Thursday 6 March 2003 00:00 Office of Fair Trading (National)

VIRGIN HOLIDAYS AGREES FAIRER CONTRACT TERMS

21/03

6 March 2003

FAIRER CONTRACTS FROM VIRGIN HOLIDAYS

Virgin Holidays Ltd have agreed to change their contract terms to give consumers a fairer deal, following action by the OFT. Over 300,000 passengers travel with Virgin Holidays each year.

The OFT was concerned that some of Virgin Holidays'' booking conditions were potentially unfair under the Unfair Terms in Consumer Contracts Regulations 1999. In particular, a number were unfair as they were inconsistent with certain consumer rights under the Package Travel, Package Holidays and Package Tours Regulations 1992. The terms revised include those dealing with cancellation and transfer rights, rights to compensation, and surcharges.

John Vickers, Director General of Fair Trading, said: "We welcome these changes to the terms of Virgin Holidays, the latest tour operator with whom OFT has secured fairer deals for holidaymakers. We will continue to negotiate with other companies to ensure that consumers'' rights are protected."

Details of the contract terms which Virgin Holidays has agreed to change are set out in the following annexe.

ANNEXE TO PRESS NOTICE 21/03 The OFT had concerns about Virgin Holidays Ltd''s terms that:

• Allowed the imposition of a surcharge if certain costs rose, namely transportation costs including the cost of fuel, dues, taxes or fees chargeable for services such as landing taxes, or for exchange rate fluctuations without entitling the consumer to a reduction if the same costs fell. The term also failed to specify that the PTRs require that no increase should be made within the 30 days before departure. Change - the term allowing surcharges has been deleted.

• Excluded payment of compensation for significant changes to a holiday or cancellation of the booking by the company before departure above a set scale, even if a consumer could prove a greater loss. Change - the contract now states that the compensation levels payable are the minimum levels payable.

• Offered compensation only for specified changes defined as ''material'', which by implication excluded liability for other changes which may have been considered material in some circumstances. Change-the term now states that the list of material changes are examples only.

• Excluded liability for changes or cancellations to advertised facilities, amenities or entertainment. Change-the term now provides that the company will notify the consumer of any changes to the brochure particulars prior to confirmation of the booking.

• Restricted consumers'' rights where the company made a material change to the holiday after departure. The PTRs set out consumers'' rights in the event of such circumstances. Change-the restriction has been deleted.

• Did not make clear the consumer''s options in the event of cancellation or a material change to the booking by the company before departure. Change-revised to state that the consumer may choose a substitute package of equivalent or superior quality, if available, or take a substitute package of lower quality, if available, and recover the difference in value from the company, or receive a full refund.

• Stipulated that any changes to the booking with 56 days of departure could be treated by the company as a cancellation, in which case cancellation charges would apply. This conflicts with Regulation 10 of the PTRs which permits consumers who are prevented from travelling to transfer their booking to another person provided that reasonable notice is given and that they or the transferee pay the costs arising from the transfer. Change-revised to give effect to the Regulation 10 right.

• Allowed the company to cancel the holiday, retain the deposit and charge a cancellation charge if the consumer failed to pay the balance of the holiday by the due date. The term also gave the company discretion as to the exact date of cancellation, giving them control over the level of cancellation charges levied. Change-the term now states that if the balance of the holiday is not paid by the due date, the booking will be cancelled and the consumer will forfeit the deposit only.

• Allowed the company to exclude liability for errors on the confirmation invoice and which stated that the company''s responsibility was to provide the consumer with the holiday confirmed on the invoice. The OFT''s view is that the company should accept responsibility for errors on the confirmation invoice if informed by the consumer in reasonable time. Change-the term now advises the consumer to contact the company immediately in the event of any discrepancy on the confirmation invoice. The wording excluding the company''s liability for errors has been deleted.

• Contained a declaration that the consumer had read and accepted the booking conditions, irrespective of whether they actually had. The term sought to bind consumers to the terms whether or not they had any real awareness of them. Change-this term has been deleted.

• Denied liability for any complaint received more than 28 days after the consumer''s return from holiday. Change-the contract now states that complaints should be made in the resort and within a reasonable time on return, and that failure to do so may deprive the company of the opportunity to investigate and put the right the complaint, which may in return affect the consumer''s rights.

• Stated that the contract was subject to the jurisdiction of the English courts. Change-revised to state that the contract is subject to the jurisdiction of the English courts unless the consumer chooses the jurisdiction of the Scottish or Northern Irish courts.

NOTES 1. The Unfair Terms in Consumer Contracts Regulations (UTCCRs) came into force on 1 October 1999 and replaced the 1994 Regulations. The regulations implement an EC Directive (EC Directive 93/13) in the UK. UTCCRs apply to standard contract terms used with consumers in contracts made after 1 July 1995. The Regulations say that a consumer is not bound by a standard term in a contract with a seller or supplier if that term is unfair. They also give the OFT and other Qualifying Bodies powers to stop the use of unfair standard terms, if necessary by obtaining a court injunction. Ultimately only a court can decide whether a term is unfair.

1. The Package Travel, Package Holidays and Package Tours Regulations 1992 (PTRs) implement an EC directive (90/314) on the same subject. The PTRs control the sale and performance of packages sold or offered for sale in the UK. They set out what information must be given to the consumer before the contract is concluded (including information to be in brochures) and information that must be given to the consumer before the package starts. They lay down terms that must be included in the contract and prescribe the circumstances in which price revisions may be made. They also set out the steps that the tour operator must take where there is, before departure, a significant alteration to an essential term of the contract and set out the steps to be taken where, after departure, a significant proportion of the services contracted for cannot be provided. They also entitle the consumer to transfer the booking to another in certain circumstances. They provide that the tour operator is liable to the consumer for the proper performance of the obligations under the contract, irrespective of whether such obligations are to be provided by the tour operator or other suppliers of services. They also provide that the tour operator/retailer should be able to provide sufficient evidence of security for the refund of money paid and for the repatriation of the consumer in the event of insolvency.

2. In this press release the functions of the Director General of Fair Trading (DGFT) under the Regulations are for simplicity described as the functions of ''the OFT''. The Enterprise Act will replace the office of the DGFT with the OFT, to which will be transferred the DGFT''s functions.

http://www.oft.gov.uk

PUBLIC enquiries: 0845 7224499 enquiries@oft.gov.uk OFT reports and consumer information leaflets are available free from: OFT, PO Box 366, Hayes UB3 1XB 0870 6060321 oft@eclogistics.co.uk

This may be Virgins response but it appears not to have influenced their custom and practice - see the links to the Almond Casurina and also the thread about virgin customer service - special offers con.