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Law360, London (October 23, 2020, 12:17 PM BST ) Virgin Holidays has promised to refund £203 million ($265 million) to customers whose holidays were canceled amid the COVID-19 outbreak after the U.K.'s consumer protection watchdog threatened to take the company to court.
The tour operator has agreed to pay all holidaymakers refunds for cancellations linked to COVID-19, the consumer protection watchdog has said. (AP Photo/Matt Dunham)
"If Virgin Holidays does not repay customers by these dates, the CMA is prepared to take the company to court," the regulator said.
Virgin has been deluged with requests for refunds — 53,000 since the beginning of March, the CMA said.
The CMA had demanded that Virgin commit to issuing refunds after being inundated with complaints about the company. Virgin told customers that they were entitled to a refund — but the money never turned up, the complaints said.
According to its agreement with Virgin Holidays, CMA said the tour operator has until Oct. 30 to repay any customers whose holidays were canceled before Sept. 1. It has until Nov. 20 to repay prospective holidaymakers whose vacations were canceled after Sept. 1.
Virgin Holidays will also ensure that people who are entitled to a refund for a holiday canceled on or after Nov. 1 will be paid within 14 days, the watchdog said.
The company has to give the CMA regular reports on the refund process so that the regulator can supervise its compliance.
"People whose holidays have been canceled due to coronavirus deserve a prompt and full refund," Andrea Coscelli, chief executive at the CMA, said. "Our action means that Virgin Holidays customers should receive all their money back without further delay."
A Virgin spokesperson said the company would have processed refunds with a value of £4.2 million by the end of the day.
"We are pleased to confirm that an outstanding 1,300 refunds with a value of £4.2 million will be processed by the end of Oct. 23, as planned and communicated to our customers," the spokeswoman said. "The unprecedented volume of refund requests we have received, combined with constraints on our teams and systems during the pandemic, created significant challenges in the processing of refunds."
The watchdog said it has also taken action against 100 other package holidays companies to remind them of their obligation to comply with consumer protection law when they deal with cancellations caused by COVID-19. It has already secured commitments from travel group TUI UK and other companies, the watchdog said.
The CMA warned in April that businesses must treat customers fairly over canceled holidays after a record rise in the number of complaints highlighting that many firms, particularly holiday companies, are pressing customers to accept vouchers instead of cash refunds.
Consumer law requires that a business should offer a full refund it it cancels a contract without providing any of the promised goods or services.
The travel industry has suffered serious blows in the wake of the pandemic, which prevented travelers across the world from taking holidays. Airlines have been hit particularly hard, with some falling into bankruptcy.
--Additional reporting by Joanne Faulkner. Editing by Ed Harris.
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