Cancelling a holiday booking? Your rights under the Consumer Protection Act

Cancelling a holiday booking? Your rights under the Consumer Protection Act
20 Nov 2017

With the holiday season looming, consumers are clamouring to secure last-minute accommodation for their new-year’s getaways and family vacations. In the past, consumers were at the mercy of the supplier – pressured to put down exorbitant deposits to secure dates months in advance, only to have to forfeit all that money because ‘life got in the way’ and cancellation of the booking became the only option.

What follows below, however, is an explanation as to why suppliers can no longer get away with the blanket ‘no refunds’ cancellation policy once widely used and abused.

The Consumer Protection Act, No. 68 of 2008 (‘the Act’) was enacted to establish consumer rights and provide accessible redress for consumers who are subjected to exploitation in the marketplace. Among other things, this Act regulates the cancellation of advanced bookings by consumers.

According to Section 17 of the Act, a supplier is entitled to require a consumer to pay a reasonable deposit in advance for committing to a reservation at some other date. In addition, this section allows a consumer to cancel such booking at any stage, subject to the supplier being entitled to charge a reasonable cancellation fee.

In this way, the Act seeks to find a balance between the rights of the consumer and that of the supplier. Just as a supplier would be unlikely to prove that it is reasonable for a consumer to pay the full accommodation price upfront, so may it be unlikely for a consumer to cancel a reservation on the day without any monetary consequence.

The Act sets out the criteria for determining a reasonable cancellation penalty in the event that a consumer cancels an advanced booking. Suppliers are therefore obliged to take the particular circumstances of a cancellation into account in determining the reasonableness of their cancellation penalty.

These factors include the nature of the goods or services that were reserved, the length of notice of cancellation, the reasonable potential for the supplier, acting diligently, to find an alternative consumer between the time of receiving the cancellation notice and the reserved date, and finally, the general practice of the relevant industry.

Bearing these factors in mind, it would seem reasonable that where a supplier manages to find an alternative consumer to fill a cancelled booking, the consumer cancelling the booking should be refunded in full in order to prevent the supplier from receiving an advantage at the consumer’s expense, by receiving the same fee twice for the same booking.

Consumers are able to find peace in the further protection afforded by the Act which stipulates that a supplier may not impose a cancellation penalty if the consumer is unable to honour the booking due to death or hospitalisation of the person for whose benefit the booking was made.

Whilst the practice endorsed by individual establishments differs to some extent, a sliding scale cancellation policy seems to be a widely used method of establishing reasonableness. In terms of this policy, the cancellation fee increases as the cancellation date creeps closer to the date of the reservation.

This would generally be considered reasonable in the circumstances where it is accepted that it is more difficult for a supplier to find an alternative consumer in a shorter period of time.

Nevertheless, it should be remembered that the onus remains on the supplier to validate its chosen cancellation penalty. The weight of this onus will however vary according to the circumstance. For example, a supplier of accommodation during the festive season, is likely to have a waiting list of potential replacement consumers. In such a case, the supplier should, in theory, only be permitted to charge an administrative fee based on additional time/resources spent as a result of the cancellation.

Although the Act does not entirely solve the tension surrounding the cancellation of bookings, it is trite that both consumers and suppliers would be wise to familiarise themselves with the consequences that flow from it. Suppliers should be wary of the fact they may be required to show proportionality between their cancellation fee and the actual loss suffered by their business, and consumers should remain alert to their right to challenge a seemingly unreasonable cancellation policy.

Carl Meyer
Carl Meyer

Carl Meyer is an associate at Eversheds Sutherland and specialises in corporate commercial advisory, commercial contract drafting, mergers & acquisitions as well as commercial litigation & dispute management.

Send a legal query to Carl Meyer
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