Gemma Disson, from Cardiff, had plans to travel to Menorca in May with her partner and four year old daughter, but was forced to cancel the £1,000 holiday due to family reasons.
Holiday cancelled for family reasons
Ms Disson said she chose the holiday - booked through TUI in January - because it included a free place for her daughter.
While she said she expected to be charged the £200 cancellation fee for the holiday places for the two adults, she was shocked to see that TUI had charged her for her daughter’s place as well.
TUI's terms and conditions state cancellation charges are a percentage of the cost of the booking.
Firm has not replied to letter
Ms Disson wrote to the firm in February to question them about the charge, however she has yet to hear back from them.
Her letter read, "I appreciate the cost of £200 per person in fees and I expected that for myself and my partner but not for my daughter.
"We booked the holiday on the pretence that there was a FREE child place which indeed was correct.
"On this understanding, and having looked through your terms and conditions, I could not see any reason why or how you could charge £200 cancellation fee for a child was in fact free in the first place."
Ms Disson told Press Association, "I couldn't believe there was a charge for something that was free.
"We've been charged £600 to cancel a holiday that cost just under £1,000 in the first place.
"It's just very disappointing and TUI has not even replied to my letter."
Watchdog rules firms must ‘act fairly’
In April this year, the competition watchdog instructed travel firms to “act fairly” when dealing with customers who had to cancel their plans.
Under consumer law, firms may be entitled to ask customers to pay a cancellation fee to cover their losses. The amount they keep must be in proportion with what they lose.
A TUI UK spokesman said, "We're sorry to hear that the Disson family is unhappy with their experience following their decision to cancel their holiday.
"Relevant information about deposits and cancellation charges is clearly stated within our booking conditions, but we do recognise that the service provided since has not been up to our usual standards. We will be in touch with them to resolve the matter."