STA Travel Finally Wins Court Case Over Malev Ticket Charge Backs

  • 15 Sep 2016 9:00 AM
STA Travel Finally Wins Court Case Over Malev Ticket Charge Backs
Four and a half years after collapse of Malev, court rules in favour of Hungarian travel agency against K&H, the country’s 2nd largest bank in a ruling which may serve as a precedent.

Sentenced to death by the EU Commission, Hungary’s flag-carrier, Malev stopped its services on 3rd February 2012. The grounded carrier left thousands of unusable sold tickets behind – and some extremely unhappy people who had purchased them. Hungarian banks quickly decided that customers who had purchased these Malev tickets with credit cards were entitled to request refunds.

It did not take long to discover that the banks’ generosity was based on the charge back procedure (if you don’t receive a product or service paid for by bank card, you can request your bank to recoup your money), a process which involved the customers’ card issuing banks and the sellers’ card clearing banks. Malev, however, was subject to liquidation, and thus no money could be retrieved from them – which was not the case for travel agents.

Warning signs

Upon determining the banks’ intentions, the Hungarian Travel Agents’ Association (MUISZ) notified all banks involved through the Banking Association about the delicate situation of IATA agents acting on behalf of airlines, and all national and EU laws governing air transport and carriers’ liabilities. MUISZ informed the banks that when a customer buys a plane ticket, the transportation contract is concluded between the passenger and the carrier, and it is not the agent’s responsibility but rather that of the airline to transport the traveller.

In addition to the general notification, STA Travel Hungary had also requested its card clearing bank to not withdraw STA’s money via the charge back procedure – unfortunately, in vain. Over a six-month period, the bank refunded more than HUF 1 million (EUR 3,500) to 18 people, requisitioning the money from STA’s ongoing card payment clearances. That proved to be a very heavy burden for a company that had already suffered a great loss through Malev’s bankruptcy, both in terms of group deposits and lost sales volume.

The company’s owners attempted to seek help from the Banking Supervision, but were provided with nothing more than the advice: sue the bank; you are likely to win the case if you are persistent enough.

Can a small travel agency take on and win against a large bank?

It took almost 4 months for STA Travel Hungary to find a lawyer who was willing to march into battle against the bank. Many lawyers were of the opinion that it was impossible to win a case like this against a large international bank in Hungary. Finally, a young lawyer with a background in banking agreed to take the case, and after 4 years the case was awarded to STA Travel Hungary Ltd., in court proceedings that have been heard at both first and second instance. This decision is now final and no further appeals can be lodged.

For the bank it was obviously not STA’s small amount claim that was important, but the potential precedent. Following the decision, all major Hungarian travel agencies would naturally follow suit and take their card clearing banks to court – demanding the reimbursement of much more substantial amounts of money.

Your truth can be recognised, but you need to be persistent

Even if the banks are not happy, Hungarian enterprises should revel in the decision of the court, as the sentence is a milestone regarding the protection of Hungarian businesses. It has been pronounced that as long as an agent conducts its business prudently, it can not be held responsible for the service – or failure – of the ‘actual’ service provider it represents. If we stop to consider insurance or real estate agents, it is immediately obvious that the scope of this decision reaches far beyond just travel agents.

The case was awarded to STA Travel Hungary Ltd., which is the franchise partner of STA Travel in Hungary. The Hungarian owned company started its independent activity in 2008, its 6 employees help 4-5 thousand travellers in fulfilling their dreams on all continents or with a round-the-world trip, one of STA’s many specialities. In addition to individual travellers, the office also serves internationally active Hungarian SMEs and organisations and festivals.


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