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Travel firms told to refund customers or face enforcement action

Paloma Kubiak
Written By:
Paloma Kubiak

The competition regulator has published an open letter to the travel package holiday sector reminding them of their legal duty to provide prompt cash refunds to customers who cancel a booking.

The Competition and Markets Authority (CMA) said it suspects businesses aren’t providing the refunds required by consumer law when package holiday contracts are cancelled as a result of coronavirus.

It said it expects businesses to comply with consumer law and pay out those cash refunds “without undue delay” – that is, within 14 days of the request.

However, it is aware of unfair commercial practices such as customers being given inadequate or misleading information about their statutory rights, customers losing their deposits or being charged cancellation fees, as well as “significant barriers” in exercising their rights. As an example, customers are asked to call the firm to request a refund but are then unable to get through.

Since the CMA set up its Covid-19 Taskforce in March to monitor how the industry is handling the situation, it said it has received over 17,500 complaints from consumers about the difficulties they’ve faced with package holiday businesses in relation to cancellations and refunds due to the pandemic.

As such, it has published an open letter to package travel firms about their obligations and the CMA expectations, and has sent a copy of the letter to over 100 unnamed businesses that have received the most complaints.

However, the CMA said it recognises that the pandemic has created “extraordinary pressures” on package holiday businesses. “Although we were sympathetic to the challenges faced in the early days of the pandemic, it is nonetheless important that businesses comply with consumer law,” Cecilia Parker Aranha, director at the CMA, wrote.

“We recommend that you check your practices and policies are in line with the requirements of consumer law and make any changes where necessary,” she added.

Parker Aranha also warned: “Businesses which do not comply with consumer law risk enforcement action from the CMA or local Trading Standards. While the CMA is not beginning enforcement action against your company at present, we continue to monitor the complaints and intelligence that we are receiving.

“In addition to any action which the CMA or local authority Trading Standards departments may take, individual consumers also have the option of pursuing a claim against businesses in the small claims court.”