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Travel firms have been warned by regulators about profiteering from unfair cancellation fees and costly deposits.
According to the Competition and Markets Authority (CMA), there is a widespread ignorance about how much travel companies can charge for a traveller cancelling their holiday.
Companies cannot automatically keep a large deposit if, due to unforeseen circumstances the customer cancels a trip.
Travel firms apply cancellation fees of up to 75 per cent even if customers cancel only one day after they have booked a holiday; because they are able to resell the holiday they can profit at the expense of their customers.
Contracts such as these may be unfair, even if written into terms and conditions.
Paul Latham, the CMA's director of strategy and communications, said:
"Nobody wants to cancel a trip or holiday, but if you have to, it's important that you are treated fairly and don't lose out more than is absolutely necessary.
Fair terms are a legal requirement as well as helping reassure customers that they're dealing with a company they can trust. Unfair terms can't be enforced so they also won't protect businesses if challenged. The small print really can make a big difference."
For example, if a booking is cancelled due to a family bereavement or illness; the travel firm still has plenty of time to re-sell the room or holiday and then they should refund the payment or the deposit.
The Competition and Markets Authority, estimate as many as 50% of travel firms may not be fully aware of the rules. Smaller firms, who copy the terms and conditions from larger firms, could lead to an explosion of unfair contracts.
Association of British Travel Agents chief executive, Mark Tanzer, said:
"There are circumstances when a cancellation charge may apply, but it must genuinely reflect the costs of cancellations faced by the travel company. We always encourage people to take out travel insurance as soon as they book their holiday, which should protect them from the costs for most cancellations."
The CMA wants travellers/holiday makers to know if they are forced to change their plans that they do not always have to resort to travel insurance to retrieve deposits.
Rory Boland, Which? travel editor, said:
"Having to call off a long-awaited trip away is bad enough, but it’s made even worse when holidaymakers are forced to hand over large sums of money unexpectedly because the cancellation policy is unfair, unclear or buried deep within the terms and conditions.
It’s time for travel firms to up their game. If they continue to fail to treat their customers fairly, the CMA should not hesitate to take the enforcement action needed to stop people from getting ripped off."
Anyone who believes they have been treated unfairly should contact the company involved, and can contact the Citizens Advice consumer helpline for guidance.