The CMA is advising over 100 wedding and event venues that requiring large deposits and cancellation charges could breach consumer law.
The Competition and Markets Authority’s (CMA) advice reminds the businesses – which provide venues for a range of events including wedding receptions, parties and anniversaries – of their obligations under consumer protection law, and recommends that they review and, where necessary, change their terms.
With costs for hiring venues often running into thousands of pounds, potentially unfair cancellation terms can result in considerable loss to consumers, particularly when they have to pay significant sums up-front which they lose if they have to cancel or change their plans.
The letters inform the businesses of when their terms are more likely to be fair under consumer protection law, including the following:
- a deposit is just to reserve the goods/services and is no more than a small percentage of the total price
- advance payments reflect the business’ expenses, and leave customers with a reasonable amount still to pay on completion
- customers do not lose large advance payments if they cancel, in all circumstances
- businesses set sliding scales of cancellation charges so they cover their likely losses directly from the cancellation
The CMA has sent the letters on behalf of the Consumer Protection Partnership (CPP), which has been considering the use of advance payment and cancellation terms by businesses in their consumer contracts.
Nisha Arora, CMA Senior Director, Consumer, said:
Planning a wedding or any large event can be stressful. Consumers are particularly vulnerable when they are focusing on preparing for a special event and have paid significant sums up-front. Businesses need to treat their customers fairly and should not require unjustifiable, non-refundable deposits or impose unreasonable cancellation charges, which could mean customers lose a significant amount of money if they change their mind about the venue or have to call off the event.
Clear and fair terms benefit consumers and businesses, help to prevent disputes and provide protection should things go wrong. Unfair terms, even when a contract is signed, are not legally binding and we encourage any businesses which use advance payments and cancellation charges to review their terms to ensure they comply with consumer protection law.
We have worked closely with Trading Standards Services and consumer advice bodies to help businesses improve their practices and ensure they comply with consumer protection law. Many businesses in this sector comply with consumer protection law and engage in good business practices, but we urge others to raise their standards. Businesses that use unfair terms risk enforcement action.
As the first item in a suite of planned compliance materials, the CMA has produced an at-a-glance guide for businesses to help them understand the things to look out for and tips on setting advance payment and cancellation terms that are more likely to be fair.
Leon Livermore, Chartered Trading Standards Institute Chief Executive, said:
Getting married should be one of the happiest and most exciting days of a couple’s life, but sadly it doesn’t always go to plan.
If a wedding has to be cancelled or plans have to be changed, couples could face losing out on considerable amounts of money after putting hefty deposits down to secure their dream venue or location.
When you are trying to plan the perfect day, it is often easy to overlook certain contractual details during the planning stages but consumers need to be cautious before entering into a contract and always be aware of any costly cancellation charges or non-refundable deposits.
Trading Standards Services advise businesses to ensure their practices comply with consumer protection law, those that do not risk enforcement action.
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. For CMA updates, follow us on Twitter @CMAgovuk, Flickr and LinkedIn.
- The CMA has not opened a formal investigation into wedding and event venue providers or made a finding on whether providers’ terms could be unfair. The CMA or Trading Standards Services may take enforcement action against businesses if there is evidence that they are using unfair terms. Unfair terms are not legally binding on consumers, who can challenge them in court. Only a court can determine if a term is unfair.
- The Consumer Protection Partnership (CPP) was formed in April 2012 as part of the reform of the UK consumer landscape. It brings together key partners within the landscape to jointly identify and prioritise areas where there is greatest consumer harm, and to agree and co-ordinate collective action to tackle such detriment, making use of all available tools at the disposal if each member. Members include the CMA, the Department for Business, Innovation and Skills, the Chartered Trading Standards Institute, National Trading Standards Board, Trading Standards Scotland, Citizens Advice and Citizens Advice Scotland, Convention of Scottish Local Authorities in Scotland, Society of Chief Officers of Trading Standards in Scotland, the Department for Enterprise, Trade and Investment Northern Ireland, Consumer Council for Northern Ireland and the Financial Conduct Authority.
- The CPP asked the CMA, with its lead role on unfair terms law, to lead a Working Group of consumer enforcement and advice partners to consider the use of advance payment and cancellation terms in business to consumer contracts, and their potential to breach consumer protection law and cause consumer harm, and co-ordinate an appropriate response.
- In 2012, more than 260,000 couples got married in England and Wales, with a further 7,000 civil partnerships.
- At-a-glance guides for consumers and businesses.
- The CPP’s priorities report 2015.
- The CMA’s guidance on unfair terms.
- Enquiries should be directed to Simon Belgard (020 3738 6472, email@example.com).