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The idea is simple: help passengers to get their compensation from an airline, which otherwise wouldn’t pay. This leaves everyone happy, except for the airline of course. All that’s needed for this is experience, good lawyers and lean processes. That might be the reason for so many startups in the legaltech area. Except for their success rates in court, they don’t differ a lot in their core service. But looking closer, one can find a huge difference in their price and the way they treat their customers.
There are two common models offered by these companies: buy and provision. While in a buy case, you sell your claim to startups like the flight refund, in a provision case you keep your claim and we represent you against the airline. The first model leaves you with a little less money but takes all the risk away from it. You get to keep it no matter what happens in court, since the refund company payed you, not the airline. Whereas in a provision case your compensation stands and falls with the final decision in court.
So there is the “zero risk low reward” method and the “risk and high reward” method. But as it turns out, some websites offer a third option: “risk and low reward”.
These certain companies claim to charge you with a percentage of claim-worth in case of success, as a service fee, roughly 25%. But if you read closely into their general terms and conditions, you find a whole list of very likely additional costs. You can be charged with another 25% in case your claim ends up in court, which happens very often.
They explain this by saying that it would be used to compensate their expenses. But in fact, in a 100% won fight in court, the looser has to pay the winners lawyers bill. This means, that these companies get compensated already, so they essentially get paid twice. Keep in mind, that no refund company will actually send you a bill. They only get money in case of success, which they subtract from the payment amount you receive from them.
One could argue, that this is an unfair way to treat your customers. We at the Flight Refund GmbH strongly disapprove with this way of doing business. Therefore you can be assured, that there are no hidden costs on our website. We communicate our fee very clearly. In buy cases, you get the amount named on the contract papers. In provision cases we keep 22% plus taxes. Being transparent about this is a key part of our strategy and will stay a primary focus.