I Got 16,000 Problems and Complaints are Each One: CMA receives complaints over coronavirus refunds

May 18, 2020

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What's going on here?

The Competition and Markets Authority (CMA) has received 16,000 complaints over coronavirus refunds between 10 March and 19 April 2020.

What does this mean?

The CMA established a COVID-19 Taskforce on 20 March 2020 in order to shine “a light on some of the big issues facing consumers in the wake of this pandemic” according to Andrea Coscelli (CEO of The CMA).  The CMA found that approximately 80% of complaints received related to refunds and cancellations in the week ending 19 April alone. The CMA published a statement after their investigation, and Coscelli highlighted three main areas of concern, namely “weddings, holiday accommodation and childcare”. Moreover, consumer rights group Which? found that many of the UKs largest travel firms and airlines, such as Love Holidays and TUI, were risking breaking the law by not providing refunds within the stipulated 7-day period. The CMA has made it clear that “most businesses are trying to do the right thing” but found instances where consumers were being pressured to accept vouchers in lieu of refunds.  The statement highlighted instances in which it would expect a full refund such as “where a business has cancelled a contract without providing any of the promised goods or services”.

What's the big picture effect?

14,000 of the 16,000 complaints concerned the same 6,000 firms, indicating that the problem is widespread. Moreover, the CMA also found problems including price gouging for domestic products such as hand sanitiser (which is reported to have had a median rise of 376%), and subsequently wrote to 187 of these firms. However, the CMA has stated that it would “not hesitate to take enforcement action if there is evidence that businesses have breached competition or consumer protection law” but conceded that firms are able to offer alternatives such as vouchers but the option of a refund should be as “clearly and easily available”.

If firms are forced to pay out refunds  they may risk going out of business, as the pandemic has hit the travel industry considerably hard due to the travel restrictions across the world (for more information on this, see another of our articles, click here). The CMA found that firms are also pressuring consumers to claim on their insurance, but this is not placing the consumer in a better position as insurance companies are also being heavily affected by the pandemic. Subsequently, consumers are often finding their claims being denied as their policies are unlikely to cover them in the current circumstances. Moreover, with the likelihood of a 14-day quarantine on overseas arrivals into the UK, it is likely that these industries will face further hardship. Steven Freudmann, Chairman of the Institute of Travel and Tourism said that “the travel industry is already in meltdown” and the quarantine “would have a devastating impact”. In light of the various hardships faced by industries during this time it would be easy to sympathise with the plight of these companies. However, with the consumer facing not only the economic ramifications of the pandemic but also the health consequences, it is arguable that our sympathy, and that of authorities, should rightly lie with them.

Report written by Natasha Dawes

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