The Competition and Markets Authority (CMA) has launched an investigation following reports that businesses are failing to respect cancellation and refund rights during the coronavirus pandemic.

It said it has seen a spike in complaints in relation to this, with its Covid-19 taskforce (monitors the market to identify problems faced by consumers) saying these account for four out of five complaints being received.

Businesses are allegedly refusing refunds and pressuring people to accept vouchers for holiday accommodation which can only be used during a more expensive period.

Based on the complaints it has received, the CMA said there are three sectors of particular concern:

• weddings and private events
• holiday accommodation
• nurseries and childcare providers

It will tackle these areas as a priority and then move on to examine other sectors. The CMA added that most businesses are acting reasonably in these unprecedented circumstances, and although the current crisis is placing everyone under pressure, consumer rights can’t be ignored.

If it finds evidence of companies failing to comply with the law, it will take enforcement action, including court action. Individuals can also take their own legal action against unfair terms should they choose to.

As part of the announcement, it has also issued expectations for firms to protect consumer rights in relation to cancellations and refunds during the crisis.

For most consumer contracts, the CMA 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, for example because this is prevented by the restrictions that apply during the current lockdown
• a consumer cancels or is prevented from receiving the service, for example due to the restrictions that apply during the current lockdown.

It also advises that businesses shouldn‘t be profiting by ‘double recovering’ their money from the government and customers.

Andrea Coscelli, CEO 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.”

If people have been affected by unfair cancellation terms in the wake of Covid-19, they can report them to the CMA using the online form. However, the CMA isn’t able to respond to every complaint received; the information provides it with areas it can address as part of its regulatory work.