Travel Troubleshooter: Refund for rental car in Iceland is frozen

Q: I'm trying to get a full refund from Iceland Car Rental for our trip to Iceland in August 2020 that was canceled because of COVID-19.

At the time we booked the rental, in March 2020, they offered a "100% money back" guarantee. We notified them to cancel our reservation as soon as our flight was canceled, in July 2020.

Can you help me get my $545 back?

Kristen Nelson, Minnetonka

A: This shouldn't have happened. Most car rental companies don't charge you until you pick up your car.

I reviewed the terms of your agreement with Iceland Car Rental, and it works a little differently. If you cancel your reservation up to two days before your pickup date, you get a "100% refund." If you're within the 48-hour cancellation window, they'll charge you for your rental. You canceled before two days, so you should have received your money back.

So why didn't you? An Iceland Car Rental representative tried to explain it in an e-mail to you. "The coronavirus outbreak has resulted in thousands of cancellations," he explained. "This means that a lot of people have applied for refunds — including you. Each refund application is handled individually. And with the great amount of cases that we're currently processing, the waiting time is currently too long."

But after you asked how long it might be, you got a different answer. "As is the case for many tourism related companies around the world, the future of our company has been secured throughout this difficult period with a survival agreement with our bank," the company noted. "However, the financial restructuring of the company could not include the refunds of outstanding reservations for the foreseeable future; therefore, we will not be able to refund your booking."

This appears to be a different argument. The car rental company was restructuring, which means the old company — the one with which you had the reservation — technically no longer exists. The new Iceland Car Rental apparently didn't feel it had to honor some of the obligations of the old company.

But the Iceland Car Rental you were dealing with shouldn't have charged your card in the first place. I think you would have had a legitimate case for a credit card dispute, had it come to that. It didn't.

I contacted Iceland Car Rental on your behalf, and it issued a full refund.

Christopher Elliott is the founder of Elliott Advocacy, a nonprofit consumer organization. Contact him at elliott.org/help or chris@elliott.org.