Travel firms told: stop charging big non-refundable holiday deposits and unfair cancellation fees

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Big deposits and unfair cancellations to become thing of the pastBig deposits and unfair cancellations to become thing of the past

Holidaymakers who need to cancel their holiday may find it easier to get a decent refund thanks to a campaign by the Competition and Markets Authority (CMA).

Travel companies are being advised that large deposits or excessive cancellations fees are likely to be unfair to consumers – and won’t be legally binding under consumer law.

A national survey of 2,000 people by Ipsos Mori, released by the CMA – an independent non-ministerial government department – revealed what holidaymakers feel penalised when forced to cancel due to unforeseen circumstances, such as ill-health or death in the family. The results revealed that:

  • 89% felt they should get all, or most, of their money back if they cancel and the business re-sells their booking
  • 85% felt that it’s unfair if they have to pay part of the cost of a booking when they cancel
  • 66% felt that travel and holiday businesses do not always make it as easy to cancel a booking as they should
  • Of those with experience of cancelling a booking, 1 in 5 felt that they had been treated unfairly

The campaign called “Small Print, Big Difference”, is backed by leading associations including ABTA – The Travel Association, UKHospitality and the Specialist Travel Association (AITO) amongst others.

Holiday and travel businesses are being urged to “check in” and make sure they are using fair terms and conditions in their customer contracts. It also encourages businesses to be upfront and clear with their customers about charges and fees, especially in the event of a customer cancellation.

Current law entitles businesses to ask customers to pay a cancellation fee to cover their losses, but the amount should be in proportion to what they are losing. Cancellation terms that don’t follow this approach are likely to be unfair and businesses can’t rely on them to resolve claims or disputes with customers.

What is deemed to be a legally unfair cancellation fee?

A term can be legally unfair if it gives the business an unfair advantage. For example, a large upfront deposit that is not refundable on cancellation whatever the reason.

Another example is when a business insists on a large cancellation fee which bears no relation to the actual losses it experiences from the cancellation.

What is deemed to be a fair cancellation policy?

A term is more likely to be fair if it clearly explains how a charge reflects what a business will genuinely lose from a cancellation, and the way this charge is calculated is reasonable.

Paul Latham, the CMA’s Director of Strategy and Communications, said:

Nobody wants to cancel a trip or holiday, but if you have to, it’s important that you are treated fairly and don’t lose out more than is absolutely necessary.

Our campaign is asking travel businesses to ‘check in’ on their terms to make sure they’re fair. Fair terms are a legal requirement as well as helping reassure customers that they’re dealing with a company they can trust.

Unfair terms can’t be enforced so they also won’t protect businesses if challenged. The small print really can make a big difference.

What to do if you feel unfairly treated

  • In the first instance lodge a complaint with the company following their procedures. If you are not satisfied with the response you can challenge an unfair term and seek redress through the courts.
  • The CMA, Trading Standards Services and other relevant bodies do have powers to pursue legal action to stop businesses using terms and notices that are unfair. If necessary, this can be achieved by seeking a court order.
  • You can get advice from the Citizens Advice consumer service on 03454 040506, or 03454 040505 for Welsh language speakers.
  • Consumers in Scotland can get advice from Consumer Advice Scot on 0808 164 6000 and consumers in Northern Ireland can get advice from Consumerline, managed by Trading Standards Service Northern Ireland, via telephone number 0300 123 6262 or email consumerline@economy-ni.gov.uk.
  • Consumers can also report an issue to their local Trading Standards Office.

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