Think carefully about protection when paying for holidays

Following the collapse of Zoom airlines Simeon Linstead, Head of Personal Finance at uSwitch.com, urges consumers to think carefully about protection when paying for holidays.

"Sadly, Zoom has followed in the footsteps of other airlines this year, such as Silverjet, becoming yet another victim of the credit crunch. Not only has the collapsed airline left 4,500 Zoom passengers stranded, a further 60,000 people with unusable tickets could struggle to get their money back. In fact, all consumers opting out of package deals, bypassing agents and booking flights themselves will not benefit from ATOL (Air Travel Organisers' Licensing) protection. This means people could lose their money if the flight company hits hard times.

"For the fortunate number of Zoom customers who purchased their flight using a credit card, a refund should be quite straight forward as they will be 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. Unfortunately, those that paid by debit card may not have any protection at all.

"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.

"As the number of holidaymakers protected by ATOL has shrunk from 98% in 1998 to less than 61% this year, due to more people arranging their own trips, consumers should think carefully about the way in which they pay. More than £6.2 billion could be paid for flights and £1.9 billion for accommodation this year, 80% of which will be booked online. As the credit crunch puts more and more companies in jeopardy, consumers should think carefully before making any big purchases if they are hoping for some form of protection."