As we mark the one year anniversary since the UK Prime Minister first told the nation to “stay at home” here is our round-up of the five key take-away points for businesses in the COVID related consumer protection enforcement arena over the past year.
The CMA launched its COVID-19 taskforce as the pandemic took effect in the UK, designed “to identify, monitor and respond to competition and consumer problems arising from coronavirus and the measures taken to contain it”. Here are our top five lessons for businesses from the activities seen over the last year:
Cancellations and refunds have been the hot-topic of the year
The CMA’s latest taskforce update (15 March 2021) summarises the coronavirus-related complaints it has received, amounting to 148,000 emails and online form submissions regarding coronavirus-related issues between 10 March 2020 and 28 February 2021 (the number of complaints having declined to around 5,000 in February 2021 compared with around 30,000 in May 2020. The most significant coronavirus-related consumer issue has been practices in relation to cancellations and refunds.
There has been a narrow, sector specific focus
Rather than adopting a broad enforcement strategy, action over the past year has principally focused on three specific sectors: travel/holidays/airlines; nurseries and childcare provision; and weddings and private events. It is notable that these sectors have been targeted, despite being under significant and unprecedented commercial pressures caused by the pandemic. This sector-based approach is consistent with the CMA’s general modus operandi and we can expect this to continue as we navigate the return to some semblance of normality throughout the year.
Businesses can push-back
The CMA has, unsurprisingly, continued to take a very consumer friendly approach to interpretation of contractual obligations and the wider consumer law framework, frequently stretching the boundaries. The CMA is not the voice of the law, and businesses can push-back.
We have previously explored the general circumstances when it’s lawful to refuse refunds, together with a sector specific approach: when businesses in the travel sector can refuse refunds, how wedding companies can refuse refunds in light of COVID-19 and when nurseries can lawfully insist on payment and avoid providing refunds. All of this remains relevant for consumer-facing businesses today as we enter into the next phase for consumer-facing businesses, releasing from Lockdown 3.
Limited formal action taken
Whilst there has been a lot of talk, with the CMA publishing a number of press statements describing its actions in the travel, nursery and wedding sectors, undertakings with formalised commitments have only been obtained from a small number of businesses operating in the holiday lets and package holiday sectors. However, where commitments have been made but not adhered to, businesses do face the threat of court action.
The playing field is not always level
The relevant consumer law is not straightforward and there is real scope for different outcomes for each and every business. We see this play out across investigations, one example over the last year being in the package travel sector, with different commitments provided by different businesses. Having the right team and approach in the engagement with the CMA is therefore critical.
We are likely to see an increase in enforcement activities over the course of this year, whether COVID related or otherwise, particularly as the CMA’s Draft Annual Plan for 2021/22 notes that protecting consumers and driving recovery during and after the coronavirus pandemic is a specific focus this year.
If your business has been approached by the CMA or if you would like to discuss a consumer law issue, please do not hesitate to contact one of our specialists.