I am organising a tailor-made trip to China in September 2017 for my wife and I, using a Chinese travel agent called Chinatours. It will be for about four weeks and the £10,000 cost will cover a variety of hotel stays, local tours, entrance fees, internal travel, etc. The company is not Atol or Abta bonded.
My concerns are about insurance and how we would get our money back should Chinatours cease trading before our holiday, although I have no reason to believe it is anything but sound.
Both my bank and John Lewis provide holiday insurance, but the policies will not provide cover for companies that are not Abta or Atol bonded (so that they wouldn’t have to pay anything because these industry schemes would step in).
I tend to use a Mastercard credit card through John Lewis for big purchases. But when I rang it I was told that I should not assume I would have protection against Chinatours’ failure if I paid using such a card. The person cited the collapse of the non-bonded LowCostHolidays earlier this summer, saying that it hadn’t paid compensation to those who had used their credit card.
This seems contrary to the advice previously offered in the Guardian and elsewhere. What would you advise I do?
JF, Newark
My immediate response to your letter was that you had been told a load of baloney by the person at John Lewis credit cards – and so it proved. You are quite right to check the situation, as it would be foolhardy when making such an expensive booking not to be covered in the event the travel operator ceased trading – an all too familiar situation in the travel sector.
We asked John Lewis to explain why you had been told what you had, and it has now confirmed that you would in fact be covered if you paid by credit card.
“JF would be protected on any purchase made with his John Lewis partnership card between the value of £100 and £30,000. Under section 75 of the Consumer Credit Act, the credit card company holds equal responsibility with the trader or retailer providing the goods or services, enabling consumers to make a direct claim to their credit card company. We would like to apologise if the advice JF received wasn’t clear. We will ensure that all customers are fully aware of the legalities surrounding this issue and the options available to them,” a spokeswoman says.
John Lewis went on to suggest you would be able to claim in full as long as you had paid a deposit of at least £100 on credit card, even if an alternative payment method was used to cover the remaining balance. This means you could pay the 3% credit card loading fee on just the first £100, and pay the rest later by debit card, which is cheaper.
In general, when buying a major item from a firm that could be at risk of going bust between the payment and receipt of the goods or service, always use a credit card for at least £100 of the bill. A new or used car purchase is a good example, as long as the total purchase price is less than £30,000. Payments made via PayPal do not enjoy the same protection. It has its own protection scheme, but claims can only be brought up to 180 days from the payment date.
We welcome letters but cannot answer individually. Email us at consumer.champions@theguardian.com or write to Consumer Champions, Money, the Guardian, 90 York Way, London N1 9GU. Please include a daytime phone number
