The Competition and Markets Authority in the UK has established a COVID-19 Taskforce, after seeing increasing numbers of complaints in relation to cancellations and refunds.
The CMA said that concerns include people being pressured to accept vouchers for holiday accommodation which could only be used during a more expensive period.
The CMA said that, in most cases, it would expect a full refund to be offered if: a business has cancelled a contract without providing any of the promised goods or services; no service is provided by a business, because this is prevented by restrictions that apply during the current lockdown or a consumer cancels, or is prevented from receiving any services, because of the restrictions that apply during the current lockdown
Andrea Coscelli, CEO, CMA, said: “Our COVID-19 taskforce is shining a light on some of the big issues facing consumers in wake of this pandemic. We are 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 consumers should be deprived of their rights at this difficult time. If we find evidence that businesses are failing to comply with consumer protection law then we will take tough enforcement action to protect those rights.”
Neil Baylis, partner, Mishcon de Reya, told us: “There are three big legal hot topics at the moment. One is insurance claims (non payment of claims) with the FCA now getting involved. Two is contractual disputes for non payment/non-performance generally.
“Three is refunds on air tickets and package holidays - making up 90% of all complaints to the CMA at the moment. It looks like the CMA is now taking up the consumer cause and there is a risk for the industry as the UK government has so far not issued any formal or informal support for the use of vouchers or credit notes - notwithstanding that the Commission and various Member States have done so.”
Last month ABTA’s CEO, Mark Tanzer wrote an open letter to customers of the Association’s Members to ask for their support.
Tanzer said that, in the absence of government guidance, ABTA had developed temporary guidelines to deal with refunds, based on a system of refund credit notes.
Tanzer said: “Travel agents and operators are working extremely hard in the most trying of circumstances to do their best for their customers. But many travel companies are unable to provide immediate cash refunds.
“It’s in nobody’s interests for normally healthy travel businesses to go under. As well as the loss of thousands of jobs, the government-backed ATOL financial protection scheme would be overwhelmed by a large-scale failure of businesses and it would take many more months for customers to get a refund.”
The CEO said that many companies were unable to adhere to the 14-day refund rules but that, notwithstanding the credit note scheme, should refund customers “as soon as they are able to”.
The WTTC joined the call for more “flexibility” around Package Travel Requirements, giving travel agents and tour operators more time to refund customers.
The group said that more than six million jobs were at risk in the EU and one million in the UK.
The organisation described the comments as an “urgent call to prevent travel & tourism sector buckling under the pressure of COVID-19”.
Gloria Guevara, president & CEO, WTTC, urged EU authorities and the UK government to implement flexibility around consumer refunds to “alleviate the unbearable pressure on the travel & tourism sector”.
Research conducted by WTTC showed that 75 million travel and tourism jobs were at risk globally due to the COVID-19 pandemic, with at least 6.4 million losses across the EU, and one million in the UK.
WTTC said that the existing Package Travel Requirements, were “not appropriate or fit for purpose in the present crisis circumstances, and should be suspended at least until August. Consumer protection will be unaffected, but travel agents and tour operators will have more time to refund those customers choosing to cancel their existing bookings.
“The current 14-day timeline for refunds is putting enormous burdens on businesses in the Travel & Tourism sector and will lead to major bankruptcies. These, in turn, will lead to more claims by consumers on credit card firms and ultimately government bonded schemes.”
Guevara said: “This measure should be implemented immediately and help lift the already crushing financial pressure on Travel & Tourism organisations and save the millions of livelihoods that depend on them.”
Insight: The return of fluffy-haired Boris Johnson to the fray this week raised hopes of some leadership and indeed he commented that he understood how tough the lockdown had been on hospitality.
Commented, but did nothing. The sector - which is part of the services sector which accounts for around 75% of the UK’s business activity - has been devastated, but despite the best efforts of the likes of ABTA, the government has failed to engage. Elsewhere governments have clarified their position on refunds, here the government has not taken up the cause on either side, leading to ructions between companies and customers which will not do much for long-term relationships.
See also the plan to open up the country. Other countries have all been open about their timetables, giving businesses time to prepare or not. In the UK, there has much trailing of a plan “soon”, but no idea what.
Idly gazing at other countries’ responses to the virus but doing nothing is a charge which MPs are faced with daily. That they have not learned the lesson and are still refusing to commit in relation to business looks to be another grave mistake.