Legal intervention needed to protect interest of customers of wedding industry

New Delhi: The pandemic has exposed the unfair contract terms deployed by wedding businesses to deny refunds to consumers who were forced to cancel their bookings on account of Covid-19

New Delhi: The pandemic has exposed the unfair contract terms deployed by wedding businesses to deny refunds to consumers who were forced to cancel their bookings on account of Covid-19.

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The nationwide lockdown last year as well as the lockdowns and restrictions on large gatherings imposed by state governments during the second wave of the pandemic this year, have led to many families having to postpone the wedding and cancel their bookings. The subsequent refusal by venue owners to return their money, has led to considerable distress among consumers in different parts of the country.

The consumer complaints in this regard reveal several exploitative practices, requiring the intervention of the consumer protection regulator- -the Central Consumer Protection Authority- constituted under the Consumer Protection Act of 2019.

First and foremost, a booking amount should be a small percentage of the total charge for the venue. Instead, it is found that most of these wedding halls are collecting the entire amount in advance, several months before the wedding date. These are not small amounts and run into lakhs to rupees.

Second, they incorporate contract terms that are highly prejudicial to consumer interest. For example, they say that these booking deposits are non-refundable. Some say that the consumer forfeits the right to a refund in case of cancellation or even change of date! There are also clauses that impose a hefty cancellation charge. Some of them even give the businesses the right to cancel the booking and give the hall to someone else and also retain the advance paid by the consumer! In short, the contracts are heavily loaded against consumers and restrict their rights given under the Consumer Protection Act.

These arbitrary clauses are mostly not read out or explained to the consumer at the time of booking. But even if consumers are informed of these conditions, they have no option but to accept them, because it is impossible to find a venue that does not impose such discriminatory conditions.

Consumers can of course seek the help of the consumer courts to get back their money from venue owners, but given the large number of complaints that such denial of refunds have generated, this is a fit case for the Central Consumer Protection Authority to take up. In fact, there is an urgent need for the authority to quickly investigate into these cases, formulate a clear policy vis-à-vis refunds, declare all those unfair contract terms as illegal and unenforceable and also ensure that these contracts are in future fair to both parties.

The new Consumer Protection Act of 2019 recognises the need to protect consumers from unfair terms in consumer contracts and defines what constitutes an ‘unfair contract’. Accordingly, “Imposing on the consumer any unreasonable charge, obligation or condition which puts such consumer to disadvantage” is an unfair contract. Similarly, “Imposing any penalty on the consumer, for the breach of contract thereof which is wholly disproportionate to the loss occurred due to such breach to the other party to the contract” is an unfair contract and therefore a violation of the consumer’s right to a fair deal.

I must mention that last year, the Competition and Markets Authority (CMA) in the United Kingdom investigated into similar complaints of wedding businesses using unfair contracts to limit their liability in respect of refunds, following cancellation of bookings due to Covid-19. It then issued a ‘Guidance’ on the topic to ‘help consumers understand their rights and help businesses treat consumers fairly’.

Subsequently, in an open letter to the wedding sector on September 7, 2020, CMA explained what terms were unfair under the law and said such clauses in the contracts of wedding businesses were unenforceable. CMA also asked businesses to examine their contracts and ensure that they meet the requirements of law. “Where businesses do not comply with consumer law, they risk action by the CMA or any other enforcer under the consumer protection law, such as local authority trading standards services”, the letter said. CMA has also issued Guidance to businesses on how to write fair contracts and avoid unfair contract terms.

There is need for similar intervention here too, to protect consumer interest.