“In the last couple of weeks, we have had more than 100 complaints relating to cancellations and refunds. This is a complicated legal area and we wanted to provide guidance for both consumers and businesses that would help to reduce the confusion,” Commission Chair Anna Rawlings said.
Rawlings said that in the current circumstances, the Commerce Commission encourages businesses and consumers to treat each other “fairly, and to be patient and respectful while they work through challenges arising as a consequence of COVID-19”.
According to the Commisssion, the main factor that will determine a consumer’s rights or a business’ obligations will be the terms and conditions that were agreed to at the time of the booking or transaction - and some contracts will provide rights to a refund, while others may state that a credit will be provided, allowing consumers to rebook at a later date.
“If you had a right to a refund under the terms and conditions at the time you purchased the ticket or made the booking, then you should receive a refund,” Rawlings said.
“Businesses must not mislead consumers into thinking they are not entitled to a refund if they are entitled to a refund and they cannot lawfully develop a policy that contradicts a consumer’s contractual entitlement. If they do either of these things, then they risk breaching the Fair Trading Act,” Commissioner Rawlings warned.
“When consumers are looking at their contract terms and conditions, they should look for a clause that explains what happens when the contract is cancelled or when there are events beyond human control that make the contract impossible to perform without fault by either party.
“These are often called force majeure clauses or clauses that talk about frustration of the contract. Some contracts may even specifically reference pandemic.
The Commission’s guidance covers general legal principles and has a series of frequently asked questions in areas such as travel, events, weddings, subscriptions and memberships.
However, the Commission says circumstances can vary from contract to contract and it encourages businesses and consumers to discuss the situation with one another to work out a solution that best fits the circumstances of their relationship.
“These are very difficult times for both consumers and businesses and some of these contracts will involve considerable sums of money. As a consumer, where you have a choice of a refund or credit, you should consider what is the best option for you personally,” Commissioner Rawlings said.
“You may wish to support a local business by accepting a credit rather than a refund. However, you should also be aware that any credit is dependent on the business continuing to trade, so there may be a greater risk with a credit than a refund.”
The Commission announced it also has a range of other guidance available on the COVID-19 page on its website including advice on responsible lending for lenders and borrowers - with information for regulated businesses and tips on how to get the best out of broadband also available.