Lastminute.com has agreed to pay more than 9,000 customers refunds of £7mln by the end of January said the Competition and Markets Authority.
The CMA added it had been inundated by complaints from people who had not received their money back for holidays booked through the travel website but subsequently cancelled because of COVID-19.
Many of these will have had to wait more than 14 days, exceeding the repayment window required by law, said the CMA.
Lastminute.com has now signed formal commitments – known as ‘undertakings’ – to pay these refunds as soon as possible and by 31 January at the latest, the CMA said in a statement.
Anyone entitled to a refund for a holiday cancelled by lastminute.com on or after 3 December 2020 will also now be paid within 14 days, the company has agreed.
Andrea Coscelli, the CMA’s chief executive, said: “Online travel agents have a legal responsibility to provide prompt refunds to customers whose holidays have been cancelled due to coronavirus – irrespective of whether the agent received refunds from airlines and accommodation providers.”
Other package holiday funds are being investigated for not paying refunds quickly enough said the CMA and will face action if found to be in breach of consumer law, said the Authority.
Consumer organisation Which? recently estimated there is more than £1bn still outstanding to customers who have had holidays or flights cancelled due to the pandemic.
Travel groups said this figure would include a large element of credits for future cruises.
Ryanair PLC (LON:RYA) recently accused several online travel agents of hanging on to money owed for refunds and said that it had paid anyone who had applied directly to the airline.