Lastminute has been given a week to refund more than £1 million to customers whose package holidays were cancelled.
If it fails, it will face legal action from the Competition and Markets Authority (CMA).
The CMA announced in December that lastminute had agreed to pay back more than £7 million to over 9,000 customers by the end of January.
The CMA says lastminute has also failed to meet an ongoing commitment to repay all customers within 14 days of any cancellation on or after 3 December.
It has also found that the online travel agent is telling some package holiday customers to go directly to their airline to get the cost of their flight back, which is a breach of its obligations under the Package Travel Regulations.
“The CMA has informed Lastminute that it will take court action if it does not repay the outstanding refunds within seven days,” it said in an announcement online.
“To avoid court action, Lastminute must also ensure that customers who book their package holidays from now on will receive a full refund within 14 days where they are legally entitled to their money back following the cancellation of their package holiday,” it added.
CMA chief said ‘it is wholly unacceptable that thousands of Lastminute customers are still waiting for full refunds for package holidays despite the commitments the company signed with us’.
The CMA has written to more than 100 tour operators to remind them of their obligations to refund packages which have been cancelled due to the coronavirus pandemic.
Which? Travel Editor Rory Boland said lastminute has been ‘one of the worst culprits when it comes to failing to refund customers for coronavirus cancellations’.