250,000 have no right to a Monarch refund because f lights were bought with debit card

MORE than 250,000 customers used a debit card to pay for Monarch flights and have no right to a refund, it emerged last night.

Customers who make a purchase of more than £100 on a credit card are legally entitled to their money back under Section 75 of the Consumer Credit Act.

But anyone who pays for flights with a debit card does not get this protection.

Debit card users are covered by weaker ‘charge-back’ rules, a voluntary scheme to which card providers and banks sign up.

Under this scheme, the customer’s bank will try to recoup their money from Monarch, which is not legally obliged to pay up. This means the customer has no guarantee they will ever get their money back.

Last night Monarch’s administrators KPMG revealed 35 to 40 per cent of 300,000 future bookings, covering about 750,000 passengers, were made with a debit card. As little as 10 per cent of those customers will be covered by the ATOL scheme – the travel industry safety net that ensures customers who bought a package holiday are refunded in full if an airline goes bust.

This means that almost 110,000 bookings, or some 270,000 passengers, are covered by the weaker charge-back scheme.

Until recently Monarch encouraged customers to book flights with a debit card, because credit card bookings incurred a 3 per cent charge, or £5, which ever was higher. It ditched the fee last December after an EU crackdown on rip-off charges.

Desperate Monarch customers have been bombarding their banks with claims since the airline collapsed at 4am on Monday, fearing they will be left hundreds or thousands of pounds out of pocket.

Banking sources last night insisted it is very likely that passengers who paid with debit cards will get their money back through the charge-back scheme.

But customers face an anxious wait, with some told that even if they are successful they will not get their money for six weeks.

Those who used credit cards to pay for flights worth less than £100 will also not be entitled to a refund under Section 75 of the Consumer Credit Act.

Another loophole in the law means that those who bought Monarch flights through third party travel agents or tour operators are not protected by the legislation. Many travel insurance policies provide no cover if an airline or travel company goes bust.

James Daley, of Fairer Finance, said: ‘This all goes to show the importance of paying for travel on your credit card.’

But a spokesman for UK Finance, which represents nearly 300 of the leading firms in the industry, said: ‘Paying through a debit or credit card provides an additional layer of protection for customers.

‘Charge-back is a well-established process to ensure cardholders don’t lose out … Customers should speak to their bank in the first instance and every claim will be assessed fairly.’

A Department for Transport spokesman said: ‘The CAA is providing [Monarch customers] with advice and assistance to reclaim their money where possible.’

‘Every claim will be assessed fairly’