The Competition and Markets Authority (CMA) have issued a stern open letter to the ‘Package Travel sector’, after their COVID19 taskforce received over 17,500 complaints about ‘harm which consumers are suffering’ in the package holiday sector, with business breaching consumer protection laws and refusing to some refund customers.
This will come as welcome news to many who lost money when their holidays were canceled, although, this could deal a massive blow to the package holiday sector.
In the letter, the CMA said that the majority of the complaints received by the taskforce since March 2020 were in relation to the termination of package holiday contracts ‘as a consequence of the COVID19 pandemic.
The CMA state that “businesses have not been meeting the requirements of the Package Travel and Linked Travel Arrangements Regulations 2018”, which provide a “statutory requirement to provide refunds without undue
delay” within 14 days.
The letter also mentions that “businesses have been engaging in unfair commercial practices, for example, providing inadequate or misleading information to consumers about their statutory rights“, a potential breach of the ‘Consumer Protection from Unfair Trading Regulations 2008’.
The CMA detailed the ‘harmful’ conduct which consumers have faced since March 2020
•Consumers were not being offered and/or provided full cash refunds in accordance with their statutory rights. This includes consumers not receiving refunds without undue delay and in any event not later than 14d ays after the package travel contract has been terminated. It also includes consumers only being offered a voucher or the right to rebook a holiday instead of a refund.
• Consumers losing their deposits and/or being charged cancellation fees when exercising their statutory right to terminate a package holiday contract and when they are entitled to a full refund.
• Consumers not being provided with clear information and/or being otherwise misled about their statutory rights.
• Consumers facing significant barriers when trying to exercise their statutory rights. For example, consumers being asked to request a refund on their terminated package booking by telephone, but being unable to readily contact businesses in this way.
• Consumers being unable to contact businesses effectively to discuss other concerns, such as wanting to pay their balance in order not to forfeit their deposit as a result of late payment.
Source: CMA Open letter – 10th July 2020
The CMA makes it very clear in the letter that they have the power to bring an enforcement action in relation to such breaches in accordance with the ‘Enterprise Act 2020’.
The letter reminds Package holiday companies that consumers have a statutory right to a full cash refund within 14 days from termination of their package holiday contract if “a package holiday contract is terminated by an organiser because of unavoidable and extraordinary circumstances”; and “where the consumer terminates the contract in the event of
unavoidable and extraordinary circumstances occurring at the place
The CMA expects businesses to provide refunds to consumers ‘promptly and without undue delay’, reminding companies that the payment should have been made within 14 days of the Holidays being terminated.
The open-letter concludes by telling the entire travel package sector that while they recognise and are sympathetic to the pressures the COVID19 epidemic have created, the law Is the law. The CMA advises ALL package holiday companies to take ‘immediate’ action to ‘bring themselves into compliance’ with the law, which means issuing refunds for thousands of holidays which were cancelled due to COVID19.
The CMA end by stating that Business which do not comply with this guidence risk enforcement action by CMA or local trading standards officials; In addition, consumers will also have the option of persuing a claim against the business in small claims court!
The news is likely to come as a shock to the package holiday sector, who are already struggling due to COVID19. While the law has to be adhered to, the current ‘no-income’ situation, and the demand by CMA that they must refund the money, now; the case may be that paying this money out now could seriously damage the holiday industry,