Transatlantic airline Zoom has gone into administration, meaning many could have lost money on tickets purchased for flights later this year or next.
Instead of trying to get cashback through the administration process, which isn't likely to yield much, we developed other techniques during the Farepak crisis.
What is 'administration'?
This means insolvency practitioners have been called in to run each company and get what cash they can for the creditors via selling or utilising the assets. In theory, a business can be kept running as a ‘going concern’ but this is unlikely.
Most likely the insolvency practitioners will simply collect in the assets and try to sell what they can, and then distribute whatever cash remains to creditors. When the money is distributed there’s a priority of who gets any cash, which usually works a bit like this:
- The Insolvency Practitioners (if they didn’t get paid they wouldn’t do the job in the first place)
- Any secured creditors (if they’ve borrowed money that's secured on property/assets)
- Any employees (redundancy pay)
- Everyone else ranked equally (this includes customers, the Inland Revenue etc. and all will be ranked pro-rata)
What does this means in practice?
It means, to be within any chance of getting money back you’ll have to apply to the administrator for it, not Zoom. Any money left after paying the secured creditors and employees will then be split between everyone else that has submitted a claim.
Unfortunately there's only a
small chance you’ll get any money back by doing this. If you do it won't be very much and it will take some time to be resolved.
As Zoom has only just filed for insolvancy, details of how to contact the administrator aren't available yet but don't worry; there are more options to get your money back.
Travel insurance often won't help
Unfortunately most travel insurance policies WON'T cover this situation, unless of course you specifically requested it and the provider agreed to include it; but this is a rarity. Yet, it is worth giving your policy provider a call to double check exactly where you stand with it.
Did you book through a tour operator?
If you purchased flights as part of a package with a travel agent that is ATOL protected (this is a financial protection scheme tour operators can sign up to), contact them asap to organise alternative travel arangements. Use the
ATOL search facility to check if your tour operator's ATOL protected.
You've a better chance trying the following
As it was quite a well-known aviation company and most ticket purchases were direct via the web, a much better way is to rely on the plastic you paid with.
Were your flights over £100 & did you pay for any or all of it on a credit card?
Thankfully the majority of people, if not all, would have paid over £100 for their flight tickets, and if the cost was charged to a credit card, either wholly or partly, the credit card company is equally liable under Section 75 of the Consumer Credit Act.
This means that whatever rights you'd have with a retailer/company, you have with the credit card company also. So here, you have a claim for breach of contract as it's a non-supply of service.
This is a
legal protection that credit card companies have no choice about, as when you spend on a credit card, you're effectively entering into an arrangement to borrow (even if you pay off in full) so you get these rights.
How to get your money back
Call up the credit card company and tell it you want to make a claim and specifically state you're doing this under
"section 75 of the Consumer Credit Act", though be aware the call centre operative mightn't have a clue what you're talking about.
While hopefully it will be smooth process, as the credit card company should already be aware of the insolvency, there is a chance it'll say you have to contact the company first or claim from it. This is not true.
The law states it is jointly responsible, there is no 'first point of call', you are choosing to claim from it and that is an acceptable decision. If it wants to try and claim from the company in administration, then that's its business.
Be firm but polite and request a claim form. Again, on the claim form state it is a claim under "section 75 of the Consumer Credit Act".
Did you pay on a Visa Debit or Credit Card?
If you paid on a Visa credit card for something over £100, then use section 75 above as that is legal protection and is a legal right.
Yet if you paid on a Visa debit card for any amount, or in the unlikely event you paid for flights under £100 on a credit card, then you have a reasonable chance to get your cash back via the Visa Debit Chargeback system.
Unlike with credit cards, Chargeback isn't a legal protection, but a protection from Visa's own rules. It's effectively Visa's own refunds system. It's designed so that if you pay for something and that order/service hasn't been adequately completed or is never received, or the order is illegitimate in some way, your bank can do a chargeback from the bank that collected the payment.
The crucial part of this is that the chargeback means you're asking for a refund from Zoom's payment processing bank rather than Zoom itself, which is great news, as Zoom has no cash, but its bank does!
Importantly, your bank must request a chargeback within 120 days of you realising the contract won't be completed (not from the date of the transaction), but don't even think of leaving it that long; get the wheels in motion straight away.
How do you do a chargeback?
Quite simply call up your bank, with all the details of the payments made to Zoom (check your statements, if you don't have them, ask the bank for details, but this will slow things down) and ask it to "
start the Chargeback procedure" to get you your money back on the basis of
"non-delivery of the goods".
At this point it's quite possible the person you're talking to will never have heard of Chargeback. Yet don't let that put you off; this is a legitimate system, and you need to (politely) stand your ground. If the bank says no, write an official letter of complaint and note that you'll be writing to complain to Visa.
Luckily, the more people who try to do a Chargeback, the more likely it is the banks will know the process and proceed.
What about other debit cards?
Banks and building societies are not legally obliged to help but sometimes they do; this happened almost across the board with the Farepak problems.
If you paid via another type of debit card, you could have a go at asking for something similar to Chargeback, but the rules are different and nowhere near as strong. Please click reply to report this if you have any success, so others can benefit.
Are you stranded?
Unfortunately many people will have already travelled out to their destination but have no means organised of getting home.
Firstly, ensure you read the
Cheap Flights guide to find the least costly alternative, then compare the price to Virgin Atlantic and British Airways as they're both offering discounted one-way fares to anyone stranded; aslong as there's proof of a Zoom travel booking/ticket.
Virgin Atlantic
Go to Virgin's aiprort ticket desk or call its contact centre for flights between £199 & £249 including taxes & charges fro departures from London Heathrow and Gatwick to either Miami, Chicago, Orlando or LA, depending on the routes available.
Or tickets are available in New York, Boston, Washington, Miami, Chicago, Orlando and LA, back to either Heathrow or Gatwick for between $299 & $399 (again, incl. all taxes & charges). You'll have to act fast to get any tickets as the seats are likely to be grabbed pronto and there are of course a limited number. These journeys must take place before 30 September too.
British Airways
BA's offering half price travel on selected one-way flights for stranded passengers between North America, Bermuda & the UK. Again, you must have proof of being a Zoom customer. If you're in the UK, call 0844 493 0787 or 1 800 247 9297 if you're in the US.
It's also selling discounted fares (though not half price) to those with Zoom tickets scheduled to fly over the coming months.
Claiming back the extra you're forking out
The Financial Ombudsman Service has said there's a slim chance of getting a refund of the extra you're paying on top, under section 75, if you're stranded and have to pay more than your original fare to get back.
However, this will only be applied on a case by case basis and will depend on your circumstances. The best thing to do is keep a record of all your transactions and travel plans and present your case once you've returned.
Lessons to be learned from Farepak & Wrapit
This site, and especially the forum was one of those at the centre of the campaign to get people's money back in Oct '06's Farepak crisis, and only several weeks ago with Wrapit.
Many of the above techniques are tried and tested because of Farepak and Wrapit. If you have time it's worth reading through some of the
Farepak discussion to see some of the success stories of Farepack victims and how to coordinate your complaint.
Please report back your experiences below to help others in the same situation.
How to keep updated on the Zoom situation
Any futher info, changes or successes about FlyZoom money back will go in the free
weekly MoneySaving e-mail.
Pls be nice to all MoneySavers. There's no such thing as a stupid question, and even if you disagree courtesy helps.
Zoom Airlines is in administration: How to get your money back
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