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Package holiday firms face extra scrutiny from watchdog over coronavirus refunds

The Competition and Markets Authority revealed holidays and airlines account for almost 27,000 complaints in just over two months.

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Holiday firms are being targeted by the CMA over refund policies during the Covid-19 crisis (Steve Parsons/PA)

Holiday firms are being targeted by the CMA over refund policies during the Covid-19 crisis (Steve Parsons/PA)

Holiday firms are being targeted by the CMA over refund policies during the Covid-19 crisis (Steve Parsons/PA)

Package holiday firms will face greater scrutiny from the competition watchdog over failures to refund customers, officials have revealed.

The Competition and Markets Authority (CMA) said its coronavirus taskforce would be prioritising the sector after seeing a spike in complaints from holidaymakers struggling to get their money back for cancelled trips.

Airlines and travel agents have faced growing criticism from customers, with pressure tactics to force through refunds in vouchers, complicated processes and outright refusals.

Almost all the complaints about the ‘top 10’ companies relate to issues around cancellations and refunds. Nine out of the 10 companies supply services, all of which are to do with travel, holidays and accommodation. Only one of the top 10 sells goodsCompetition and Markets Authority

Investigators at the CMA said they have now received 60,000 coronavirus-related contacts from March 10 to May 17 2020, with the majority relating to the travel, holiday and hotel businesses.

It added: “Since mid-April, the large majority of complaints received by the CMA have been about unfair practices over cancellations and refunds.

“In the week to May 17, cancellation complaints were being received at a rate of 850 per day on average.”

Watchdog officials have already advised the Government that without emergency laws they will find it harder to crack down on unscrupulous businesses trying to cash in on the Covid-19 crisis.

But on Thursday it said legal avenues were being explored for a handful of companies in certain sectors.

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CMA Complaint categories (CMA / PA)

CMA Complaint categories (CMA / PA)

CMA Complaint categories (CMA / PA)

The CMA’s taskforce initially investigated weddings and private events where venues were telling customers to claim on insurance; holiday accommodation refunds being processed as vouchers; and nurseries charging parents fees for keeping places open after lockdown.

Cases have now been opened against certain companies in these sectors and “further updates will be provided in due course”.

It added: “Based on the number and nature of complaints being received, package holidays has now been included in the scope of the investigation.

“Practices of concern include refusing refunds; making it very difficult for consumers to obtain refunds; and insisting that consumers rebook or accept vouchers.”

The problem is so bad, the CMA also revealed: “Almost all the complaints about the ‘top 10’ companies relate to issues around cancellations and refunds.

“Nine out of the 10 companies supply services, all of which are to do with travel, holidays and accommodation. Only one of the top 10 sells goods.”

The 10 most complained about companies account for 37% of submissions, it added.

In one example, seen by the PA news agency, a Lastminute.com customer who had a flight cancelled was later told she would have to pay a £30 processing fee to receive a cash refund – which could take two months.

Alternatively, she was told she could have a voucher, without the fee, but was given just two weeks to decide – otherwise she would be automatically processed with the coupon.

The taskforce initially received complaints on price rises, particularly for personal hygiene products such as hand sanitiser and basic foods like meat.

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CMA complaints over price gouging and refund refusals. (CMA / PA)

CMA complaints over price gouging and refund refusals. (CMA / PA)

CMA complaints over price gouging and refund refusals. (CMA / PA)

But this dropped off at the beginning of April, to be replaced with a spike in complaints over cancellations and refunds.

The CMA had written to 264 businesses following 3,100 complaints relating just to those firms.

On Thursday it said: “To date, we have received 150 responses from the businesses to which we have written.

“The majority of these attribute high prices to higher costs charged by suppliers, although this does not adequately explain prices that are far in excess of the average.”

PA