Refund cancellation CMA

The Competition and Markets Authority (CMA) has launched a programme of work to investigate reports of businesses failing to respect cancellation rights during the coronavirus pandemic.

Through its Covid-19 Taskforce, which monitors market developments and identifies the major problems facing consumers, the CMA has seen increasing numbers of complaints in relation to cancellations and refunds.

These now account for four out of five complaints being received into the Taskforce and include concerns about businesses refusing to issue refunds.

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Andrea Coscelli, CEO of the CMA, said: “Our Covid-19 taskforce is shining a light on some of the big issues facing consumers in wake of this pandemic. Alongside price-gouging reports, we’re now seeing cancellation issues in their thousands.

Noting that the majority of businesses are acting reasonably during the COVID-19 crisis, the CMA added that it acknowledged the pressure facing businesses and consumers alike but stressed that consumer rights cannot be ignored.

“The current situation is throwing up challenges for everyone, including businesses, but that does not mean that consumer rights can fall by the wayside,” continued Andrea.

“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.”

Speaking with Duncan Gillett, Managing Director of Clearwell Mobility, in this month’s issue of THIIS, he highlighted the impact that consumer refunds may have on mobility retailers and how supplier closures may exacerbate this.

“Refunds of customer deposits will also be a significant cash outflow for most retailers,” he explained.

“Deposits taken for chairs and beds where the supplier has closed places retailers in an invidious position. In some cases, customers may wait but most will request refunds of their deposits when you can’t even give them an idea of a delivery date.”

In cases where the CMA does find evidence of companies failing to comply with the law, it has stated that it will take appropriate enforcement action, including moving quickly to court if a firm does not address its concerns.

Coinciding with the new investigation, the CMA has also released new guidance outlining the rules surrounding cancellations and refunds during the coronavirus pandemic.

For most consumer contracts, the CMA says it would expect a full refund to be issued where a business has cancelled a contract without providing any of the promised goods or services or where a business has failed to provide a product or service as a result of current lockdown restrictions.

Additionally, the CMA would expect a full refund to be issued in cases where a consumer cancels or is prevented from receiving the service due to the lockdown restrictions.

The CMA added that businesses should not be profiting by ‘double recovering’ their money from the government and customers.

Individuals and businesses that have been affected by what they believe to be unfair cancellation terms in the wake of COVID-19 can report them to the CMA using this online form.

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