Not upheld: section 75 claim and chargeback dispute - holiday deposit retention complaint against Barclays Bank UK PLC trading as Tesco Bank

Decision detail

Summary

Mr D booked a £1,635 package holiday and paid £122 towards the deposit. He missed a payment deadline due to inadequate reminders and the holiday company cancelled the booking, retaining the £122. Mr D disputed this with Tesco Bank, arguing the retention was unfair and disproportionate despite no services being provided. Tesco Bank declined to assist via chargeback or section 75 of the Consumer Credit Act, finding no breach of contract as the terms explicitly allowed deposit retention for non-payment. The ombudsman upheld Tesco Bank's decision, noting the retained amount was reasonable given industry practice, represented only 7.5% of the total cost, and was significantly less than the full £400 deposit permitted under the contract terms.

The Ombudsman's reasoning

The ombudsman found that Tesco Bank acted fairly in assessing the section 75 claim. Although Mr D argued the terms were unfair and disproportionate, the ombudsman noted that: (1) the contract clearly stated H could retain the full £400 deposit, yet only retained £122 (7.5% of total holiday cost); (2) H made payment deadlines clear in the booking confirmation; (3) deposit retention for cancelled holidays is a common industry practice; (4) H likely incurred administrative and marketing costs from the cancellation; (5) Mr D provided no evidence that £122 was disproportionate; and (6) only a court can determine if a contract term is unfair. The ombudsman concluded Tesco Bank was not obliged to make further enquiries with H about the retained amount.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website