The Competition & Markets Authority (CMA) has wanted lastminute.com it faces legal action unless it pays a number of outstanding refunds to customers.
The company signed formal undertakings in December which committed it to pay out over £7 million to more than 9,000 customers when their holidays were cancelled due to the Covid-19 pandemic.
All those affected were due to get their money back by the end of January.
However, the company still owes over £1 million to 2,600 customers, with consumer rights organisation Which? calling for action earlier this week.
The CMA said lastminute.com also failed to meet its ongoing commitment to repay all customers entitled to a refund within 14-days of their package holiday being cancelled on or after December 3rd.
On top of this, the company told some package holiday customers to go directly to their airline to get the cost of their flight back.
This is also in breach of its commitments and against its obligations under the Package Travel Regulations.
The CMA has informed lastminute.com that it will take court action if it does not repay the outstanding refunds within seven days.
To avoid court action, the company must also ensure that customers who book