeback scheme. Unlike the credit card protection there is no minimum or maximum limit on the purchase, however you must apply for compensation within 120 days of the date the goods were due to arrive. Unfortunately, those that paid by alternative debit cards may find they do not have any protection at all.

"Due to the increased number of consumers arranging their own trips, the number of holidaymakers protected by ATOL has shrunk from 98% in 1998 to less than 61% this year. With this being the third collapse of an airline/holiday firm we have seen this month, consumers should think carefully about the way in which they purchase their holidays or any other big purchases if they want some form of protection."