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Coronavirus - Consumer cancellation and refund guidelines - UK

  • United Kingdom
  • Commercial and IT
  • Competition, EU and Trade
  • Coronavirus
  • Consumer

06-05-2020

 

On 30 April 2020, the Competition and Markets Authority (“CMA”) released a statement on consumer protection law in relation to cancellations and refund complaints.

The coronavirus outbreak has seen a significant increase in consumers seeking redress against businesses in relation to cancelled leisure services, such as hotel and accommodation bookings, entertainment events and weddings.  With uncertainty surrounding the duration of any initial lockdown, and the ongoing restrictions around international travel, many consumers are looking for initial refunds from businesses, reluctant to accept re-booking options.  This unprecedented situation has seen businesses struggling to balance the need to protect their ultimate survival with the rights owed to their customers. 

The CMA has noted a rise in complaints from consumers in relation to businesses not complying with their obligations under consumer legislation.  The CMA has therefore launched a programme of work to investigate reports of business failing to respect cancellation rights during the COVID-19 pandemic, focussing at this stage on businesses operating within the wedding, childcare, and leisure accommodation industries.

The statement outlines the CMA’s interpretation of cancellation and refund rights available under consumer law.  The key takeaways from the statement are:

  • where a contract is not performed as agreed, the CMA considers that consumer protection law will generally allow consumers to obtain a refund
  • of particular note, the CMA deems that the above-mentioned refund right includes where a consumer cancels, or is prevented from receiving services, because Government public health measures mean they are not allowed to use the services.  Where this is the case, the business may be able to deduct, from the refund, a contribution to the costs already incurred
  • where a consumer has obtained some of the services/goods they have paid for in advance, the consumer will normally be entitled to at least a refund for the services/goods that have not been provided
  • where a consumer receives regular services in exchange for regular payments as part of an ongoing contract, a business may require payment from the consumer of a “small contribution” to its costs until the provision of the service is resumed (but only where the contract terms set this out fairly and clearly)
  • in the CMA’s view, the above-mentioned rights to a refund will usually apply even where the consumer has paid what the business says is a non-refundable deposit or advance payment; and
  • consumers can normally be offered credits, vouchers, re-booking or re-scheduling 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.

The CMA recognise that in the circumstances it may take businesses longer than normal to process refunds. However the expected timescales should be made clear to the consumer and a refund should still be processed in a “reasonable time”.

The CMA statement in full is available here.

For more information on your obligations under consumer protection legislation, our consumer law team would be happy to assist you.