The Competition and Markets Authority does not believe the firm has done enough to deal with the issue.
Court action has been launched against Teletext Holidays over delays in refunding consumers for trips cancelled due to the coronavirus pandemic, the competition watchdog has announced.
De Konkurransetilsynet (CMA) said it has requested a court order stating that package holiday customers with outstanding refunds are repaid immediately, and those entitled to a refund in future are paid within the 14 days required by law.
Truly Holidays, the company that operates Teletext Holidays and sister company Alpharooms.com, formally agreed in May to address failures to issue timely refunds.
But the CMA does not believe the firm has done enough to deal with the problem.
CMA chief executive Andrea Coscelli said: “Companies must abide by consumer protection law and treat their customers fairly.
“After engaging with Teletext Holidays extensively, we are now requesting a court order to make sure that the company immediately pays back the money it still owes to customers and refunds people within 14 days going forward.”
The CMA said that its actions to date have resulted in Truly Holidays paying more than £7 million owed to package holiday customers.
Agreements from LoveHolidays, Lastminute.com, Virgin Holidays and Tui UK were previously secured by the watchdog after thousands of customers complained that the companies had failed to refund them for cancelled trips.
The travel sector has been one of the hardest hit during the pandemic and has faced the most scrutiny from the CMA, which wrote to more than 100 firms reminding them of their responsibility to process all refunds within 14 days by law for any cancellations.