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CMA to investigate concerns about cancellation policies

Subject: Coronavirus pandemic; Suppliers to consumers - cancellations and refunds

Source: Competition and Markets Authority (CMA)

The CMA set up its Covid-19 Taskforce on 20 March to monitor market developments during the crisis and to identify harmful sales and pricing practices. The CMA state that it will take enforcement action if there is evidence that firms may have breached competition or consumer protection law.

The CMA has seen increasing numbers of complaints in relation to cancellations and refunds which now account for 80% of complaints being received into the Taskforce. Particular concerns arise from firms refusing refunds or firms pressuring people to accept vouchers for holiday accommodation, which can only be used during a more expensive period. The CMA has identified 3 sectors of particular concern:

*  weddings and private events;

*  holiday accommodation;

*  nurseries and childcare providers

The CMA will prioritise action in these areas and will then go on to examine other sectors. Although consumer rights must not be ignored, the CMA does acknowledge that most businesses are acting reasonably in what are unprecedented circumstances.

The CMA points to key consumer protection legislation relevant to its investigation, being the Consumer Rights Act 2015 (CRA) and the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). The CMA says that the CRA prohibits the use of unfair terms in contracts between businesses and consumers. While this is correct, it also deals with failure to deliver goods and services. The CPRs prohibit unfair commercial practices by businesses towards consumers.

The CMA expects that a supplier in the case of most consumer contracts will make a full refund if:

*  the supplier cancels a contract without providing any of the promised goods or services;

*  no service is provided by the supplier, for example because this is prevented by the current restrictions;

*  a consumer cancels or is prevented from receiving the service due to the restrictions that apply during the current lockdown.

The CMA will take appropriate enforcement action, including court proceedings, if it finds evidence that firms are failing to comply with the law. Individuals can also take their own legal action against unfair terms should they choose to.


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