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Are you being refused a refund?

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Profile photo of Adam French Adam French Consumer Rights Expert
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The Competition and Markets Authority is threatening to take action against firms that ignore consumers’ rights to cash refunds. Have you been refused one?

Complaints about cancellations and refunds are soaring.

We’ve heard from thousands of people who are scared of losing significant sums of money and are experiencing a real struggle to get their money back.

Experiences like this:

Featured Comment
Isla says:
7 May 2020
@James Shelton - Thank you for a **very** helpful and lengthy response, clarifying my unqualified legal opinion that frustration of contract may be applicable to some of the cases being reported to Which? I was not concerned with flight cancellations or package holidays which, as you say, have very specific legislation and are not the main topic of this Conversation. But there are a number of people posting about weddings, holiday accommodation and other events where the supplier is digging in their heels over payments still due and refunds. There are also questions about bespoke orders and retailers refusing to cancel the contract. As you say, frustration of contract is complex. However, it might give some assurance to people that are being pressurized to make further payments or risk being sued, even though the event cannot go ahead or fulfillment of the order may be delayed significantly. Conversely, it is unreasonable to expect a 100% refund, if the consumer has put the venue or retailer to some extraordinary expense. Maybe they have asked the organizer to provide a wedding marquee or entertainment that is not part of the standard package, or some customization of the product ordered that would make it non-returnable. I hope that a basic knowledge of the principles of contract frustration you have confirmed will help consumers understand that contracts can sometimes be terminated without breach by either party. An appreciation that a win/lose outcome is not the only possibility, may help them to negotiate a more amicable and just settlement. I would certainly encourage anyone who has benefited from James' advice to contact Which? Legal in the first instance. Thank you again for taking the time to provide your valuable expertise.
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What are the areas of concern?

Based on the complaints received, the CMA has identified three sectors of particular concern:

šŸ“‹ Weddings and private events

šŸ“‹ Holiday accommodation

šŸ“‹ Nurseries and childcare providers

It says it will tackle these areas as a priority and then move on to examine other sectors, based on the information it receives.

Itā€™s good news for consumers that companies found to be skirting their legal responsibilities on refunds and cancellations by trying to rely on unfair terms and conditions will be held to account.

But 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.

How to report a business

If youā€™ve been hit by unfair cancellation terms tell us your story in the comments below ā€“ we’ll be sharing a dossier of what we hear directly from consumers with the CMA.Ā 

Or you can report it directly to the CMA using its online business reporting form.

The CMA does say that while it is not able to respond directly to every complaint it receives, the information provided will help it to decide which issues to address as part of this rolling programme of work.

Is the law on your side?

The CMA has helpfully also issued a statement on its views on consumer protection law in relation to cancellations and refunds during the current crisis.

For most consumer contracts, the CMA would expect a full refund to be issued where:

šŸ“„ A business has cancelled a contract without providing any of the promised goods or services.

šŸ“„ No service is provided by a business, for example because this is prevented by the restrictions that apply during the current lockdown.

šŸ“„ A consumer cancels or is prevented from receiving the service, for example due to the restrictions that apply during the current lockdown.

But you will need to take the following into consideration:

šŸ“„ If youā€™ve already received some of the services you paid for in advance you may only be entitled to a partial refund to the value of what hasnā€™t been provided. For example if you canā€™t use three months of a 12 month season ticket you could claim a 25% refund.

šŸ“„ In some cases, a business may be able to deduct a contribution to the costs it has already incurred if it cannot recover those costs elsewhere. Instances where this applies should be pretty rare.

šŸ“„ If you are making a regular payment to receive a regular services in exchange for a regular payment as part of an ongoing contract, the business might be able to ask you to make a small contribution to its costs until the provision of the service is resumed. But this is only if the contract you have signed set this out clearly and fairly ā€“ so you might have to dig out the paperwork.

It also advises that businesses should not be profiting by ā€˜double recoveringā€™ their money from the government and customers.

Are you currently being refused a refund? Feel like a business isn’t playing by the rules? Let us know.

Comments
57
Em says:
23 May 2020

Iā€™m not in any financial contract with them!

But that is precisely what you are in, if I’ve understood you correctly. The deposit you paid is what brings the purchase contract into effect.

To have a valid contract of sale:

– an offer had to be made (“I would like to buy that dress [for amount Ā£x].”),
– an acceptance given (“Yes, I will sell you that dress for the ticket price [or amount Ā£x].”) and
– a consideration made, whether financial or a benefit in kind.

For a contract to be valid, the consideration has to come from both parties (both must be seen to derive some sort of benefit from the contract).

In this case, the sellerā€™s consideration is the agreement to not sell the dress to someone else during the term of the sales agreement. The consideration from the buyer is the deposit. Without a deposit, the contract is not binding on the seller. They could sell the dress to someone else, if they choose. They would not be in breach of contract because, in the eyes of the law, the contract is defective without a consideration from both parties.

If you fail to make further payments as they fall due, you are technically in breach of the contract, unless there is an cancellation clause that covers your situation. Whether the deposit is sufficient to cover the seller’s losses depends on what it was intended to cover. Was it:

– simply a nominal consideration amount to bring the contract into effect, tying the hands of the seller into an agreement to only sell that dress to you?
– to cover the seller’s unrecoverable costs (shipping and alterations) in the event that you default?
– partial payment of the final amount?

In general, it is expected that a deposit is sufficient to cover nominal damages for breach of contract, but in this case (ordering, shipping, first fitting, alterations, second fitting, etc.,) the expenses the seller incurs increase throughout the term of the agreement … . Does you deposit cover all that?

There is no simple answer to your question. You will need to contact the seller and agree what is an appropriate amount.

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