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Coronavirus: Regulator tells package holiday firms to refund customers

Edmund Heaphy
·Finance and news reporter
·2-min read
A German tourist takes a sunbath at the Riu Concordia hotel swimming pool in Palma de Mallorca, Spain, Monday, June 15, 2020. Whether its German holidaymakers basking in Spain's sunshine or Parisians renewing their love affair with their city, Monday's border openings and further scrapping of restrictions offered Europeans a taste of pre-coronavirus life that they may have taken for granted. (AP Photo/Joan Mateu)
Travel restrictions across Europe brought the tourism industry to a standstill. Photo: Joan Mateu/AP

Package holiday firms should promptly issue refunds to customers whose holidays have been cancelled, even in spite of the “extraordinary pressures” they are facing during the coronavirus pandemic, the Competition and Markets Authority (CMA) warned on Friday.

The regulator noted that consumers have a statutory right to a full cash refund within 14 days of the termination of their package holiday, even if the reasons for the cancellation are “unavoidable and extraordinary.”

“We expect businesses to comply with these requirements where package holiday contracts are terminated due to the COVID-19 pandemic,” said Cecilia Parker Aranha of the CMA in an open letter to package travel sector.

“We are aware that many consumers have been promised full cash refunds, but these have yet to be paid,” she said.

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Since launching its coronavirus task force, which was set up to monitor market developments in the wake of the pandemic, the CMA has received more than 17,500 complaints from consumers about firms in the sector.

The CMA said that it was now “particularly concerned” about the harm being suffered by consumers who have purchased package holidays, noting that companies seemed to be engaging in practices contrary to consumer law.

The regulator noted that it had the power to bring enforcement actions against firms in relation to such breaches.

“The CMA recognises that the pandemic has created extraordinary pressures on package holiday businesses,” said Parker Aranha.

“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.”

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The travel industry is confronting an unprecedented crisis in coronavirus, as airlines, travel firms, and manufacturers face a collapse in demand from travellers.

Coronavirus lockdowns and travel restrictions across Europe brought the tourism industry across the continent to a standstill, and many firms believe it will be 2023 until travel returns to pre-crisis levels.

“Today’s warning to more than 100 package travel firms should act as a clear reminder that, even as lockdown eases, the CMA will work to protect consumers from unfair businesses practices,” said George Lusty of the CMA.

“We’re already looking at package holidays as part of our investigation into companies’ cancellation policies, and we’ll continue to take direct action wherever we can.”