06/05/2020

The Coronavirus pandemic and refunds

Since the start of the Coronavirus pandemic, the Competition and Markets Authority (CMA) – which is the government body that makes sure consumers get a good deal and that businesses are operating within the law - has seen an increase in complaints relating to companies refusing to give refunds for services they aren’t providing during the crisis.

The specific areas of concern are; wedding venues, private parties, nurseries, childcare providers and holiday accommodation such as hotels.

The rule of thumb

In most cases where a contract is not performed as agreed, consumer protection law allows you to obtain a refund. Especially where:

  • The business has cancelled the contract without providing any of the promised goods/services; or,
  • No service is provided by the business because it’s prevented by Government public health measures – for example, your childcare provider can’t look after your child because you’re not a key-worker.
  • You cancel the contract, or are prevented from receiving any services, because Government public health measures mean you’re not allowed to use the services – for example, you cancel your wedding venue because you’re not allowed to have your wedding.

Exceptions

Sometimes you may have already received part of the service you’ve paid for, in which case, you should still be entitled to a refund of the part of the service that hasn’t been provided.

In some cases, the business may be able to take a contribution to cover costs already in incurred but these cases should be rare.

Ongoing payments

Where you have a contract for regular/ongoing services like a gym membership:

  • You should be offered a refund for any services you’ve paid for but which haven’t been provided by the business, or which you’re not allowed to use during lockdown.
  • You should be allowed to withhold payment for the services that the business hasn’t provided, or which you’re not allowed to use during lockdown.
  • The business may ask you to pay a contribution to its costs until services are resumed – but this must be set out in the contract clearly and fairly.

Non-refundable payments and fees

The CMA’s view is that your right to a refund will usually apply even where you’ve paid a “non-refundable deposit” or an “advance payment”, and you shouldn’t be charged an administration fee for refunds.

Credits and Re-booking options

You might be offered a credit receipt or voucher in place of a refund or, if you’ve booked an event which has been rescheduled, you may be re-booked onto the rescheduled event. However, you must not be misled or pressurised into accepting one of these measures, and should still be able to get a refund if you prefer.

Issues with refund timings

Under the current circumstances, refunds may take longer to process than normal but businesses should make the expected timeframe for a refund clear, and they should still be provided within a reasonable time.

Future contracts

Some contracts may require you to pay now for something you’ll receive in the future, after the current disruption has lifted, but a business shouldn’t ask you to pay for something it knows it will be unable to provide. Where the business reasonably expects to provide the service as agreed, they can ask you to carry on making these payments for the time-being. This could be the case, for example, for some services due to be provided later in the year. Your right to a refund will depend on whether the services can be provided when the time comes.

Cancellations for other reasons

If a you cancel a contract because you no longer want the service, even though the service can still be provided as agreed, your rights to a refund will depend on the terms and conditions of the contract.

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