Consumer NZ lays complaint against Airbnb and Bachcare over cancellation policies

Tuesday, 24 November 2020

Consumer NZ has lodged a complaint with the Commerce Commission over what it calls “unfair” cancellation fees on accommodation booking sites Airbnb and Bachcare.

Chief executive Jon Duffy said the booking sites’ cancellation policies had resulted in some customers being hundreds of dollars out of pocket.

Complaints to Consumer NZ about the sites had risen in number since the last Covid-19 lockdown in August, Duffy said.

“Consumers who had booked accommodation but couldn’t travel because of the lockdown told us they’d been denied a full refund,” Duffy said.

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Consumer NZ had laid a formal complaint against Airbnb and Bachcare over their cancellation policies.

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“Even though they couldn’t use the accommodation, through no fault of their own, they were informed they wouldn’t get their money back. That’s plainly unfair.”

A Commerce Commission spokesman said it had received a total of 60 complaints about Airbnb or Bachacare cancellations or refunds since November 24 last year.

Of these complaints, 50 were about Airbnb and 10 about Bachcare.

Consumer NZ reviewed the booking sites’ cancellation policies and believed they risked breaching the Fair Trading Act, which bans unfair terms in consumer contracts.

According to the cancellation policies, Bachcare and Airbnb customers could face steep fees if they needed to cancel, in some cases forfeiting the entire amount they had paid.

Duffy said Airbnb allowed hosts listing on its site to use cancellation policies that could result in customers losing 50 to 100 per cent of the accommodation fee, even if they gave reasonable notice.

In contrast, if an Airbnb host wanted to cancel a booking, the most they could be charged by Airbnb was $145.

Jon Duffy, Consumer NZ chief executive, says the cancellation policies of Bachcare and Airbnb are unfair for consumers.

Bachcare’s standard terms were even harsher, he said.

Its cancellation policy stated the customer would lose all accommodation fees and the service fee, even if they cancelled 60 days before the start of their stay.

Duffy said the charges were excessive.

“If an accommodation provider imposes a cancellation fee, it can’t just charge whatever it wants,” he said.

“Companies must have a legitimate basis for their fees and take into account the fact the property could be relet to another customer. It’s hard to argue the fees being charged to Airbnb and Bachcare customers are in any way justified.”

In its complaint, Consumer NZ asked the commission to seek a court declaration that the cancellation terms were unfair.

Any term the court deemed unfair could not be enforced by the trader, he said.

Duffy advised consumers who believed they had been charged an unfair cancellation fee to make a complaint to the commission.

Derek Nolan, head of public policy for Airbnb in New Zealand and Australia said the cancellation policies were designed to balance the needs of hosts and guests.

“Hosts are also actively encouraged to use flexible cancellation policies and our platform makes it easy for guests to find stays with cancellation policies best suited to them,” Nolan said.

Nolan said a “significant number” of Airbnb’s hosts offered flexible and moderate cancellation policies.

“We take our obligations under the Fair Trading Act very seriously and work to ensure the balance between property owners and guests is fair. Since the unprecedented events of Covid-19 we’ve issued over 5000 refunds, equivalent to almost 15 per cent of our annual bookings.”

A Bachcare spokesman said it would consider the Consumer NZ’s “feedback” as part of its regular reviews of its terms and conditions.

When Covid-19 strick the company was “overwhelmed” dealing with a “tidal wave of cancellations”, he said.

“During the August lockdown, all eligible Bachcare bookings received a credit. We do what we can to accommodate refunds for guests with extenuating circumstances.”