Watchdog warns more than 100 package holiday firms over refund delays

Update 11 May 2021: This story was first published in July 2020, but the info in it on your rights still stands. This shows how the CMA acted over package holidays, but it's also said other travel providers should give refunds for cancellations too. And if you can't go on a trip because it would be illegal for you to use the booking, it says you should get a refund - though that's untested in court, and not all firms are following it. For more info see our Watchdog to investigate unfair cancellation policies MSE news story and Coronavirus Travel Rights guide. 

It's important to note however that CMA guidance isn't a definitive interpretation of the law, and this is a new scenario which hasn't been tested – so while you can direct your holiday accommodation provider to the guidance, complain to the CMA or even pursue legal action, there are no guarantees.The Competition and Markets Authority (CMA) says it's received over 17,500 complaints about package holiday contracts which have been cancelled due to the coronavirus pandemic.

After reviewing the complaints, it says some businesses in the package travel sector may have been breaking consumer law by failing to give refunds on time and giving misleading information to customers about their rights.

The CMA says it will continue to monitor complaints against the firms it's contacting and could prioritise taking enforcement action against them if it carries on receiving complaints – though it hasn't revealed which firms it's written to.

The watchdog is also including package holidays in its investigation into firms' cancellation policies during the pandemic – so you can make a complaint about a package holiday provider to its coronavirus taskforce. Two UK holiday rental firms, Hoseasons and Sykes Cottages, recently agreed to reverse their cancellation policies after CMA intervention.

See our Coronavirus Travel Rights guide for info on getting refunds for cancelled package holidays and more.

What are my rights when a package holiday is cancelled?

The CMA's letter sets out consumers' rights if their package holiday is cancelled due to the coronavirus pandemic.

These apply if a package holiday contract is cancelled either by the provider itself, or by the customer if the performance of the package or the customer's journey to the package's destination would be significantly affected by the circumstances.

Consumers have the right to a full cash refund "without undue delay" and within 14 days of the contract being cancelled.

The CMA says it sympathises with the challenges faced by package holiday businesses due to the coronavirus pandemic, but has stressed that firms must still comply with the law and pay out refunds.

How have firms been breaking the rules?

The CMA says it's identified harmful practices from some businesses in the package holiday sector, including:

• Consumers not being offered or paid the full cash refunds they're entitled to. This includes consumers who aren't paid their refunds within the legal timeframe, or who are only offered the option to rebook the holiday or request a voucher rather than a cash refund.

• Consumers losing their deposits or being charged cancellation fees in circumstances when they're entitled to a full refund.

• Consumers being misled about their rights or not being given clear enough information.

• Consumers facing "significant barriers" when asking for refunds, for example being told they need to phone up to request a refund but then struggling to get through in this way.

• Consumers not being able to get in touch with firms to discuss other concerns about their package holidays – for example, if they want to pay the balance on their holiday in order to protect their deposits.

What must package holiday firms do now? 

In its letter, the CMA tells firms they must now pay requested refunds "promptly" and make sure customers are given clear and accurate information about their rights – including their right to a full refund.

Firms should pay the refunds directly and shouldn't tell customers they need to claim from card providers or insurers instead.

If a customer has previously been given inaccurate or partial information, or was denied a full refund, the firm should proactively get in touch with them to explain their rights and tell them their options, including refunds.

What does the CMA say?

George Lusty, senior director of consumer protection at the CMA, said: "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. 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.

"The CMA recently investigated and secured policy changes from major holiday accommodation providers, ensuring that they are now offering refunds for cancelled bookings – and it won't hesitate to take action against non-compliant package travel firms. If companies want to avoid CMA action, then they must follow consumer protection law by offering refunds where they are due and refunding customers on time."