Online travel agent Lastminute.com has been threatened with legal action unless it repays more than £1m ($1.38m) to customers after their package holidays were cancelled due to the pandemic.
In December last year, the Competition and Markets Authority (CMA) announced that Lastminute.com had signed an agreement which committed it to pay out over £7m ($9.6m) to more than 9,000 customers when their holidays were cancelled.
However, the travel firm still has outstanding refunds owed to 2,600 customers, who were due to get their money back by 31 January at the latest.
The CMA has said it will take court action if Lastminute.com does not repay the outstanding refunds within seven days.
The watchdog noted that the company also failed to meet its promise to repay all customers entitled to a refund within 14 days of their package holiday being cancelled on or after 3 December 2020.
To avoid court action, the holiday firm must also ensure that customers who book their package holidays going forward will receive a full refund within 14 days where they are legally entitled to getting their money back.
In addition to this, Lastminute.com also advised some package holiday customers to go directly to their airline to get the cost of their flight back, which was in breach of its commitments and against its obligations under the Package Travel Regulations.
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Andrea Coscelli, chief executive of the CMA, said: “It is wholly unacceptable that thousands of Lastminute.com customers are still waiting for full refunds for package holidays despite the commitments the company signed with us.
"We take breaches of commitments extremely seriously. If Lastminute.com does not comply with the law and pay people their outstanding refunds quickly, we will take the company to court.”
The news comes after significant action by the CMA in relation to holiday cancellations during the coronavirus pandemic. The watchdog has already written to over 100 package holiday firms, reminding them of their obligations to comply with consumer protection law.
It has secured refund commitments from Virgin Holidays, TUI UK, Sykes Cottages and Vacation Rentals.
Rory Boland, editor of Which? Travel, said the regulatory action sent "a clear message that this kind of behaviour is unacceptable".
"Lastminute.com is one of countless holiday operators that have let customers down on refunds, highlighting the need for widespread reforms across the travel industry," he said.
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