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What are my rights if a travel company cancels my tour and keeps my money?

Travel Disputes

Imagine saving for months for a dream tour, such as an overseas journey through Central Asia or the Middle East, only for the travel provider to cancel the trip due to security conditions or operational issues. To make matters worse, instead of returning your $10,000 payment, the company informs you that you are only entitled to a credit voucher, less more than $1,000 in withheld “supplier charges.” When you request an itemised breakdown of these charges, they refuse to provide one and stop replying to your emails.

This is a common and distressing scenario for many Gold Coast travelers. Fortunately, under the Australian Consumer Law (ACL), your legal position is significantly stronger than travel contracts usually suggest. In Australia, statutory consumer guarantees override private contracts, and a business cannot simply hide behind its fine print to keep your hard-earned money.

The Golden Rule: The ACL Overrides the Contract

Many businesses operate under the mistaken belief that their terms and conditions represent the final word on refunds. However, section 64 of the ACL, which is located in Schedule 2 of the Competition and Consumer Act 2010 (Cth) 1, expressly voids any contract term that purports to exclude, restrict, or modify consumer rights.

If a travel provider’s contract terms conflict with the ACL, the contract terms are legally void, and the statutory protections of the ACL prevail.

Consumer Guarantees and Major Failures

When you book a holiday or tour, you are purchasing services. Under sections 60 to 62 of the ACL2, the supplier automatically guarantees that:

  • The services will be provided with due care and skill (section 60);
  • The services will be fit for the particular purpose or achieve the result you made known to the supplier (section 61); and
  • The services will be supplied within a reasonable time (section 62).

When a travel company cancels a tour, they fail to provide the contracted services. Because the services are not delivered at all, this failure cannot be easily remedied. Under section 258 of the ACL, a failure to supply the services is deemed a major failure if the services would not have been acquired by a reasonable consumer had they known the nature of the failure, or if the services are entirely unfit for their purpose.

Your Absolute Right to a Full Cash Refund

Under section 259(3) of the ACL3, when a service suffers from a major failure, the consumer has the absolute right to:

  1. Terminate the contract for services; and
  2. Choose a full cash refund of the money paid.

A credit voucher is not the legal equivalent of a cash refund. If a travel company cancels your tour, they cannot force you to accept a credit voucher or travel credit. You have the statutory right to insist on a bank transfer or cash refund.

Unfair Contract Terms (sections 23 to 28 ACL)

Travel companies often insert clauses in standard agreements allowing them to retain a portion of your funds for administrative fees or supplier charges in the event of cancellation.

Under the ACL’s Unfair Contract Terms regime in sections 23 to 284, a term in a standard form consumer contract is void if it:

  • Causes a significant imbalance in the parties’ rights and obligations;
  • Is not reasonably necessary to protect the legitimate interests of the supplier; and
  • Would cause financial or other detriment to the consumer if relied upon.

A clause that permits a business to withhold a customer’s money for supplier charges without being required to demonstrate the actual cost incurred, itemise the charges, or provide a written breakdown is highly likely to be deemed an unfair contract term. Because the term is unfair, it is void, and the travel company has no legal authority to make the deduction.

Travel Agents versus Principal Operators

An important distinction arises when you book through a third party travel agent rather than directly with the tour operator.

The Agency Relationship

If a travel agent acts purely as an intermediary, the contract for the tour is between you and the principal operator. If the operator cancels the tour:

  • The principal operator remains primarily responsible for providing the refund under the ACL.
  • The travel agent cannot keep commission or charge cancellation fees unless those fees represent a genuine service provided and do not constitute an unfair contract term.
  • Under the ACL, travel agents must exercise due care and skill in facilitating your booking and processing your refund. If they delay or withhold funds they received from the operator, they can be held directly liable.

Credit Card Chargebacks: A Powerful First Line of Defence

If a travel provider refuses to refund your money after they cancel a tour, you may not need to wait for a tribunal hearing.

If you paid by credit or debit card, you can request a chargeback from your bank under the visa or mastercard rules for “services not supplied” or “transaction not completed”.

  • Strict Time Limits: You must generally lodge a chargeback request with your bank within 120 days of the cancellation date or the scheduled date of service.
  • Evidence Required: You will need to provide your bank with proof of the booking, the cancellation notice from the provider, and your formal email demanding a refund.
  • Result: If successful, your bank will reverse the transaction and claw back the money directly from the provider’s merchant account.

What Happens in the Event of Operator Insolvency?

If a travel operator cancels a tour because they have gone into administration or liquidation, your options are more restricted.

In this scenario:

  • You become an unsecured creditor in the liquidation process. You must lodge a proof of debt form with the liquidator, but consumer refunds are paid last, meaning you are unlikely to recover the full amount.
  • Chargeback Fallback: You should immediately apply for a credit card chargeback. Banks can often process chargebacks even if the business is insolvent, provided the time limits have not expired.
  • Travel Insurance: Most standard travel insurance policies explicitly exclude insolvency of travel providers. You must check your policy to see if you purchased optional insolvency cover.

Misleading Conduct and the Refusal to Provide a Breakdown

Under section 18 of the ACL5, businesses are strictly prohibited from engaging in conduct that is misleading or deceptive, or is likely to mislead or deceive.

If a company tells you they are retaining $1,000 for supplier charges but refuses to provide any receipt, invoice, or breakdown of those charges, their conduct is highly suspect. A refusal to substantiate a deduction while withholding your funds is consistent with misleading conduct, as it deprives you of the ability to verify if the costs were actually incurred.

Your Action Plan: How to Recover Your Money

If a travel company cancels your trip and unlawfully retains your funds, do not panic. Follow this step by step recovery process:

Step 1: Write a Formal ACL Letter of Demand

Send a formal email or registered letter to the travel provider. Do not just express frustration; you should cite the specific provisions of the law:

  • State that the supplier initiated cancellation constitutes a major failure of the consumer guarantees under sections 60 to 62 and section 258 of the ACL.
  • Formally reject any credit voucher and demand a full cash refund under section 259(3) of the ACL.
  • Point out that any clause allowing them to deduct unspecified supplier charges without a breakdown is an unfair contract term under sections 23 to 28 of the ACL and is void.
  • Set a strict deadline of 14 days for the refund to be processed, and state that you will escalate the matter to Queensland Fair Trading and QCAT if they fail to comply.

Step 2: Lodge a Complaint with Queensland Fair Trading

If the deadline passes without a resolution, submit a complaint online to the Queensland Office of Fair Trading (OFT) (13 74 68). Provide all your receipts, booking terms, and correspondence. The OFT will contact the business, investigate their conduct, and attempt to resolve the dispute through conciliation. Most Australian registered travel companies will capitulate at this stage to avoid formal regulatory investigation.

Step 3: Apply to QCAT for a Minor Civil Dispute

If the business remains unresponsive, file an application with the Queensland Civil and Administrative Tribunal (QCAT) (1300 753 228) under its consumer and trader disputes jurisdiction.

  • QCAT can hear claims up to $25,000.
  • The filing fee is low (typically under $100 for smaller claims).
  • The process is informal and designed for self representation, meaning you do not need a lawyer to argue your case.
Action Step Key Statutory Reference Remedy Sought
Demand Refund Section 259(3) ACL Full cash refund of original booking amount
Challenge Deductions Sections 23 to 28 ACL Declare supplier charges clause void as an unfair term
Request Breakdown Section 18 ACL Demand written itemisation of alleged third party fees
Escalate Dispute QCAT MCD Jurisdiction Tribunal order forcing payment of withheld funds

📞 Need help recovering a travel refund? If you are dealing with a cancelled tour dispute exceeding $5,000, contact Bell & Senior Lawyers today on (07) 5532 8777 or contact us online for a strategic review of your contract. Read more about how we support clients on our Consumer Law & Residential Disputes practice area page.

  1. Competition and Consumer Act 2010 (Cth) sch 2 (’Australian Consumer Law’) s 64. ↩︎

  2. Ibid ss 60 to 62. ↩︎

  3. Ibid s 259(3). ↩︎

  4. Ibid ss 23 to 28. ↩︎

  5. Ibid s 18. ↩︎

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