£203m in COVID-19 refunds for Virgin Holidays customers

As part of its ongoing work into consumer protection issues arising from the COVID-19 pandemic, the UK Competition and Markets Authority ("CMA") announced on 23 October 2020 that it had secured commitments from Virgin Holidays to refund all customers whose package holidays have been and are to be cancelled due to the pandemic.

The CMA announced at the end of April 2020 that, in response to a large number of complaints, it had opened an investigation into cancellations and refunds. Initially, this investigation focused on three sectors (weddings and private events, holiday accommodation, and nurseries and childcare providers), and was subsequently extended to package travel after the CMA received over 17,500 complaints in just a few months. 

In July 2020, the CMA published an open letter to all package holiday businesses setting out its concerns that business may have been engaging in practices contrary to consumer law and explaining what it expects businesses to do in relation to cancellations and refunds due to COVID-19.

The CMA received hundreds of complaints from customers who had not received refunds from Virgin Holidays for holidays cancelled due to the pandemic. Of those customers who were informed by Virgin Holidays that they would receive a refund, many had to wait for an unreasonably long time, with some being told they would have to wait 120 days to receive their money back.

The CMA investigated Virgin Holidays' practices and, on 23 October 2020, the CMA announced that it had secured the following undertakings:

• holidays cancelled before 1 September 2020 will be repaid by 30 October 2020;
• holidays cancelled from 1 September to 31 October 2020 will be repaid by 20 November 2020; and
• people who are entitled to a refund for a holiday cancelled on or after 1 November 2020 will be paid within 14 days.

Virgin Holidays must provide the CMA with regular reports on the progress of its repayments to customers. If it does not repay customers by within the set timeframes, the CMA has stated that is prepared to take the company to court.

CMA's increasing focus on consumer enforcement, particularly in relation to cancellations and refunds 

This action is the latest example of the CMA's increasing focus on consumer enforcement, which has been particularly evident in its work in response to COVID-19. As noted in the May/June 2020 edition of our newsletter, to address concerns relating to cancellations and refunds, the CMA has turned to its consumer law powers, with the practices of package holiday companies coming under particular focus.

As part of this work, the CMA has now secured commitments from a number of travel companies:

• On 9 June 2020, the CMA announced that Vacation Rentals, an operator of online accommodation websites, has offered undertakings to provide full refunds to customers who were unable to fulfil bookings due to lockdown restrictions.
• On 3 July 2020, the CMA announced undertakings received from Sykes Cottages in relation to bookings prevented from going ahead due to government restrictions related to the COVID-19 pandemic.
• On 16 September 2020, the CMA announced that TUI UK had committed that customers awaiting refunds for holidays that were cancelled due to the COVID-19 pandemic would receive them by the end of the month.

Alongside its work in relation to package holidays, the CMA has also recently taken action in relation to wedding services.  For further information see the September 2020 edition of our newsletter.

For a summary of the UK consumer law regime, as well regimes in other jurisdictions around the word, see the International Comparative Legal Guide to Consumer Protection Laws and Regulations 2020.

With thanks to Victoria Beswick of Ashurst for her contribution.