The competition watchdog has urged travel firms to make their terms and conditions clearer for customers who need to cancel their bookings.
The Competition and Markets Authority’s (CMA) Small Print, Big Difference campaign warns businesses that they must act fairly towards customers who need to cancel their plans in events such as illness or death in the family.
UK consumers spent an estimated £81 billion on holidays at home and abroad in the 12 months to April last year.
Under consumer law, firms may be entitled to ask customers to pay a cancellation fee to cover their losses, but the amount they keep must be in proportion to what they are losing.
Cancellation terms that do not follow this approach are likely to be unfair and businesses cannot rely on them to resolve claims or disputes with customers.
A survey of 2,000 people for the CMA found that 89% of people believe they should get all or most of their money back if they cancel and the business re-sells their booking.
Some 85% think it is unfair if they have to pay part of the cost of a booking when they cancel and 66% say that travel and holiday businesses do not always make it as easy to cancel a booking as they should.
Of those with experience of cancelling a booking, one in five felt they had been treated unfairly.
Examples of unfair terms can include those which allow a business to take a large, upfront deposit and refuse to refund any of the customer’s money if they cancel, regardless of the amount the business is losing or the reason for the customer cancelling.
Paul Latham, the CMA’s director of strategy and communications, said: “Nobody wants to cancel a trip or holiday, but if you have to, it’s important that you are treated fairly and don’t lose out more than is absolutely necessary.
“Fair terms are a legal requirement as well as helping reassure customers that they’re dealing with a company they can trust. Unfair terms can’t be enforced so they also won’t protect businesses if challenged. The small print really can make a big difference.”
Association of British Travel Agents (ABTA) chief executive Mark Tanzer said: “There are circumstances when a cancellation charge may apply, but it must genuinely reflect the costs of cancellations faced by the travel company. We always encourage people to take out travel insurance as soon as they book their holiday, which should protect them from the costs for most cancellations.”