Johannesburg - When there’s no money, there’s no money, the liquidators say: STA Travel is hopelessly insolvent, tens of thousands of South African customers and suppliers are out of pocket to the value of around R91 million, and employees are owed more than R2.1m.
It’s a dire situation and a bitter pill for customers to swallow but there is good news: If you paid by credit or debit card and have not received service, you can get your money back through your bank.
Hopelessly insolvent
STA South Africa’s liabilities are estimated to be at least R213.5m, with assets worth just R3.7m. The SA division traded out of 22 outlets across the country, and while its fixtures, fittings, furnishings and equipment were said to have a nett book value of R4.89m, the liquidators say only about R500000 of that is likely to be realised from the sale – much of which is expected to be seized by landlords through a statutory hypothec, to recover millions owing in outstanding rent. Cash in bank accounts amounted to just over R3.22m, but that was ceded to Rand Merchant Bank (RMB), which issued a guarantee to the International Air Transport Association.
Jurgens Steenkamp and Cheryl Jones from JJS Administrators were appointed the provisional liquidators on October 28.
In their provisional report on November 5, the liquidators noted that more than R116m was “doubtful and irrecoverable debt”, in landlord and potential airline claims.
Credit card protection
The only customers who will probably see refunds are those who paid with a Mastercard or Visa card.
However, if you’ve paid via EFT or direct cash deposit, you have little to no hope of ever seeing a cent.
It’s not the news more than 27 000 local STA Travel customers – or victims, as they see themselves – are wanting to hear. But as lockdowns decimate the travel and hospitality sector, STA’s demise is yet another chalked up to the global pandemic.
The global travel agency, which was founded in 1971 in Zürich, Switzerland, was placed into voluntary administration on August 21 last year.
After a meeting of creditors, it went into liquidation on September 30.
Customers accused STA’s agents of taking bookings up until the end. That’s not their fault, because staff also seemed to be in the dark about the company’s financial trouble.
There are thousands of complaints on STA’s Facebook page as well as Hello Peter, about how customers were told to accept credit notes instead of refunds when the Covid-19 lockdowns were announced.
When STA shut abruptly, the vouchers became worthless.
Customers are livid. After splurging thousands on their dream holidays, they have nowhere to turn – there’s no one to vent at and apparently no one to hold accountable. Many tour operators have also suffered substantial losses after providing services.
Help at hand
The Banking Association of South Africa would not be drawn on the matter, referring queries to the individual banks. And this is what some of them have to say:
Absa: Cowyk Fox, managing executive: Everyday Banking, Absa Retail and Business Bank says: “Customers who opt to use their credit card for transactions have the added peace of mind of qualifying for chargeback
rights, should merchants not deliver goods and services, as promised, that have been paid for by the customer.
“In essence, a chargeback prevents customers from suffering financial loss and engaging in lengthy disputes with merchants – the bank takes care of this within a clearly defined process.
“Generally speaking, where a merchant has not delivered a service or product paid for by a card, there would be a chargeback right (which can be processed to the merchant’s acquiring bank). Typically, chargebacks are applicable from the point at which the service was to be delivered (in this particular case, the chargeback is applicable from the point of liquidation).
“A chargeback is only allowed where goods/services were not delivered as paid for. Importantly, it does not cover, for example a fridge bought that breaks – that is covered by the warranty the merchant provides with the product; that is the goods were delivered (no chargeback), but not in working order (warranty claim – no bank involvement).
“In this particular instance, Absa has taken note of the unfortunate situation surrounding STA Travel and empathise with customers who have been inconvenienced.
“Absa customers who have booked via STA Travel, and its affiliates, are encouraged to approach us (or email: [email protected]) to assist with the chargeback process. All chargeback requests are evaluated in line with the Visa and MasterCard chargeback rules.”
Capitec says: “A client that has made a purchase using either their Capitec debit or credit card and has not had the service rendered can call our call centre on 0860 102 043 and log a dispute. Our card disputes department will then investigate the matter and will issue the chargeback if necessary. We are prioritising cases that link to clients losing money as a result of the lockdown, or if a client is in financial distress as a result of the non-delivery of service.”
Nedbank says: “The cardholder does have the right to dispute a transaction if the merchant has not provided the goods/services. Where the travel company or airline has undertaken to honour the flight or accommodate the cardholder in a mutually acceptable manner, then a dispute cannot be initiated. If this is not acceptable to the cardholder, they can claim a refund from the company and, if this fails, they have the ability to engage their bank (as described above) to charge back the cost to the travel company or airline.”
And FNB’s head of the card division Chris Labuschagne says the bank continues to process card disputes and all customers retain their card transaction chargeback rights during this period.
“For such instances we would advise customers to log a card dispute with their issuing bank, accompanied by all relevant supporting documentation. The bank will then assess the claim and determine if the claim satisfies the requirements for recovery through the chargeback process,” says Labuschagne.
* Georgina Crouth is a consumer watchdog with serious bite. Write to her at [email protected] or tweet her @georginacrouth.