Skip to content

Insights

30 April 2020

The CMA shining a light on consumer issues in light of Covid-19

As we all know, the current Government restrictions mean that, since March, upcoming events and holidays have had to be cancelled or postponed for an indefinite period of time, leaving both businesses in the retail, leisure and hospitality sector and their customers in a precarious position.  There has been much public discussion and debate in relation to the challenges facing these businesses and the measures introduced to alleviate them; however, this should not detract in any way from consumer rights, which still need to be upheld to the greatest possible extent, even in these exceptional and largely unforeseen circumstances.

This has been recognised by the Competition and Markets Authority (CMA) which has formed a dedicated Covid-19 Taskforce to investigate and deal with the problems facing consumers as a result of the Covid-19 pandemic. 

Based on the complaints received by the Taskforce, the CMA has identified 3 sectors of particular concern:

  • weddings and private events;
  • holiday accommodation; and
  • nurseries and childcare providers.

These industries have been hit particularly hard by the lockdown measures which have meant that their businesses and the services they provide have largely ground to a halt, leaving hundreds of thousands of consumers ‘in the lurch’.  As a result, the main consumer issues identified by the CMA relate to cancellations and refunds, in particular businesses refusing to issue refunds or encouraging customers to accept vouchers instead / making it unduly difficult for consumers to access refunds.

Helpfully, the CMA has issued a statement setting out when a full refund would be expected, namely where:

  • a business has cancelled a contract without providing any of the promised goods or services;
  • no service is provided by a business, for example because this is prevented by the restrictions that apply during the current lockdown; or
  • a consumer cancels or is prevented from receiving the service, for example due to the restrictions that apply during the current lockdown.

This is not intended to be any alteration to the current consumer rights laws (largely contained in the Consumer Rights Act 2015) but rather a summary and reminder of that law. Unfortunately, the findings of the CMA appear to show that some businesses are nevertheless resisting issuing refunds to their consumers in these circumstances, potentially opening themselves up to consumer rights claims.  

Where companies are issuing refunds, the CMA has acknowledged that, in these circumstances, it might take longer than usual to process these.  However, the timeframe should nevertheless be made clear to consumers and given within a reasonable time (although no guidance is given on what might constitute a ‘reasonable’ time). 

Lastly, the CMA has stressed that businesses should not be benefiting from ‘double recovery’ by receiving money via Government schemes as well as from customers.

This CMA Taskforce and Government update shows that consumer rights are still being taken seriously during this pandemic.  In their owns words, if the CMA finds evidence that businesses are failing to comply with consumer protection law then they will “get tough – that means launching enforcement cases and moving to court action where there is a strong reason to do so”.

TOP