Consumer watchdog to investigate firms failing to refund customers for holidays and weddings

Companies failing to refund customers for cancelled holidays and weddings will face action from the consumer watchdog.

The Competitions and Markets Authority is to launch an investigation into concerns over companies refusing to pay out for cancelled holiday accommodation, weddings and childcare provision as a result of the coronavirus outbreak.

The CMA said it would expect a company to provide a full refund if no service is provided by a business because of lockdown restrictions and said it would take "appropriate enforcement action", including "moving quickly to court" if a firm does not address its concerns.

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Holiday accommodation providers who are obstructing refunds to customers are included in the CMA’s crackdown, however problems faced by customers battling with airlines to claw back money from cancelled flights will not be included in the watchdog’s new investigation. The CMA told The Scotsman that it may consider looking at airline refunds in partnership with the air industry watchdog, the Civil Aviation Authority (CAA) in future.

The watchdog said it acknowledges that most businesses are “acting reasonably in what are unprecedented circumstances”, and that the current crisis is placing everyone under pressure, but insisted that “consumer rights cannot be ignored” and said that consumers should not be pressured into taking vouchers in lieu of a refund.

Advice helpline Consumeradvice.scot said that examples of these types of issues in Scotland included a Glasgow company cancelling a 50th birthday cake order, but offering another cake at a later date rather than a refund and a professional football club offering to rebook a hospitality suite rather than provide a refund - even though no dates are available on when matches will next be played.

Complaints in relation to cancellations and refunds now account for four out of five complaints being received by the CMA’s Covid-19 Taskforce and so far include concerns about businesses refusing refunds or firms pressuring people to accept vouchers for holiday accommodation, which can only be used during a more expensive period.

Andrea Coscelli, chief executive of the CMA, said: “Our Covid-19 taskforce is shining a light on some of the big issues facing consumers in wake of this pandemic. Alongside price-gouging reports, we’re now seeing cancellation issues in their thousands. So far, the CMA has identified weddings, holiday accommodation and childcare as particular areas of concern.

“The current situation is throwing up challenges for everyone, including businesses, but that does not mean that consumer rights can fall by the wayside. If we find evidence that businesses are failing to comply with consumer protection law then we will get tough – that means launching enforcement cases and moving to court action where there is a strong reason to do so.”

It has issued a statement to businesses in the sectors stating that it expects a full refund to be issued where a business has cancelled a contract without providing any of the promised goods or services; no service is provided by a business due to restrictions that apply during the lockdown or where a consumer cancels or is prevented from receiving the service due to lockdown restrictions.

However, it says that in “rare” cases, a business may be able to deduct a contribution to the costs it has already incurred in relation to a service – where it cannot recover them elsewhere. It also advises that businesses should not be profiting by ‘double recovering’ their money from the Government and customers.

The statement added: “Consumers can normally be offered credits, vouchers, re-booking or rescheduling as an alternative to a refund, but they should not be misled or pressured into doing so, and a refund should still be an option that is just as clearly and easily available.”

Marjorie Gibson, head of operations with Scotland’s national consumer advice service, consumeradvice.scot, said: “There has been an upsurge in queries in Scotland relating to consumer rights, particularly in relation to holiday and event cancellations. The announcement by the CMA is therefore both timely and welcome.

“Some businesses are expecting their customers to bear their pain with no consideration of the impact on the individual.”

Adam French, Which? consumer rights expert, said: "We've heard from many distressed people who risk being left out of pocket for significant sums of money as they struggle to get refunds for cancelled weddings, private events, or holiday accommodation.

"It's right the CMA investigates sectors that are skirting their legal responsibilities on refunds and cancellations by trying to rely on unfair and unenforceable terms and conditions.

"The regulator must be prepared to step in and take strong action against any businesses found to be breaching consumer law and taking advantage of consumers during these unprecedented times."

The CMA added that individuals can also take their own legal action against unfair terms should they choose to.

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