Kensington Tours review: Won't provide refund

I and three of my friends, who are all graduate students with modest incomes, booked a tour for Thailand with Kensington Tours in February 2010, scheduled to begin on June 9th. The itinerary included touring in Bangkok and Chiang Mai. We made a deposit with Kensington of 7937.00 USD.

We first contacted Kensington on May 2nd with concerns regarding the political situation in Thailand, but were reassured by our agent that the conditions were improving. She then convinced us to alter the itinerary to spend more time in Chiang Mai. When we finally cancelled on May 14th, Kensington told us that they were not willing to offer any refund, only credit. Kensington does not operate its own tours, but instead contracts to third parties. In an earlier e-mail to us, they stated they were not sure they could recover internal airfare (about $500 per passenger) to offer as credit, suggesting they could recover everything else. The credit they offered us in the end was for the full cost, which leads me to believe they recovered everything. According to the Kensington terms and conditions (http://www.kensingtontours.com/Terms-and-Conditions), we believe that we are entitled to a refund of all costs they can recover from third parties:

the passenger shall have the option of accepting in lieu of the original tour such rescheduled tour or other substituted tour(s) as may be offered, or else, receiving a refund of as much of such advance tour expenditures as Kensington Tours can recover on the traveler's behalf from carriers

However, in a response to my complaint with the BBB on June 1st (see below), the Kensington VP of sales wrote that this clause does not apply because Thailand "remained open for business throughout this period", despite travel advisories from the US and other governments, a state of emergency throughout most of the country that forbids gatherings of 5 or more persons, and a nightly curfew that was in force at the time.

In a second response on June 8th, Kensington stated that they need not provide a refund, since "Thailand is back to normal" (which itself is debatable, since the state of emergency that allows authorities to break up gatherings of 5 or more is still in effect) and "perfectly safe." While Kensington clearly has good hindsight, at the time we could not afford to wait longer, due to a deadline to refund airfare (booked separately) and a need to make other (significantly cheaper) plans for that time if the travel arrangements should fall through, since all four of us had to balance university studies, jobs, and other obligations, and do not have much money or vacation time to spare.

I am appalled at the lack of concern that Kensington has displayed for the safety of its customers in reassuring us, both through e-mail and in the reply to the BBB complaint, that travel in Thailand was safe. It also seems particularly dishonest of this company to refuse to return any part of our deposit, when it appears that they themselves are apparently able to recover the funds from their contractors (or at least have not indicated otherwise), and therefore should be able to provide a refund without incurring any loss.