CMA Warns Holiday Firms to Comply with Refunds or ‘Face Legal Action’

The Competition and Markets Authority (CMA) has warned over 100 holiday companies that they must adhere to consumer laws with regards to coronavirus cancellations, or prepare to face legal action.

Over 17,500 complaints have been received by the CMA with regards to companies that have sold package holidays but have failed to give refunds or inform customers of their statutory rights during the COVID-19 pandemic.

The companies with the most complaints will receive letters from the watchdog, reminding them that if they do not comply with the law they will face legal action from the CMA or local trading standards offices.

Thousands of would-be holidaymakers are battling travel companies in order to get refunds for cancelled holidays, with some outfits delaying claims by deflecting liability to other companies.

The open letter from Cecilia Parker Aranha, CMA director, says: “Intelligence suggests that businesses may not be providing the refunds required by consumer law when package holiday contracts are terminated as a result of COVID-19.

“The CMA expects that consumers who are entitled to refunds will be paid those refunds, and that businesses will comply with consumer law.”

The regulator also recognised the ‘extraordinary pressures’ being put on the sector, but added: “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.”

Many of the letters from disgruntled consumers complain about companies giving misleading information about statutory rights, or failing to provide refunds no later than 14 days from the holiday’s termination.

Despite being entitled to a full refund, some customers have been charged for cancelling their trip. Other customers have been told that they need to request refunds via phone, but are then unable to get through to the company.

The CMA have warned the unnamed businesses that they must take immediate action to comply with the law: “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,” said the letter.

A spokesperson for ABTA, the trade association for tour operators and travel agents, explained that many companies were themselves struggling to get refunds from airlines:

"Many airlines, in particular, have been and continue to be very slow in passing refunds back to package holiday businesses, which means that those package holiday businesses are unable to refund their customers as promptly as they would wish.

"It is essential, therefore, that effective regulatory action is taken against the airlines that are not currently refunding within seven days, as required under relevant consumer protection legislation.”