Do they allow you to hold the fare without ticketing for up to 24 hours? If so then I believe they are permitted to charge the cancellation fee. Also, is the travel more than 7 days from today?
From the
DoT press release:
Originally Posted by DoT
Also beginning this week, passengers will be able to hold a reservation without payment, or cancel a booking without penalty, for 24 hours after the reservation is made, if they make the reservation one week or more prior to a flight’s departure date.