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Dear Consumer Ed:
I reserved a hotel room in Georgia and paid a one-night deposit of $200 using my credit card. A week prior to my scheduled check-in date, I cancelled my reservation. According to the hotel’s cancellation policy, I am entitled to a refund of my deposit less a $50 fee. The hotel said it would take 30 days to process the refund. There is nothing in the hotel’s cancellation policy about it taking that long to issue a refund. Meanwhile, I will incur interest on this charge. Are they allowed to take that long to process my refund, and am I entitled to be reimbursed for the interest accrued?
Consumer Ed says:
The short answers to your questions are yes, and no. Under these circumstances, Georgia law generally doesn't require companies to provide refunds, nor does it require a time frame for the business to process the refunds. However, if the business has a refund policy, then it must honor those terms. If the hotel has a refund policy that promises refunds will be processed within a certain time frame, and if you abided by the terms of that policy, then the hotel is obligated to issue you a refund according to those terms. You mentioned that the hotel’s cancellation policy did not specify a time frame for the refund to be processed. If this is so, the hotel was not acting outside its stated cancellation policies.
One reason that businesses often take time to issue refunds is that they sometimes process the refunds in batches to avoid paying several transaction fees. For example, if the business uses a merchant account to process its transactions, it may have to pay a transaction fee every time it transfers funds out of its merchant account; accordingly, it may choose to process all the refunds once in a particular period to save on the transaction fee. Often, credit card companies charge merchants per transaction fees for charge-backs, so the hotel may have used the same reasoning to avoid paying multiple individual charge-back fees. Along these lines, the hotel also wouldn’t be required to reimburse you for any interest accrued for the charge on your credit card while you were waiting for your refund (unless its stated cancellation policy provided otherwise).
If you booked the hotel through a third-party website, you should also consult the website’s cancellation and refund policy. For example, Orbitz.com provides that your refund should post to your credit card within 7 days after cancellation. Additionally, some credit card companies may offer trip cancellation insurance to compensate you for the losses. In circumstances where the business keeps a deposit, consumers who pay with a credit card can also dispute the charge for the deposit with the credit card company—but the decision as to whether a refund would be granted would then be up to the credit card company. The bottom line, however, is that in Georgia, there’s no formal legal right to a refund of a hotel deposit, absent a written policy granting you that right....more>
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