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Law360, London (April 30, 2020, 11:47 AM BST) -- The Competition and Markets Authority said Thursday it is prepared to take companies to court if they refuse to give customers refunds after events and holidays are canceled because of the coronavirus outbreak.
The watchdog has recorded a record rise in complaints that businesses are reluctant to give cash refunds to consumers during the crisis. (AP)
The complaints are in three main areas, the CMA said: wedding venues, holiday accommodation and nurseries. The regulator said "customer rights cannot be ignored," even during a health crisis.
Consumer law requires that a business should offer a full refund it it cancels a contract without providing any of the promised goods or services.
"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," Andrea Coscelli, the CMA's chief executive, said.
For most consumer contracts, the watchdog would expect a full refund to be issued when a business has canceled a contract without providing any of the promised goods or services. It would also expect the company to pay all the money back when it provides no service, or when a consumer cancels or is prevented from receiving the service, for example because of the restrictions imposed by the lockdown.
The rights to a refund will usually apply even when the consumer has paid what the business says is a non-refundable deposit or advance payment, the CMA said. The regulator said it accepts that it may take businesses longer than usual to process refunds, but urged them to make clear to customers how long it will take.
The CMA also advised businesses not to profit by "double recovering" their money from the government and customers.
"The current situation is throwing up challenges for everyone, including businesses, but that does not mean that consumer rights can fall by the wayside," Coscelli added.
The CMA launched a "COVID-19 Taskforce" in March to scrutinize market developments, identify harmful sales and pricing practices as they emerge. The taskforce will take enforcement action if there is evidence that companies could have breached competition or consumer protection law.
The pandemic has forced the CMA to issue clarifications on competition law as businesses scramble to keep up with a range of unprecedented challenges.
The regulator said in March that it will not penalize companies for coordinating to help the country respond to the coronavirus outbreak. But it warned there is "no free pass" for cooperation that is not essential.
The antitrust watchdog also warned in an open letter to the pharmaceutical and food and drink industries that they should not capitalize on the crisis by charging unjustifiably high prices for essential goods or making misleading claims about their efficacy.
--Editing by Ed Harris.
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