LoveHolidays has agreed to pay out more than £18m to 44,000 customers after their trips were cancelled due to the pandemic, following an investigation by the competition watchdog.
The Competition and Markets Authority (CMA) was forced to intervene after receiving hundreds of complaints from LoveHolidays customers who were left waiting for their money back.
When customers contacted LoveHolidays to request a refund for a cancelled holiday, they were told they would only get their money back for their flights once the firm had received refunds from airlines, according to the CMA.
LoveHolidays has now signed formal commitments that ensure these customers will receive full refunds, with £7m so far refunded to 20,000 out-of-pocket customers.
Andrea Coscelli, chief executive of the CMA, said: “Travel agents have a legal responsibility to make prompt refunds to customers whose holidays have been cancelled due to coronavirus.
“Our action today means that LoveHoliday’s customers now have certainty over when they will receive their money back and they will receive this without undue delay.
“We are continuing to investigate package travel firms and where we find evidence that businesses are breaching consumer law, we will not hesitate to take enforcement action to protect consumers.”