Thursday, March 12, 2020
The travel and tourism industries have been hit hard by the coronavirus outbreak, and indications are that things will get worse before they get better. One trend to watch for is an anticipated spike in chargebacks as concerned Americans put vacation plans on hold only to learn they can't get refunds or will incur substantial cancellation fees.
"Imagine you've been saving for a dream vacation, you book the ticket and then are forced to cancel [because of concerns about coronavirus], only to discover the operator has no refund policy," said Monica Eaton-Cardone, chief operating officer at Chargebacks911. "It's a very unfortunate situation that could well result in a chargeback claim," Eaton-Cardone said. "There's legitimate pain on both sides. But consumers shouldn't leverage the dispute resolution process to try to get money they don't deserve."
The travel industry is immense, generating $7.6 trillion in revenues worldwide in 2017, according to the online data portal Statista. Online bookings, alone, generated $567 billion in revenues that year, Statista reported.
Chargebacks are a multibillion dollar problem that largely impacts merchants and card issuers. Mercator Advisory Group is projecting 25 million credit card chargebacks involving $209 billion in U.S. card purchases this year. One of the fastest growing types of chargebacks involves friendly fraud, which involves bogus chargeback claims that get filed because the buyer doesn't recognize the transaction, suffers from buyer's remorse or similar reasons.
The coronavirus already has claimed at least one victim in the travel industry: Flybe. The U.K.-based regional airline went out of business in early March, leaving passengers stranded. Company officials blamed financial troubles, "compounded by the outbreak of coronavirus," which depressed demand.
The United States has restricted foreign travelers from at least 26 countries, as well as Americans traveling home from China and Iran, in an effort to stem the tide of coronavirus cases. Several other countries also have imposed travel bans. And the U.S. Centers for Disease Control has advised "older adults," as well as people with chronic medical conditions like heart disease, diabetes and lung disease, to consider avoiding travel.
Polling by USA Today and Ipsos suggests many Americans are putting their travel plans on hold. Among the just over 1,000 U.S. adults polled March 10 and 11, half said they would not currently travel on an airplane. Older Americans are even less likely to fly – 58 percent of those over the age of 55 said they would not travel by plane. Eighty percent of polled Americans said they would not take a cruise.
Views on public transit were mixed, with 45 percent saying they would use public transit and 47 percent saying they would not. One in 10 of those polled said they already canceled a planned personal trip.
Eaton-Cardone had this advice for airlines, cruise lines and others providing travel and tourism services: be sure customers understand refund policies and processes, and be on the lookout for friendly fraud.
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