In recent news a passenger was forcibly removed from an overbooked United Airlines flight in order to make space for four employees from a partner airline. The passenger, a doctor, had refused to give up his seat citing his need to return home to attend to his patients. The CEO of United Airlines has since apologised for the incident and promised a “thorough review of the airline’s practices”.
Overbooking is a practice most experienced by the consumer in the travel industry where flights are often overbooked in case passengers cancel. This is a travel industry convention where service providers overbook seating by a specific margin in order to ensure that every seat is filled so as to receive maximum return on their investment. The effect of this is that every now and then, all passengers arrive for the scheduled travel and the supplier is forced to turn passengers away due to a lack of seating.
The question the consumer is then left with is, what right of recourse do they have?
In South African law, overbooking and overselling is governed by Section 47 of the Consumer Protection Act (CPA):
“…a supplier must not accept payment or other consideration for any goods or services if the supplier –
has no reasonable basis to assert an intention to supply those goods or provide those services; or
intends to supply goods or services that are materially different from the goods or services in respect of which the payment or consideration was accepted.”
What this means is that under the CPA, suppliers are not allowed to sell something which does not exist and accepting payment for this are unlawful.
If a supplier has failed to supply a consumer with the promised goods or services due to a shortage in stock or capacity to supply the goods or services, the consumer must be reimbursed the monies they paid plus interest at the prescribed rate (10.5% at present) as well as receive compensation from the supplier for any costs directly related to the service provider’s breach of contract. These costs can only be those that flow directly or naturally from the breach. An example of this would be a consumer having to book a hotel in order to catch a flight the next day.
If the shortage of stock, for example flight seats, is due to circumstances beyond the supplier’s control and reasonable steps were taken by the supplier to inform the consumer of the circumstances, the supplier is only liable to refund (with interest) the consumer but not to compensate for directly incidental costs.
A defence that can be raised by the supplier is that they offered to find another person to supply the consumer with comparable or sufficiently similar goods or services to satisfy the consumer’s request and the consumer either accepted the offer or rejected it unreasonably.
Suppliers, whether big or small businesses, need to remain aware that they are under a legal obligation to ensure that they can provide their consumers with the goods or services as advertised by them.
ABOUT THE AUTHOR
Charlene Botha is currently a SEESA Consumer Protection and POPI Legal Advisor. Prior to joining SEESA, she practised as a Civil Litigation Attorney.