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Everything’s canceled. Now what?

The COVID-19 pandemic upended the daily rhythms for hundreds of millions of consumers, seemingly overnight. Airlines cancelled more than 90 percent of their flights. Gyms and health clubs closed en masse. Tens of thousands of concerts, Broadway shows, and sporting events have been cancelled or postponed indefinitely. What do all these businesses have in common?

They all take money from consumers in advance for services (e.g., flight, concerts, yoga classes) to be provided at some point in the future. For consumers, this meant that they have hundreds or even thousands of dollars tied up for services that cannot be provided due to COVID-related lockdowns.

While many businesses have done the right thing and refunded consumers, many have not. For example, many airlines have made obtaining refunds for canceled flights difficult even though Department of Transportation regulations require prompt refunds in the event a flight is cancelled. Big ticketing companies like Ticketmaster have given ticket-holders mixed messages on whether and how they can obtain refunds. And many gyms continue to collect membership fees even though they are closed to the public.

“There is no question that businesses are struggling with unprecedented difficulties due to the COVID-19 pandemic,” said John Breyault, NCL vice president of public policy, telecommunications, and fraud. “The airlines that are unable to fly still must maintain their airplanes and pay their employees. Ticketing companies facing canceled events are often at the mercy of promoters, artists, and sports leagues. But the needs of these businesses must be weighed against the needs of consumers, tens of millions of whom are newly jobless and struggling to make ends meet.”

It is for this reason that NCL has been actively pressuring airlines and ticketing companies to promptly provide consumers with full refunds for cancelled and postponed flights and live events. NCL experts have contributed to dozens of newspaper, television, and radio interviews raising awareness about this problem and communicating the outrage they are hearing daily
from consumers.

“What consumers are being asked to do, essentially, is give airlines, ticketing giants, and other businesses long-term no-interest loans with no expectation for when the service they paid for will be provided,” said Breyault. “At a time when millions of families are wondering where the next mortgage or rent payment is going to come from, we can’t let unscrupulous businesses get away with that.”

In addition to raising alarm in the press, NCL has endorsed consumer protection legislation like the Cash Refunds for Coronavirus Cancellations Act of 2020. That bill, proposed by consumer champions like Senators Ed Markey, Richard Blumenthal, and Elizabeth Warren, would require airlines to refund the more than $10 billion on consumers’ money they are holding on to from cancelled flight reservations. NCL is also a long-time supporter of the Better Oversight of Secondary Sales and Accountability in Concert Ticketing Act of 2019 (BOSS ACT). That bill, introduced by Congressmen Bill Pascrell and Frank Pallone and Senator Blumenthal would require that any refunds provided for cancelled or postponed events include all ancillary fees paid.

With the return to a pre-COVID “normal” still far away, and new outbreaks expected in the fall, it is likely that consumers will continue to encounter difficulties receiving refunds for some time. NCL will continue to be on the front lines to make sure that consumers are not left holding the bag when big businesses cannot hold up their end of the bargain.

Price gouging a threat to consumers in new economy

In past natural and man-made disasters, whether in the aftermath of Hurricane Katrina or the 2008-09 financial crisis, opportunistic bad actors have sought to squeeze every last penny from desperate consumers. Unfortunately, the COVID-19 crisis seems to be a little different in this respect.

In the earliest days of pandemic panic, reports of overpriced goods were widespread; products were flying off of shelves, and those that remained were often dramatically marked up. NCL learned of $10 milk, $100+ dollar masks, and outrageous prices on toilet paper. Two Tennessee brothers who stockpiled 17,700 bottles of hand sanitizer with the intent to sell them at a mark-
up online earned instant national notoriety.

“Like moths to the flame, profiteers cannot resist the allure of easy money. In this time of national emergency, it should perhaps come as little surprise that those who wish to make a quick buck off the desperation of consumers are finding few obstacles in their way,” said NCL Executive Director Sally Greenberg.

This spring, price gouging proved to be an immediate threat to consumers across the nation, as unscrupulous sellers increased pricing online and in-person of essentials ranging from personal protective equipment, hand sanitizer, disinfectant products, and even toilet paper and paper towels.

According to the National Law Review, “in normal times, there would be nothing problematic about a seller’s unilateral decision to increase its prices in response to higher consumer demand. However, with emergency declarations in most—if not all—states, such price increases may lead to hefty civil fines and even imprisonment under state laws prohibiting price gouging.”

Indeed, price gouging in times of crisis is illegal in most states. For example, Maryland’s anti-gouging statute prohibits raising the price of many consumer goods and services that increase the seller’s profit by more than 10 percent while the COVID-19 emergency, declared by Governor Larry Hogan, is in effect. California has a similar statute, punishable by up to a year in jail and a $10,000 fine.

“While state laws are important, enforcement alone won’t solve this problem,” said Greenberg. “Reputable businesses must also play their part to keep price gouging off their shelves. We are encouraged when we see sellers committing to stomping out price gouging, such as Amazon’s announcement in April of a ‘zero tolerance’ policy against it.”

In practice, Amazon’s policy means the company is working to remove price gougers from its marketplace, forwarding reports of price gouging to law enforcement, and making it clear to their sellers that price gouging is not allowed. Amazon has removed more than half a million products and suspended thousands of seller accounts in the United States since its commitment to stopping price gougers in its ecommerce platform.

Others are fighting against gouging in different ways. In May, in response to more than 500 complaints from residents about price gouging on essential goods, the Los Angeles County Department of Consumer and Business Affairs announced the launch of a mobile app to make it easier to report cases of price gouging and phony COVID-19 remedies.

“The overwhelming majority of sellers on sites like Amazon, eBay, and other online marketplaces are honest,” said Greenberg. “But these e-commerce marketplaces are where millions of consumers are going to find much-needed products. Particularly for consumers who are at high risk, these online services can be a lifeline, enabling them to stay home, avoid going out into public, and decreasing their chances of contracting the virus. We call on retailers to do the right thing during this terrible pandemic.”