More than 100 package holiday businesses facing the highest complaints over travel refunds have been warned they could face action from the competitions watchdog.

The Competition and Markets Authority has published an open letter to all firms involved in organising package holidays for UK customers due to the volume of complaints.

The CMA has received more than 17,500 complaints from consumers since March about difficulties they have faced with package holiday businesses in relation to cancellations and refunds due to the Covid-19 pandemic.

The “advisory letter” sets out how the CMA thinks package holiday companies should respond to refunds and cancellations during the Covid-19 pandemic.

The open letter to the sector highlights its concerns and sets out what it expects businesses to do.

It follows the CMA’s decision to include package  holidays as part of an investigation into companies’ cancellation policies.

According to the letter, the “harmful conduct” includes

  • Consumers not being offered and/or provided full cash refunds in accordance with their statutory rights. This includes consumers not receiving refunds without undue delay and in any event not later than 14 days after the package travel contract has been terminated. It also includes consumers only being offered a voucher or the right to rebook a holiday instead of a refund
  • Consumers losing their deposits and/or being charged cancellation fees when exercising their statutory right to terminate a package holiday contract and when they are entitled to a full refund.
  • Consumers not being provided with clear information and/or being otherwise misled about their statutory rights.
  • Consumers facing significant barriers when trying to exercise their statutory rights. For example, consumers being asked to request a refund on their terminated package booking by telephone, but being unable to readily contact businesses in this way.
  • Consumers being unable to contact businesses effectively to discuss other concerns, such as wanting to pay their balance in order not to forfeit their deposit as a result of late payment.

The letter adds: “The CMA recognises that the pandemic has created extraordinary pressures on package holiday businesses. Although we were sympathetic to the challenges faced in the early days of the pandemic, it is nonetheless important that businesses comply with consumer law.

“Where businesses have breached consumer law, the CMA expects them to take immediate action to bring themselves into compliance and address any consumer harm arising from the breaches.

“We expect businesses to comply with these requirements where package holiday contracts are terminated due to the Covid-19 pandemic.

“We are aware that many consumers have been promised full cash refunds, but these have yet to be paid, contrary to the requirements of the PTRs [package travel regulations].

“We expect businesses to provide such refunds promptly and without undue delay (bearing in mind payment should have been made within 14 days of termination).”

Firms which do not comply with consumer law risk enforcement action from the CMA or local trading standards officials.

The letter says: “While the CMA is not beginning enforcement action against your company at present, we continue to monitor the complaints and intelligence that we are receiving.”

Senior director of consumer protection, George Lusty, 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.”

He added:  “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.”

Right to Refund campaign leader Kane Pirie said: “Right To Refund welcomes the letter today from the Competition & Markets Authority instructing travel companies to follow the law to avoid further action which includes the risk of substantial fines.

“This underlines what we have argued all along: miserable as Covid-19 is, it does not represent a get-out-of-jail free card for companies who fail to refund customers.”