The Competition & Markets Authority (CMA) has launched its investigation into Teletext Holidays.
The probe, launched under consumer protection law, comes after the body received hundreds of complaints that people were not receiving refunds for package holidays cancelled due to the Covid-19 pandemic.
In some instances, Teletext customers reported that they were promised refunds by a certain date, only to have that date pushed back.
The CMA will now engage with Teletext to gather further evidence on whether the company has broken consumer protection law.
Andrea Coscelli, chief executive of the CMA, said: “We understand that the pandemic is presenting challenges for travel businesses, but it is important that the interests of consumers are properly protected and that businesses comply with the law.
“We’ll be engaging with Teletext to establish whether the law has been broken and will take further action if necessary.”
The announcement follows significant action by the CMA in relation to holiday cancellations.
The government body has written to over 100 package holiday firms to remind them of their obligations to comply with consumer protection law, and has secured refund commitments from a number of holiday firms, including Love Holidays, Lastminute.com, Virgin Holidays, TUI UK, Sykes Cottages and Vacation Rentals.
The CMA is also investigating whether airlines have breached consumers’ legal rights by failing to offer cash refunds for flights they could not lawfully take due to the pandemic.
Rory Boland, editor of Which? Travel, said: “Which? has received a steady stream of complaints from Teletext Holidays customers who have been left chasing refunds for cancelled holidays, so it is right that the CMA is investigating the company.
“Nearly a year on from the first wave of cancellations, it’s unacceptable for anyone to still be waiting for their money back.
“Customers have been understanding of the difficult circumstances travel companies faced in the past year, but it’s clear now that some operators feel empowered to act with impunity.
“The regulator should establish the scale of the problem and, if necessary, quickly take appropriate action against the company to send a clear message that it will not stand for this kind of behaviour.”
