The UK Competition and Markets Authority (CMA) has announced that through its Covid-19 Taskforce, which was launched on 20 March 2020, it has received a significant number of complaints in relation to cancellations and refunds. The Taskforce was established to identify harmful sales and pricing practices and take enforcement action if there is evidence businesses may have breached competition or consumer protection law.
Based on the nature and number of complaints received by the Taskforce to date, the CMA has identified three areas of particular concern, namely: (i) hotel accommodation; (ii) weddings and private events; and (iii) nurseries and childcare providers. The CMA has highlighted concerns that businesses in these sectors are refusing to provide refunds or pressuring people to accept vouchers for holiday accommodation that can only be used during a more expensive period.
The key pieces of consumer protection legislation relevant to the CMA’s investigation include the Consumer Rights Act 2015, which prohibits the use of unfair contractual terms in agreements between businesses and consumers, and the Consumer Protection from Unfair Trading Regulations 2008, which prohibits unfair commercial practices towards consumers.
The CMA has said that, regardless of the challenges business face in the current climate, they cannot ignore consumer rights. Andrea Coscelli, CEO of the CMA, said: “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.”
While many hotels throughout the UK are currently closed, the CMA has also indicated that hotel operators should not be profiting by ‘double recovering’ their money from the Government and customers.
When considering whether or not a refund is appropriate, the CMA’s guidance suggests that a full refund should 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, because this is prevented by restrictions that apply during the current lockdown; or
- a consumer cancels or is prevented from receiving the service, due to the restrictions that apply during the current lockdown.
While there are limited exceptions to the above, we suggest that hotel operators err on the side of caution when considering whether they will issue refunds and, if so, how such refunds will be provided, or risk facing enforcement action from the CMA.
"The current situation is throwing up challenges for everyone, including businesses, but that does not mean that consumer rights can fall by the wayside." - Andrea Coscelli, CEO of the CMA