By @Rachel S |
The Story
Online holiday package provider Lastminute.com came under further fire from the Competitions and Market Authority (CMA) in the past week. Lastminute.com has been warned that legal action will ensue if they do not refund 2,600 holiday makers over £1 million worth of cancelled holidays within seven days. This comes after the holiday package provider was originally ordered to repay 9,000 holiday makers more than £7 million worth of refunds by the 31 January 2021, yet over one million pounds’ worth of these refunds remains outstanding (Gov.uk). The company has also been accused of redirecting customer attempts to reclaim their refunds – which is a breach of the Package Travel Regulations.
Legally if a package holiday is cancelled by the provider then a refund should be issued within 14 days. CMA Chief Executive Andrea Coscelli commented that "Online travel agents have a legal responsibility to provide prompt refunds to customers whose holidays have been cancelled due to coronavirus - irrespective of whether the agent received refunds from airlines and accommodation providers” (Financial Times)
What It Means For Businesses And Law Firms
While such regulatory action is important, it is feared that package holiday companies and other travel-dependent companies will be pushed to the brink of collapse with continued holiday cancellations and travel restrictions. This week saw airline Jet2 raise £422 million in equity after suspending all flights and holidays until 14 April 2021.
The action will also likely serve a stark reminder to other holiday package providers of the need for prompt action. For example, among 100 other companies, Tui, Vacation Rentals, and Virgin Holidays were all also ordered by the CMA to repay customers last year.
Law firms could have advised Lastminute.com on proposing and drafting a detailed plan ensuring the pending refunds are paid within the seven day window. Law firms could also be involved in any continuing litigation. Moving forward, law firms could continue to advise on compliance and disclosure, and, considering the financial burden of refunds - any potential restructuring.
