CMA issues refund warning to package travel operators

The Competition and Markets Authority (CMA) has issued the open letter as part of its investigation into “suspected breaches of consumer protection law in the package holiday sector”.

While the CMA stresses it is “not beginning enforcement action against your company at present”, the authority adds it will continue monitoring complaints and could take enforcement action if more complaints are received.

The letter from Cecilia Parker Aranha, director of the CMA’s Consumer Group, says: “The CMA is particularly concerned about the harm which consumers are suffering in the package travel sector.

“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 CMA has received more than 17,500 complaints from consumers about package travel companies over Covid-19 cancellations since March. The letter has been sent directly to more than 100 operators who have received the most complaints so far but these companies are not being named.

Consumer complaints centre on operators not issuing cash refunds within the statutory 14-day period, as well as providing “inadequate or misleading information to consumers about their statutory rights.”

“This includes consumers not receiving refunds without undue delay and in any event not later than 14 days after the package travel contract has been terminated,” said the CMA.

“It also includes consumers only being offered a voucher or the right to rebook a holiday instead of a refund.”

Other “harmful” conduct by operators includes clients losing their deposits or being charged fees when cancelling a package, and facing “significant barriers” to claiming a refund such as being required to phone a company and then not being able to get through.

The letter adds: “The CMA recognises that the pandemic has created extraordinary pressures on package holiday businesses. 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.”

The letter does not mention Refund Credit Notes (RCNs), which the industry has been pushing as an alternative to offering full cash refunds.