A travel firm has been ordered to compensate Scots employees who were sacked without consultation when the 'profitable' UK operation folded.

STA Travel ordered to compensate Scots employees after 'shock' dismissals

High-profile business closures where consumers lost their money in recent years include tour agency STA Travel. ST PHOTO: KELVIN CHNG
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SINGAPORE - Consumers need more safeguards when they make prepayments, said Consumers Association of Singapore (Case) president Melvin Yong on Thursday (Dec 30). Consumers have lost more than $3 million in prepayments since 2019, according to Case data. Mr Yong wrote in a blog post that current laws do not sufficiently protect consumers who might have paid thousands of dollars in prepayments to a company that becomes insolvent. Typically, the administrator assigned to wind up the company will first pay off secured and preferential creditors, such as banks and employees. What cash is left will be divided among unsecured creditors, which include customers, suppliers and landlords. Mr Yong said: "I hope that the Ministry of Trade and Industry (MTI) could review industries where consumers report a high amount of prepayment losses and consider mandating prepayment protection in these industries." As part of licensing conditions, the MTI could also require the industry to better inform consumers of the steps they can take to protect themselves against business closures, he added. Case has been working with trade associations and stakeholders to develop joint accreditation schemes for specific industries that have a high number of complaints, said Mr Yong. These include firms offering services in spa and wellness, motoring and renovation. Those that are accredited have committed to fair business practices and consumer-friendly policies, which include mandatory protection against prepayment and deposit losses. "This means that customers would be refunded of their unconsumed but insured prepayments and deposits if the company goes bust," Mr Yong said. The accreditation, called CaseTrust, has protected more than $308 million worth of consumer prepayments since 2011. There are more than 770 CaseTrust accredited entities in around 10 industries today. More On This Topic
Besides protecting consumers at the outset, industries that receive many complaints regarding pressure sales tactics should have a mandatory cooling-off period, Mr Yong said, especially if they collect hefty prepayments. "In recent years, the beauty industry received a high number of consumer complaints regarding pressure sales tactics. Many consumers have given us feedback about being aggressively pestered to purchase high-priced beauty or massage packages after their free trials or treatments," he added. A mandatory cooling-off period will mean a consumer can cancel a spa or beauty package within five days, for instance. "This will help reduce the number of pressure sales tactics complaints as consumers will have ample time and space to consider their purchases and not be forced to accept packages sold under pressurising or 'compromising' situations," said Mr Yong. More On This Topic

More should be done to safeguard consumers when they make prepayments: Case

Posted by Kemble on
Nov 5th, 2021 at 09:22
Contiki Holidays’ boss says distribution has been “one of the big challenges” this year as he reported the firm had seen a spike in direct business following the demise of STA Travel. But, speaking on a panel at World Travel Market this week, Armstrong said the youth-focused tour operator was surprised by the level of direct enquiries it had received this year. “One of the big challenges has been distribution,” he said. “Some big agencies have downsized or gone, like STA Travel. During Covid we’ve flipped and got more direct business which were not quite ready for.”
Armstrong said October had been the best sales month for Contiki since the start of the pandemic and said he was “optimistic as we go into Black Friday”. But he warned 2022 “is going to be a relatively challenging year” and added that some suppliers “might not make it through the winter”. “Most of the suppliers have survived by downsizing,” he explained, adding that the operator still works with between 80% and 90% of the suppliers it did prior to Covid. Armstrong said there had “never been a better time” for a consumer to buy a travel product. “Life is good for the consumer,” he said. “I don’t think that will be the same for ever.”
EasyJet chief commercial officer Sophie Dekkers agreed with fellow panellist Armstrong. “As an industry we would like to charge more but it’s all demand driven,” she said. “We’ve got higher fuel costs. How much can we pass through to the consumer? We cannot push through this cost headwinds. This means that recovery will take much longer.”
Despite Contiki’s direct sales spike, Advantage Travel Partnership chief executive Julia Lo Bue-Said said Covid had not delivered a “fatal blow” to travel agency businesses but conceded that “more failures” across the industry are likely. “Next year is looking really positive as we see restrictions easing,” she said, noting the US had risen from the consortia’s members’ eighth best-selling destination to second after it was announced that restrictions on internatinal travel would be lifted on Monday (November 8). “The discussion is now ‘what is your vaccination status’ rather than ‘where are you going?’,” Lo Bue-Said said. On the future of business travel, she added: “There’s a lot of talk that business travel is dead. It has changed. Corporate companies do not want their employers to travel, they just do not have the budget. “Travel is complicated at the moment, and it will continue to be complicated. “We’ve got to be prepared to operate in a different way. Things will change and at some point things will start to ramp up again.”
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Demise of STA Travel prompted spike in direct business, says Contiki

New 24-hour amusement arcade could open in Clifton after travel agency closes during pandemic
It will not sell alcohol or play loud music
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A 19th-century building at one corner of Clifton Triangle could become home to a new 24-hour arcade. Gambling and betting company iLudo82 has sought planning permission from Bristol City Council , to open a Be Lucky 'amusement centre' along Queens Road. The Grade II listed site was formerly home to travel agency STA Travel, which collapsed into administration last year as a result of the coronavirus pandemic. Despite the Clifton branch being listed as "temporarily closed" on Google, the planning application states that STA Travel "vacated the premises in August". It adds: "The proposals will facilitate the occupation of the premises by a Be Lucky amusement centre, which are becoming increasingly popular within designed shopping areas across the UK. "Be Lucky amusement centres do not offer alcohol nor do they play loud music. "The premise of the business is to offer quiet leisure option, catering for individuals that do not wish to drink or socialise in large groups with loud music." The application advises that "the amusement centre seeks to operate 24 hours daily" and would create seven jobs. It continues: "The gaming machines do not generate significant amounts of noise, as this would detract from the subdued atmosphere of the business. "Whilst the amusement centre will be operating outside of regular commercial operating hours, the customer base of Be Lucky amusement centres after midnight is predominantly local entertainment and shift workers who like to relax after their busy shifts. "Therefore, [they] are unlikely to generate significant amounts of noise. "The Noise Impact Assessment identifies the 24 hour of the use of the proposed Be Lucky amusement centre will not harm the amenities of the first floor student flats, and customers leaving the application site will not generate significant disturbance which would harm the amenities of residential properties within the surrounding area." What's planned near you? Check with your postcode
Vacant units 'harmful' to shopping area
There are already Be Lucky sites in the South West, including along Cheltenham High Street. The application states that there are "no existing amusement centres" within the shopping area in which it is located, which falls within the Park Street and Brandon Hill Conservation Area. Noting neighbouring vacant units, the application adds: "This forms a harmful concentration of vacant retail units as well as an existing significant break in the shopping frontage. "The change of use provides an opportunity to reduce this break in the inactive retail frontage and reduce the overall amount of vacant units. "The proposed use will diversify the function of the [shopping area] and contribute to the evening economy." Planning documents describe the building as a "mid-19th century terrace", and discuss its historical use as a bank. Read More

A 24-hour amusement arcade wants to open in Clifton

By Georgina Crouth
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Johannesburg - When there’s no money, there’s no money, the liquidators say: STA Travel is hopelessly insolvent, tens of thousands of South African customers and suppliers are out of pocket to the value of around R91 million, and employees are owed more than R2.1m. It’s a dire situation and a bitter pill for customers to swallow but there is good news: If you paid by credit or debit card and have not received service, you can get your money back through your bank. Hopelessly insolvent
STA South Africa’s liabilities are estimated to be at least R213.5m, with assets worth just R3.7m. The SA division traded out of 22 outlets across the country, and while its fixtures, fittings, furnishings and equipment were said to have a nett book value of R4.89m, the liquidators say only about R500000 of that is likely to be realised from the sale – much of which is expected to be seized by landlords through a statutory hypothec, to recover millions owing in outstanding rent. Cash in bank accounts amounted to just over R3.22m, but that was ceded to Rand Merchant Bank (RMB), which issued a guarantee to the International Air Transport Association. Jurgens Steenkamp and Cheryl Jones from JJS Administrators were appointed the provisional liquidators on October 28. In their provisional report on November 5, the liquidators noted that more than R116m was “doubtful and irrecoverable debt”, in landlord and potential airline claims. Credit card protection
The only customers who will probably see refunds are those who paid with a Mastercard or Visa card. However, if you’ve paid via EFT or direct cash deposit, you have little to no hope of ever seeing a cent. It’s not the news more than 27 000 local STA Travel customers – or victims, as they see themselves – are wanting to hear. But as lockdowns decimate the travel and hospitality sector, STA’s demise is yet another chalked up to the global pandemic. The global travel agency, which was founded in 1971 in Zürich, Switzerland, was placed into voluntary administration on August 21 last year. After a meeting of creditors, it went into liquidation on September 30. Customers accused STA’s agents of taking bookings up until the end. That’s not their fault, because staff also seemed to be in the dark about the company’s financial trouble. There are thousands of complaints on STA’s Facebook page as well as Hello Peter, about how customers were told to accept credit notes instead of refunds when the Covid-19 lockdowns were announced. When STA shut abruptly, the vouchers became worthless. Customers are livid. After splurging thousands on their dream holidays, they have nowhere to turn – there’s no one to vent at and apparently no one to hold accountable. Many tour operators have also suffered substantial losses after providing services. Help at hand
The Banking Association of South Africa would not be drawn on the matter, referring queries to the individual banks. And this is what some of them have to say:
Absa: Cowyk Fox, managing executive: Everyday Banking, Absa Retail and Business Bank says: “Customers who opt to use their credit card for transactions have the added peace of mind of qualifying for chargeback
rights, should merchants not deliver goods and services, as promised, that have been paid for by the customer. “In essence, a chargeback prevents customers from suffering financial loss and engaging in lengthy disputes with merchants – the bank takes care of this within a clearly defined process. “Generally speaking, where a merchant has not delivered a service or product paid for by a card, there would be a chargeback right (which can be processed to the merchant’s acquiring bank). Typically, chargebacks are applicable from the point at which the service was to be delivered (in this particular case, the chargeback is applicable from the point of liquidation). “A chargeback is only allowed where goods/services were not delivered as paid for. Importantly, it does not cover, for example a fridge bought that breaks – that is covered by the warranty the merchant provides with the product; that is the goods were delivered (no chargeback), but not in working order (warranty claim – no bank involvement). “In this particular instance, Absa has taken note of the unfortunate situation surrounding STA Travel and empathise with customers who have been inconvenienced. “Absa customers who have booked via STA Travel, and its affiliates, are encouraged to approach us (or email: [email protected] ) to assist with the chargeback process. All chargeback requests are evaluated in line with the Visa and MasterCard chargeback rules.”
Capitec says: “A client that has made a purchase using either their Capitec debit or credit card and has not had the service rendered can call our call centre on 0860 102 043 and log a dispute. Our card disputes department will then investigate the matter and will issue the chargeback if necessary. We are prioritising cases that link to clients losing money as a result of the lockdown, or if a client is in financial distress as a result of the non-delivery of service.”
Nedbank says: “The cardholder does have the right to dispute a transaction if the merchant has not provided the goods/services. Where the travel company or airline has undertaken to honour the flight or accommodate the cardholder in a mutually acceptable manner, then a dispute cannot be initiated. If this is not acceptable to the cardholder, they can claim a refund from the company and, if this fails, they have the ability to engage their bank (as described above) to charge back the cost to the travel company or airline.”
And FNB’s head of the card division Chris Labuschagne says the bank continues to process card disputes and all customers retain their card transaction chargeback rights during this period. “For such instances we would advise customers to log a card dispute with their issuing bank, accompanied by all relevant supporting documentation. The bank will then assess the claim and determine if the claim satisfies the requirements for recovery through the chargeback process,” says Labuschagne. * Georgina Crouth is a consumer watchdog with serious bite. Write to her at [email protected] or tweet her @georginacrouth.

Consumer Watch: STA Travel is bankrupt, but there’s good news for customers who paid via credit card

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