Impact of COVID-19 on certain industries
The onset of the COVID-19 pandemic has had many implications for businesses, especially those in the travel, tourism and entertainment industries. There was an international ban on travelling and social gatherings, and as a result businesses could not deliver services paid for by consumers. These included airfreight, hotels and music concerts.
As a result, businesses had to think outside of the box to continue operating and prevent the businesses from shutting down permanently.
Vouchers instead of refunds
Airlines, travel agencies and hotel groups issued consumers with travel vouchers, which could be redeemed, once the travel ban was lifted and these businesses could operate once again. The travel vouchers were issued instead of refunds. These vouchers differed in their terms and conditions, flexibility, and validity.
Many consumers were unhappy with this practice, and the question arose whether it is permitted and falls within the Consumer Protection Act (CPA).
Several matters were also referred to the Consumer Goods and Services Ombudsman (CGSO) for adjudication.
While it was the CGSO’s view that consumers had a right to full refunds if a postponement was possible, they urged consumers to take this option rather than request a refund to minimise the impact on suppliers, who were also not at fault. They also encourage suppliers to treat each case on its merits and develop incentives to encourage consumers to accept postponements (or vouchers) where possible.
However, according to the CPA, if a consumer is entitled to a refund, the consumer may choose the manner of refund. This means that while refunds, vouchers, or credits are not illegal, if the consumer demands a cash refund, the supplier must give it to them. Also, in section 56, the consumer (not the supplier) can choose the refund, replacement or repair.
Validity of Vouchers
Section 63 of the CPA regulates the validity period of vouchers.
When suppliers issue vouchers, it is important to note that the voucher must be valid for a period of three (3) years from the date on which the voucher was issued, alternatively, the date on which the total value of the voucher has been redeemed, whichever comes first.
Summary
In conclusion, a business can offer a consumer a voucher instead of cash or monetary refunds. Still, a consumer may refuse and can insist on a cash refund if they are entitled to cancel the transaction.
Important note
Although the article focused on the travel, tourism and entertainment industries during the COVID‑19 period, it applies to all businesses that want to issue vouchers instead of refunds, and the same principles will apply.
The validity period also applies to any vouchers purchased by consumers from businesses.
Want to know more about Consumer refunds? Contact your nearest SEESA Consumer Protection & POPI Legal Advisor. Alternatively, leave your contact details on our website, and a SEESA representative will contact you.
About The Author:
Rouchelle de Beer started her career at SEESA one year ago. She is currently a Consumer Protection & POPI Legal Advisor at the SEESA Pretoria branch. She obtained her LLB degree from UNISA and is an admitted attorney.
Resources:
- Sections 56 & 63 of the Consumer Protection Act 68 of 2008;
- https://www.thencc.gov.za – Implications of Section 63 of the Consumer Protection Act for Business.