Teletext Holidays has failed to refund many of its customers and must sign a formal commitment or risk court action, the competition watchdog has warned.
The Competition and Markets Authority (CMA) said customers due refunds on cancelled package holidays due to the pandemic are still waiting for their cash.
Regulators have written to Teletext Holidays warning it could be in breach of Package Travel Regulations.
Bosses must address the CMA’s concerns and avoid any potential court action by signing a formal undertaking to refund the affected consumers as soon as possible.
Andrea Coscelli, chief executive of the CMA, said: “Our investigation has revealed that Teletext Holidays failed to pay many of its customers the refunds they were due after their package holidays were cancelled.
“This follows hundreds of complaints from people who say they have not received refunds for holidays cancelled due to the pandemic, with many still waiting to get their money back months later.
“We have now started a formal process that aims to get people their money back as quickly as possible and to ensure that Teletext complies with its legal obligations.”
Package holiday firms have faced severe criticism from the regulator due to the slowness of processing refunds.
In February, lastminute.com paid out £1 million to thousands of customers whose holidays were cancelled because of Covid-19, but only after being threatened with court action.