Consumer rights: Government cancellation or postponement of events
On 13 March 2020, the Commonwealth Government announced its recommendation that all organised, non-essential gatherings of more than 500 people across Australia should be cancelled to halt the spread of COVID-19. Since then, these restrictions were extended to prohibit all non-essential gatherings and the State and Territory Governments have imposed restrictions on trading for non-essential services. In such circumstances, are service providers impacted by those restrictions required to provide a refund to consumers?
The ACCC released guidance relating to consumer rights and event cancellations in relation to COVID-19, which will be updated regularly by the ACCC as new guidance is available.
The Australian Consumer Law (ACL) provides consumer guarantees that apply if a person supplies, in trade or commerce, services to a consumer. Service providers or event organisers who supply events to consumers will be bound by these provisions. Relevantly, consumer guarantees include that services will be:
- rendered with due care and skill;
- reasonably fit for purpose; and
- supplied within a reasonable time when there is no agreed end date.
If a person who supplies services to consumers breaches any of these consumer guarantees, that person is required to provide consumers with a remedy under the ACL.
If an event is cancelled by the event organiser, then in most circumstances, a consumer will be entitled to a remedy under the ACL consumer guarantees, including a refund. However, if an event is cancelled as a result of the implementation of these new restrictions on large events, this may affect a consumer's rights under the ACL consumer guarantees, and consumers may not be entitled to a refund in these circumstances.
The ACL contains a provision that prevents a consumer from taking action for failure to comply with a consumer guarantee in respect of services, where that failure occurred because of an act, default or omission of any person other than the supplier (or an agent or employee of the supplier). This provision of the ACL applies to all consumer guarantees, other than the guarantee that services will be provided with due care and skill. In the present situation, the enactment of legislation or the making of an order by the Commonwealth or a State / Territory Government prohibiting large public events would likely fall within the scope of this provision, if it is the effect of this legislation or order, and not the event organiser, that caused the event to be cancelled.
Consumer guarantees do not apply where a consumer has had a change of mind. According to the ACCC's guidance, if a consumer decides not to attend an event due to concerns about COVID-19, this may be treated as a "change of mind". An event organiser would not be required to provide a remedy under the ACL consumer guarantees to consumers who decide not to attend an event. However, the ACCC is encouraging businesses to treat consumers fairly, including by offering refunds as a goodwill gesture where appropriate.
The ACL consumer guarantee provisions are just one relevant consideration, and there are other factors (such as terms and conditions and representations that may have been made about the provision of refunds) that should be taken into account in assessing whether a service provider is required to (or should) provide a refund to consumers for events cancelled or postponed in response to the Government restrictions.
Specific guidance has also been provided for telecommunication services, food delivery services and gym memberships.