Kurt Piemonte is annoyed when Expedia calls to tell him that his upcoming Airberlin flight to Barcelona has been canceled. He requests the next available flight and is stunned to find that there aren’t any — ever again. And a new shock soon follows: A refund will not be forthcoming. Airberlin is out of business.
In the spring, I purchased two roundtrip tickets from Boston to Barcelona through Expedia on Airberlin. On Oct. 4, Expedia informed me that our flights were canceled by Airberlin. The agent informed me that she would submit the request for a refund to Airberlin on my behalf. I had paid a total of $807 for the two tickets.
Two weeks later, I received an email from Expedia informing me that the airline would not offer a refund for tickets and to contact my credit card company (Chase).
Unfortunately, the Chase representative told me that because another carrier could be buying Airberlin, the new owner may ultimately decide to refund us so they cannot reimburse us until all that dust settles.
I sent an email to Expedia’s CEO, to express my disappointment in the way I was treated and explained that I had expected Expedia to reimburse me since they served as my agent. An Expedia representative responded with the same runaround as before then said, “We won’t pay someone else’s debt.” Great customer service for a loyal customer who has been using them for more than 20 years! Is there a way to retrieve our money? — Kurt Piemonte, Natick, Mass.
What a frustrating situation! I am not sure if it will make you feel better or worse to know that you aren’t alone. There are thousands of Airberlin customers faced with this same dilemma: How to extract refunds from the failed airline?
After Etihad pulled its financial backing of Airberlin in August 2017, Airberlin declared bankruptcy.
Although the German government provided an emergency loan and Airberlin continued to operate, it was clear that its days were numbered. Throughout September, Airberlin began canceling long-haul flights and then short-haul flights before completely ceasing operation in October.
When you were informed that your scheduled flight was canceled, the full financial impact of this cancellation did not immediately hit you. It wasn’t until much later when Expedia told you that it could not process your refund that you realized your precarious situation.
Expedia is a third party booking agent, but the charge to your credit card came from Airberlin. And Airberlin is under insolvency protection. That protection relieves the airline from its obligation to pay any claims at this time.
Expedia’s recommendation to contact your credit card company about these charges was the extent of what it would do for you in this unusual situation.
You then turned to Chase with high hopes for a quick resolution. That hope was swiftly deflated when the Chase representative you spoke to encouraged you to wait and see if Airberlin would be purchased by another airline. After this hypothetical purchase, you could request your refund from the new owner, the Chase representative suggested.
The Fair Credit Billing Act can protect consumers
This seemed like an unnecessarily complicated and lengthy path to a refund with no guarantee of success at the endpoint.
Not at all what you wanted to do.
When I reviewed your paper trail, I noted that you had not officially requested a chargeback.
The Fair Credit Billing Act (FCBA) protects credit-card-using consumers against, among other things, merchants who do not provide goods and services as agreed upon.
But are credit card companies required to protect their customers against bankrupt merchants?
Asking the Federal Trade Commission for clarification
To find out, I contacted the Federal Trade Commission.
Carole Reynolds, senior attorney in the Division of Financial Practices, explains:
One type of billing error under the FCBA is a reflection on or with a periodic statement of an extension of credit for property or services not accepted by the consumer or not delivered to the consumer as agreed. Unless there was some agreement on this matter, this situation could involve a billing error for dispute (e.g., “not delivered as agreed”) — industry tends to call the dispute process a “chargeback.”
Further, I was told that it would be quite unusual for a credit card company to write a provision into its policy that would release it from obligation in the case of a bankrupt merchant.
And what if there is no money in the merchant’s account or that account is currently being protected by bankruptcy laws? The FCBA requires the credit card bank to absorb the debt.
If you needed another example to highlight the importance of using a credit card when making large purchases, this is it.
With this information in hand, I encouraged you to reach out to Chase again and to specifically ask for a chargeback of these tickets.
You did so and this time you received your refund. You are pleased with this result and I am happy to have pointed you in the right direction.
Although we can’t help the consumers who contact us for assistance with Airberlin claims that involve EU 261, damaged/lost baggage or unused vouchers, a credit card chargeback should work for most would-be passengers who have charged Airberlin tickets for flights that will never operate.