Bankrupt travel company? You could pay

By | February 13th, 2007

Before you pick up that phone to call a travel company or click on that Web site, you might want to check on its financial health. Why? If the company declares bankruptcy before your trip starts, you could miss your trip and possibly even lose your cash.

That’s the unfortunate situation facing one reader, who made a reservation through an online travel agency that has fallen on troubled times.

“After charging our credit card, they e-mailed us to say that the airline could not confirm the itinerary and that the reservation request had not been fulfilled,” she said.

Unable to find a new flight that suited her, she asked for her money back. That’s when things got interesting.

The agency refused, and the customer disputed the charge on her card. Then the agency re-charged the card but promised to refund the money within one to two months.

And then it filed for bankruptcy protection.

More than six months later, this poor reader is tied up in the agency’s bankruptcy proceedings. I’ve tried to help, but the agency insists that its customer go through channels to get her money back.

That means waiting for it to emerge from bankruptcy court, which may take a while. Then again, it may never happen.

So how can you prevent this from happening to you?

Do your due diligence. Check out your travel company’s financial health. My favorite resource for business information is Google Finance, but there are many other sites that can offer the lowdown on a particular company. Look for warning signs like stock delistings, negative earnings or ratings downgrades.

Related story:   "Worst hotel room I’ve ever seen"

Act immediately. If a reservation doesn’t go through, you shouldn’t be charged. At all. Don’t let the agency bill you, and don’t allow it to delay. The longer you wait, the greater the chances you’ll never see your money again.

Keep meticulous notes. Save files, tape phone conversations (as long as it’s legal) and keep any and all records related to your purchase. If it’s necessary to dispute a charge, do it quickly and provide all of these documents to your resolution officer. If you have the paperwork, your chances of prevailing are significantly better.

In this poor reader’s case, the online agency should have never been allowed to re-charge her card for tickets she didn’t receive. If a company ever does that to you, call the Federal Trade Commission, your Better Business Bureau — and your lawyer.

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