The Competition & Markets Authority has said it will take Teletext Holidays to court if it fails to meet a new deadline for customer repayments.
The government body opened an investigation into the brand and its sister travel operator, Alpharooms, in February after receiving hundreds of complaints.
This showed that people were not receiving refunds they were owed within 14-days, as required by law, for package holidays cancelled by the company due to the pandemic.
On April 30th, the CMA informed Truly Holdings, the company that operates Teletext Holidays and Alpharooms, that it was preparing to take court action against the firm for over £7 million in outstanding refunds owed to its customers.
Truly Holdings has now signed formal commitments, known as undertakings, that ensure affected customers still owed a refund will get their money back.
This includes a repayment schedule that prioritises refunds to customers with the longest-standing claims.
Andrea Coscelli, chief executive of the CMA, said: “There’s no excuse for travel firms to delay refunding customers what they are legally owed, even in these extraordinary times.
“Companies should be doing the right thing without the threat of court action.
“As a result of our work, customers who have waited many months for their money back from Teletext Holidays and Alpharooms will now receive a full refund.”
He added: “With international travel resuming and many people considering long awaited trips abroad, all package holiday firms must give refunds within 14 days where these are due, and should also provide clear cancellation information, so that no one else is unnecessarily put through this ordeal.”
Having carefully reviewed Truly Holdings financial information and how quickly it can realistically make the repayments, the CMA has accepted its commitment to pay back all customers owed refunds by August 31st the latest.
The timeframe that has been agreed balances the challenges experienced by the travel sector as a result of the pandemic with the need to get customers their money back in full as quickly as possible.
The company has also committed in its undertakings to refunding in full within 14 days any package holidays it cancels due to the Covid-19 pandemic going forward.
To ensure that the company adheres to its commitments, it has agreed to provide the CMA with regular reports on the progress of its repayments.
If the firm fails to repay customers according to the undertakings, the CMA said it was prepared to take it to court.
Rory Boland, Which? travel editor, welcomed the news.
He said: “It’s right that Teletext has finally committed to paying back the millions it owes in refunds, and as some customers have already waited many months, it must now do so without delay.
“If it fails to uphold this promise, the regulator should not hesitate to take strong action against the company.
“Other holiday companies should take this as a reminder that refunds for any cancellations from the past year, as well any future refunds, should be paid swiftly and within the legal time frame of 14 days.
“While there is still a chance of further disruption to travel, there can be no more excuses for the kind of lawbreaking on refunds we have seen over the course of the pandemic.”