Section 75 & liability for Additional Costs

desiman

I recently came across this article from the Financial Ombudsman magazine, which was useful in understanding the S75 liabilities of the card provider when it comes to additional costs. It has helped me build a case for a S75 claim for recovering additional costs I had to pay for the FCO rescue/repatriation flights as the commercial option was no longer available. 
https://www.financial-ombudsman.org.uk/files/2921/86.pdf

credit-card provider misunderstands the extent of its liability under section 75

As a wedding anniversary present for her parents, Mrs K paid for them to join her and her husband, together with their two children, on a holiday in Florida. She used her credit card to buy six return flights, at a total cost of £2,890.50. Just a few days before they were due to fly home at the end of their holiday, the family learned that their airline had gone into receivership. In order to get home, Mrs K had to book flights with a different airline – at a total cost of £1,980.60. Once they were home, she made a claim to her credit card provider, under section 75, for the cost of the flights from the USA. In due course the card provider refunded £1,349.25 to her account.

Unhappy at receiving less than the amount she had claimed, Mrs K complained to the card provider. It told her the amount it had credited to her account was the exact amount it had recovered from the failed airline. It said the airline had confirmed that this sum ‘represented the portion of the original payment that was attributable to the return flight’.

Mrs K thought it was unfair to simply refund her the cost of the unused portion of her original tickets. However, the card provider was not prepared to reconsider the matter, so she brought her complaint to us.

complaint upheld

The failure of the airline with which she had booked return flights meant that Mrs K was obliged to buy tickets from a different airline to get her family home from their holiday. It was clear from the evidence that she had paid a reasonable price for these tickets. The card provider’s liability to Mrs K under section 75 was not limited to passing on any refund it was able to obtain from the airline. The card provider was also liable to her for the additional costs she had reasonably incurred as a result of the airline’s breach of contract.

The flights from the USA had cost Mrs K £1,980.60, so the card provider’s refund still left her out of pocket by £631.35. We upheld the complaint and told the card provider to pay her this amount.