AFTA chargeback schemes for insolent travel companies

Sunny’s Travel Agency found itself in trouble when a hotel chain in Sydney collapsed due to insolvency.

Sunny’s had received credit card payments from clients totalling $100,000 that were then used to pay for many holiday stays at this particular hotel chain.

Sunny’s had no idea that the hotel chain was about to enter Liquidation before it made the payments.

So, as can be expected, clients started making claims to claw-back their down payments from Sunny’s and their bank, but this leaves Sunny’s significantly out of pocket and in financial trouble.

Luckily Sunny’s, as a member of the Australian Federation of Travel Agents, had signed up for the AFTA Chargeback Scheme (“ACS”).

As a member, each credit/debit card transaction paid by clients incurs an extra levy, which is used as security to then protect travel agents in the event of a supplier insolvency.

This means that Sunny’s does not need to deal with the Liquidators of the hotel chain, rather the ACS subrogates into the position of Sunny’s.

For travel agents this seems like a nifty scheme, but has anyone had a personal experience in dealing with the ACS?


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