Businesses failing to respect consumer refund rights remain in the crosshairs

Businesses are fighting on multiple fronts, and many of them for their survival. With another national lockdown, and a resolution date for mass vaccination still indiscernible, UK companies are, for the third time in a year, facing continued costs with restricted incomes.

It is a shame then, but perhaps not a surprise, that the Competition & Markets Authority (CMA) continues to battle with business failing to treat consumers fairly in light of Covid-19 related cancellations and refunds issues.

Wedding firms remain a concern 

Despite issuing warnings to weddings firms earlier this year, the CMA continues to receive complaints from consumers that businesses in the sector are unfairly withholding refunds or are misleading consumers about the size of refund which may be due, a topic we delved into in more depth last year.

As a result, wedding firms are being strongly encouraged by the CMA to review their practices to ensure compliance with the law, or face enforcement action for their failures to do so. The CMA has stressed that:

1. Deductions should not be made from refunds unless the wedding firm can prove that costs deducted were incurred in relation to the wedding in question, including providing a breakdown. If the contract is one for venue hire only, then the starting point is that no deductions are to be expected.

Where a deduction is justifiable, the CMA has been at pains to make clear that there is no “one size fits all” approach to this and each case must be looked at individually.

As an example, in relation to Bijou Weddings, a wedding venue and provider of wedding planning and catering services, the CMA determined that the maximum possible amount which could be deducted was 37.2% of the total price but that was dependent on certain factors. No circumstances gave rise to Bijou being entitled to retain that maximum amount and on average the permitted deduction was 28%.

2. Businesses must act promptly, and refunds should not be unreasonably delayed or refused.
3. If consumers voluntarily choose to reschedule rather than take a refund, additional charges should not be levied upon them for doing so.

Ramifications for other event organisers

While the CMA’s latest warnings have again put the spotlight on wedding firms, all event organisers and associated businesses should reflect on these issues and consider how the CMA would view their own practices.

It is not difficult to make a leap from wedding firms to event organisers, and the assumption is that the CMA will take enforcement action against event organisers who:

• fail to refund consumers when they should
• delay refunds unnecessarily
• seek to charge a consumer for rescheduling their event.

The CMA has set out, at length, how it expects businesses to behave when resolving Covid-19 related cancellations, rescheduling, or refunds with consumer customers. This includes making use of the various Government support schemes open to businesses to help them through the pandemic. For example, businesses should first attempt to recover costs from Government schemes such as the Coronavirus Job Retention Scheme (furlough), the Coronavirus Business Interruption Loan Scheme, business rates relief and VAT deferrals, rather than withholding refunds to consumers.

For more information on this or for advice, please contact Kevin Mahoney on 07741 907 454 or at kmahoney@ hcrlaw.com