DOT ASSESSES $1M CIVIL PENALTY AGAINST LATAM FOR FAILURE TO PROVIDE TIMELY REFUNDS
June 9, 2023
On May 22, 2023, the U.S. Department of Transportation (“DOT”) issued a Consent Order and Order of Dismissal for LATAM Airlines Group S.A. and some of its affiliates (“LATAM”) for the carrier’s alleged failure to provide timely refunds to passengers for flights to/from the U.S. between March 2020 and November 2021. DOT found that LATAM had failed to provide timely refunds after cancelling flights, because the carrier required affected consumers who requested cash refunds to accept travel vouchers that could then be exchanged for cash via a bank transfer. DOT alleged that the procedure resulted in a “lengthy” process for passengers to be able to obtain a refund, as many refunds took more than 100 days to process t2023, o completion. DOT also acknowledged that LATAM changed its policy and began providing refunds in the original form of payment instead of mandatory travel vouchers, in most cases, on November 30, 2021, and discontinued issuing travel vouchers instead of entitled refunds altogether on May 24, 2022. In response, LATAM asserted that it was forced to cancel thousands of flights due to government restrictions related to the COVID-19 pandemic, which resulted in four times the amount of refund requests that it normally receives. LATAM also argued that because of pandemic related restrictions and other challenges, including the fact that it was unable to receive government-funded emergency assistance, it had to file for Chapter 11 Bankruptcy protection and radically downsize its company. Despite these challenges though, LATAM stated that it continued to honor its obligation to refund passengers for cancelled flights, even though refunds were delayed, and that it had issued more than $62,000,000 in refunds since the beginning of the pandemic. DOT nevertheless concluded that enforcement action was warranted, ordering LATAM to cease and desist from future violations and imposing a $1,000,000 civil penalty against the carrier, the latest in a string of penalties against U.S. and foreign carriers for failures to provide timely refunds for cancellations that occurred during the COVID-19 pandemic.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com 202-659-6622) or Drew Derco (dderco@eckertseamans.com 202-659-6665).
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