The Competition and Markets Authority is threatening to take legal action against companies that fail to refund people for holiday accommodation cancelled due to the coronavirus outbreak.
The consumer watchdog cited concerns about businesses refusing refunds and pressuring people to accept vouchers for holiday accommodation, which can only be used during a more expensive period.
It has selected holidays as one of three sectors of particular concern to investigate, alongside weddings and private events and nurseries and childcare, and will tackle these areas as a priority before moving on to examine other sectors.
Four out of five complaints made to its Covid-19 Taskforce are about cancellations and refunds, it said.
"The CMA acknowledges that most businesses are acting reasonably in what are unprecedented circumstances, and the current crisis is placing everyone under pressure, but consumer rights cannot be ignored," it said as it announced its investigation today.
"If it finds evidence that companies are failing to comply with the law, the CMA will take appropriate enforcement action, including moving quickly to court if a firm does not address its concerns. Individuals can also take their own legal action against unfair terms should they choose to."
Kane Pirie, the man behind the Right to Refund campaign, said he is delighted the CMA has heard the ‘cries of thousands of shocked consumers who have been given the refund run-around by large tour operators, in many cases breaking the law’.
"The UK’s largest tour operators, who followed ABTA’s doomed Credit Refund Note scheme, now find themselves the targets of a law enforcement agency with a fearsome reputation. We tried to warn them, and ABTA, but were ignored," he said.
"If those giant tour operators with wealthy shareholders did not understand before that ABTA do not make the law before, they will today. Their position is indefensible: morally, legally and commercially.
"Time is now up on the bungled Great Refund Robbery. Right To Refund said from the start this is a turkey that would not fly, and with over 23,000 supporters and the CMA in town, that turkey is now plucked, buttered and in the oven."
Although the initial CMA investigation does not refer specifically to flight refunds, Matt Buffey, head of consumer protection at the UK Civil Aviation Authority, issued a statement which said: "We welcome the investigation from the Competition and Markets Authority (CMA) into cancellation rights and refunds and the statement on its view of how consumer protection law applies.
"We will continue to work alongside the CMA on this issue as it progresses. We expect airlines to provide refunds for cancelled flights as soon as practically possible."
Adam French, Which? consumer rights expert, said: "We’ve heard from many distressed people who risk being left out of pocket for significant sums of money as they struggle to get refunds for cancelled weddings, private events, or holiday accommodation. It’s right the CMA investigates sectors that are skirting their legal responsibilities on refunds and cancellations by trying to rely on unfair and unenforceable terms and conditions.
"The regulator must be prepared to step in and take strong action against any businesses found to be breaching consumer law and taking advantage of consumers during these unprecedented times."
