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February 2001 Vol. 27, No. 2   RSS Feed for Undercurrent Issues
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Made a deposit then stayed home?

... and the resort kept your money?

from the February, 2001 issue of Undercurrent   Subscribe Now

Several Undercurrent subscribers have written us, complaining of difficulty in getting deposits refunded after canceling reservations at dive resorts. They feel entirely justified in their cancellation, while the resort feels it has a right to keep their money.

Unfortunately, there is no travel industry standard for cancellation policies or deposit refunds. Even if you believe the policy covers your situation, you may have to rely on the good will of the resort to refund your money once they have it.

What rights do you have if you research a destination, pay your money and, when you arrive, find it doesn’t meet the standards you expected? Few and fewer, it seems.

When Undercurrent subscribers June Reinisch and Leonard Rosenblum suddenly had a twoweek vacation window in August 1999, they checked out Roatan’s Bay Island Resort on the Internet. Impressed by the website ( www.bibr.com) they called the resort and charged two all-inclusive dive packages to their American Express card, in keeping with Bay Island’s policy requiring full payment in advance.

Upon arriving four days later, they were disappointed to find that the facilities and service weren’t up to the expectations they had, based on their visits to other Honduras’ dive resorts. After a two-night stay they checked out and asked resort owner Cam O’Brien for a refund, who, they said, told them she had to refer the request to her husband, Ted, at the hotel’s U.S. office. Upon settling in at the Laguna Beach Club on Utila, Reinisch faxed AMEX instructions to pay only two days charges at Bay Island. That seemed fair to June and Leonard, since the resort was not fully booked, and they had not even dived.

Yet, Ted O’Brien disputed their claim, citing the resort’s norefund policy: “Unused portions of packages, accommodations, meals and activities are not refundable for any reason including airline delays, schedule changes, cancellations, inconveniences, weather, acts of God, or any circumstances beyond our control.” We found that policy on Bay Island’s website, but June Reinisch had not, and says it wasn ’t included with the other confirmation paperwork faxed to her by the resort.

After extensive negotiations between American Express and Bay Island Resort, AMEX determined that the charge was valid. As an AMEX customer service supervisor put it, “Unfortunately, American Express is not able to dictate a merchant’s refund policy. ”

That raises the question of how much help you can expect from your credit card company in a dispute. Ed Perkins, travel columnist and previous editor of Consumer Reports Travel Letter, says on his web page at www.smarterliving.com: “There’s a difference between the way the bank cards (MasterCard and Visa) and travel and entertainment (T&E) cards (AMEX and Diners Club) operate. In both cases, when you ask for a chargeback or refund, the card company first tries to get the money from the supplier. But if the supplier fails, with a bankcard the supplier’s bank is on the hook for the money. The international MasterCard and Visa networks handle the transfer - and may referee a dispute. With a T&E card, the card company itself must pay. To protect themselves, charge card companies often hold back a certain portion of a supplier’s sales revenue to cover possible chargebacks.

When they booked, they
thought the cancellation
fee was $35. When hassles
with ALM Air forced them
to cancel, the fee jumped
to $475.

“A chargeback is valid only when a supplier flat-out fails to deliver. It’s not a universal money-back’ guarantee of satisfaction. You can’t demand a chargeback or refund for a cruise or tour you found disappointing, for example, or an unpleasant air trip. For that sort of redress, you still need to deal directly with a supplier.” In other words, chargebacks almost never apply to ordin a ry disappointment.

We ran the case of Reinisch and Rosenblum by San Francisco travel attorney Al Anolik, who confirmed there are no firm industry standards regarding refunds for travelers dissatisfied with accommodations. Anolik adds that many operators have waived their policies in specific cases. “Both parties have a duty to mitigate a claim,” Anolik points out. The usual reasons to justify such mitigation are safety issues or gross misrepresentation.

Although Reinisch and Rosenblum claimed that Bay Islands didn’t live up to the glossy image on its website (a claim substantiated by more than one contributor to our Chapbook), the O’Brien’s vehemently denied misrepresentation when protesting June’s dispute of her AMEX bill, and eventually prevailed. So, while the proprietors of Bay Island’s Beach Resort were apparently on solid legal ground, the resolution doesn’t speak well for their business ethics.

Anolik also believes that without sufficient notice, a cancellation or refund policy is unenforceable. Still, we got a different view from David Teece, an attorney with the New York law offices of Steven M. Ruttner, which specializes in hotel contract law. He told us that, “A reservation is a contract. The fact that a policy is not specifically stated to the consumer does not mean that such a policy is not in force.” Clearly this is a gray area, subject to different interpretations in different jurisdictions. However, Ed Perkins told us that whether or not you agreed to a policy in advance, the check-in form may include language to the effect that the guest accepts the hotel’s cancellation/early departure provisions. So if it turns out you’ve checked into the Hotel California, you may be able to check out, but you’re likely leave with a lighter wallet .

Teece recommends that consumers “specifically inquire as to a resort’s cancellation policy and if possible request that policy in writing.” To which we would add, if time is short, have the policy faxed or emailed. If the resort won’t do it, or if you spot a red flag among the small print, start looking elsewhere.

And be sure you have the current policy. Carole and Frank Ott of Louisville, KY booked a trip to Captain Don’s Habitat in Bonaire with the understanding that if they canceled between 30 and 45 days before arrival, they would face only a $35/person administrative fee. They had visited Don’s before, and got their information from an old brochure. They made their reserv ations through Louisville Dive Center, which in turn booked through Maduro Dive Fanta-Seas, a specialty travel firm that doubles as a wholesale tour operator and dive resort rep. But hassles with the infamous Air ALM, which the Otts booked direct, forced them to cancel their plans. That’s when Maduro informed the Otts that a new policy was in effect, and the cancellation fee was now $475 per person.

Fortunately, after further discussions with Ray Scott, proprietor of Louisville Dive Center, Maduro agreed to honor its earlier policy, minus a $100/person administrative fee.

Sometimes, even if you do follow the rules, you can still get the run-around. In November 1999, Susan Brown of Stevensville, Montana used a local travel agent to book a one-week package at Coyaba Beach Hotel in Grenada. The travel agent went through a middleman, Dream Voyages of Framingham, Mass., which she found in a Caribbean guidebook. Dream Voyages seemed cooperative, even agreeing to reduce the normal 30-day cancellation fee from $50 to $25. With a clear understanding of the cancellation policy, Brown felt confident enough to write a check for the full $700 package price 45 days in advance (credit cards were not accepted).

Things got sticky when a family illness forced Brown to cancel her reservation, though she did it well before the hotel’s 30-day penalty period. The booker at Dream Voyages informed Susan’s agent that he had to wait for the advance to be returned from the hotel before he could process her refund. Yet after a few weeks he went incommunicado, failing to respond to the travel agent’s polite but firm phone messages, letters and faxes.

After months of frustration, Brown finally contacted the hotel directly. They told her that they had received her cancellation from Dream Voyages, but had never received money. Armed with that information, the travel agent was finally able to get Dream Voyages to cut a refund check in early September — ten months after Susan’s original booking, and six months after her cancellation. Persistence eventually paid off.

There’s always the option of taking your dispute to small claims court. But what if the hotel is in a foreign country, and the booking office, wholesaler or travel agent are in different states? Anolik recommends that you send the following notice along with your advance payment, preferably on the back of your check: “Any dispute shall be settled in [your hometown].” If the resort cashes your check, that stipulation becomes part of your contract with them. You can then file in your local small claims court, requiring the defendant to appear there or to default on the judgment.

Of course, even if you win you still have the problem of collecting what’s due you. But Anolik suggests that you can send evidence of the judgment to dive and travel industry groups such as PADI, the American Society of Travel Agents, and Undercurrent, to let others know of problems with a specific resort.

If you think there is any possibility you may need to cancel, avoid a ton of headaches first by getting the most current policies in writing, and then deciding whether you can live with them. Finally, look into trip cancellation insurance for an extra level of protection.

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