'No Refunds Policy' - Viable?

ironclaw

Hi Folks,

Looking for some feedback on the concept of 'No Refunds' from both a business and consumer perspective. Its relatively common for the likes of hotels and hostels, even airlines, where no matter what, once you place the booking you cannot edit it or if you do, it incurs a large cost.

Our model is selling a booking slot for third party businesses e.g. We sell the time slot for Joe Bloggs Ltd and we take a percentage of the total. The rest is payable by the customer to Joe Bloggs when they arrive at their premises for their slot. Importantly, Joe Bloggs Ltd does not see any cash flow until the customer arrives as the percentage total taken would be our 'take'

We have two issues:

- If Joe Bloggs decides not to undertake the booking or has to cancel last minute e.g. Power is out, short staffed.

Our Proposed Solution: Joe Bloggs Ltd has to offer the customer an alternative date within one week. However its quite likely the customer will decline this. As we took the initial deposit, we're liable for the charge back. Our proposal is to issue the refund but charge Joe Bloggs a cancellation fee e.g. The deposit amount. Is this enforceable?

- The customer decides they don't want to go any more and wishes to cancel.

Our Proposed Solution: We are taking a 'hard line' of no refunds under any circumstances relating to the customer changing their mind. Our businesses would allocate staff and resources based on the customer showing up. With this in mind, are we provided any protection from charge backs if the terms of sale include a 'no refund' clause?

Would appreciate any and all inputs.

jimmii

Definitely charge JB if it's their fault. Would it be possibly to sell customers a ticket? Seen a few restaurants go down this route and then the same rules apply as a gig and it can only be refunded in case of cancellation by the venue.

pedroeibar1

You have several legal issues involved IMO. Much would depend on the terms of the contract you have with Joe Blogs Ltd. and on what you do/represent. Are you an agent or just an intermediary/broker? Could your role be construed as an agent?

If Joe Blogs cancels a booking he is in effect rescinding a contract so the grounds on which he can do that need to be clearly set out at the outset (short staffed probably would not be a valid excuse?) Otherwise he could be open to an action for breach of contract – even if the sums are small and no legal action happens, any adverse PR would destroy the business model. If your agreement with Joe covers a cancellation process (retaining a cancellation fee by charging him) you should be OK once the fee is commensurate with the work involved (make sure your agreement has an off-set clause for all sums due and their priority).

If the customer decides to cancel, you are up against Consumer protection and the practices of credit card companies.

In your position I would take legal advice.

ironclaw

Thank you for the input folks.

@jimmii, we are in effect selling a 'ticket' but we are only taking a percentage of the face value e.g. This purchase for €100 entitles you and 10 mates to do XYZ at Joe Bloggs Ltd. You pay us €10 and the remaining €90 when you arrive.

@pedroeibar1, good point, I hadn't thought of this. Legally, I don't know where we would fall. We are certainty not the only revenue stream for the businesses, they can take bookings themselves. We merely act as a middle man, which I presume would fall under the loose definition of broker? Our contract with the business, in plain and non legal terms, would be along the lines of 'We sell your time slots and unless you tell us otherwise, you have a duty to fulfill them' The only grounds for a venue not paying for a reservation they cancelled would be 'Acts of God' or if we messed up e.g. Overbooked the venue, double booking.

As regards consumers, I'll need to seek further advice. I know for a fact many of the hotel sites and hostels operate on the principal of 'no cancellations' once you have paid. I just need to see how enforceable this is and how credit card companies react to such terms. In all instances, it will be clearly communicated to the customer but that doesn't matter much if a charge back is made and can't be fought!

ted1

ironclaw wrote: »

Hi Folks,

Looking for some feedback on the concept of 'No Refunds' from both a business and consumer perspective. Its relatively common for the likes of hotels and hostels, even airlines, where no matter what, once you place the booking you cannot edit it or if you do, it incurs a large cost.

Our model is selling a booking slot for third party businesses e.g. We sell the time slot for Joe Bloggs Ltd and we take a percentage of the total. The rest is payable by the customer to Joe Bloggs when they arrive at their premises for their slot. Importantly, Joe Bloggs Ltd does not see any cash flow until the customer arrives as the percentage total taken would be our 'take'

We have two issues:

- If Joe Bloggs decides not to undertake the booking or has to cancel last minute e.g. Power is out, short staffed.

Our Proposed Solution: Joe Bloggs Ltd has to offer the customer an alternative date within one week. However its quite likely the customer will decline this. As we took the initial deposit, we're liable for the charge back. Our proposal is to issue the refund but charge Joe Bloggs a cancellation fee e.g. The deposit amount. Is this enforceable?

- The customer decides they don't want to go any more and wishes to cancel.

Our Proposed Solution: We are taking a 'hard line' of no refunds under any circumstances relating to the customer changing their mind. Our businesses would allocate staff and resources based on the customer showing up. With this in mind, are we provided any protection from charge backs if the terms of sale include a 'no refund' clause?

Would appreciate any and all inputs.

If your selling online then you need to really look up the laws with regards distance selling which allows for cooling off periods. You also need to consider if the customers contract is with you or Joe blogs

ironclaw

ted1 wrote: »

If your selling online then you need to really look up the laws with regards distance selling which allows for cooling off periods. You also need to consider if the customers contract is with you or Joe blogs

True, but as devils advocate, what is the legal defense of some hotel booking sites where if you ring back even within 10 mins (Say you got the booking date wrong) they have a very strict no refunds, changes etc policy? Or is it merely a case they are so large (or insured) that they are happy for people to conduct a charge back, hoping the terms of the site would be a deterrent for some?

I personally take the view that I'm happy to credit the booking up to a year or move the date if the venue can accommodate, but I don't believe a refund is deserved as the person elected to choose a venue, date and time, with a 'change of mind' not being a valid reason for physical product purchases, so why should it apply to a service? I'm very much customer orientated but I don't want a situation where people make a booking and then decide to pull out at the last minute especially if bookings are made far in advance e.g. A booking made this week will be on this months accounts, but if its for a date two months away, we can't withhold the funds until such time as the booking completes. I see cashflow issues there!

As regards the contract, as you rightly said I need to get legal advice and define it. From a high level:

- We have an agreement with Joe Bloggs (And other businesses) to sell their time.

- Joe Bloggs has an agreement with us that unless they tell us otherwise, any dates they elect as available, they will fulfill. They are liable for any costs associated with them cancelling the booking unless it's a true 'Act of God' e.g. Extreme weather, Fire etc.

- We advertise on behalf of Joe Bloggs, with the customer booking through us, however we do not actually provide the final service, we merely offer the means to book it.

The third point there is where I see it being 'grey' Who has the ultimate responsibility to the consumer. As we charged them first, its probably a good deal of weight on our shoulders, but then again, the contract with the suppliers stipulates they will fulfill all bookings. Of course, the customer doesn't care, they paid us so they onus is on us to give them a seamless experience and get the booking done. Hence why I feel we'll have two separate processes, consumers always deal with us, and the business need to bare the brunt if the business themselves are the source of the cancelation.

Graham

Distance selling directive has exceptions including:

Accommodation, transport, catering or leisure services supplied on a specific date or period

ironclaw

Thanks Graham!

Would anyone have any idea of the best bodies to approach for advice on this? I'd rather get the groundwork done and have specific questions for any legal partners I may engage with.

antoinolachtnai

Just read all the consumer law, or at the very least, all the citizens advice website material.

After that. IBEC or ISME might be some help if you are a member, but probably not. You are then into legal advice. The queries you have do not seem deeply technical, so you should be able to work it out yourself.

There are some broad exceptions in the cooling off legislation (a case of fine wine is mentioned as an example in the EU legislation as I recall) but it is hard to fit into these.