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Passengers given important EU guidance on compensation claims agencies

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The International Air Transport Association (IATA) welcomed the European Commission’s guidance to air passengers on the activities of agencies that make claims for compensation in the event of delays or cancellations to flights.
The guidance makes it clear that so-called ‘claims farms’ are not the most effective means to seek compensation under the EU’s passenger rights regulations. The EU advises that passengers should always contact the carrier first. National enforcement bodies and alternative dispute resolution services can also help passengers in the event a compensation claim is disputed by an airline.
Should passengers desire to work with a claims agency they should be aware of the dubious practices of some claim farms, which include submitting claims without asking for the passenger’s permission. Passengers should only deal with a claims agency that is transparent about its charges, has a clear power of attorney, and has a robust data privacy policy. Agencies should also not resort to unsolicited telemarketing. Travel agencies and tour operators must not transmit passengers’ personal data to claim farms.
“Passengers deserve good information about their rights. This guidance clarifies some important issues both for airlines and their passengers on the activities of claim farms, particularly warning against those that resort to fraudulent practices. Airlines are in a strongly competitive market, and good customer service is vital.
If something goes wrong with a flight, airlines have a strong commercial incentive to put it right. A claims agency cannot recreate the relationship between the airline and the customer. Moreover, using a third-party service can result in substantial costs which eat away at the compensation payment. We fully agree with the European Commission that passenger’s first contact should always be with their airline,” said Rafael Schvartzman, IATA’s Regional Vice President for Europe.
Schvartzman also explained that claims agencies were a symptom of the problems with the passenger rights regime that is currently in place in Europe.
“A major reason for the proliferation of these agencies is that the EU261 passenger rights legislation is complex, often misunderstood, and inconsistently applied. We hope that the political deadlock which is currently blocking the revision of EU261 is resolved so that the much-needed revision and clarification of the regulation can proceed, to the benefit of everyone in Europe,” he said.

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