Consumer refunds: a warning to businesses during Covid-19


The CMA has confirmed that it will be investigating reports of businesses failing to respect cancellation rights during the Covid-19 pandemic.

The CMA are reporting that complaints in relation to cancellations and refunds now account for 4 out of 5 complaints being received into the Covid-19 Taskforce.  The Taskforce was launched on 20 March to scrutinise market developments, identify harmful sales and pricing practices and take enforcement action where there is evidence of a breach of competition or consumer protection law.

The CMA has identified 3 sectors to be addressed as a first priority:

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

Guidance available on the website confirms that the CMA would expect a full refund to be issued where:

  • a business has cancelled a contract without providing any of the promised goods or services
  • a consumer cancels or is prevented from receiving the service, for example due to the restrictions that apply during the current lockdown.

This is unlikely to be welcome news to businesses hoping to encourage customers to postpone bookings and accept credit rather than a refund. However, cases will be fact specific and there will often be room to reach mutually convenient arrangements with customers.

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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.
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