Preparing for the unexpected: Consumer compensation measures for catastrophic events


During the Covid-19 pandemic, many merchants unable to provide services due to health measures refused to reimburse consumers, preferring to issue deferred vouchers, extend the duration of subscriptions or, in the case of events, offer deferrals. Through the experience of the Covid-19 pandemic, this research aims to better understand the issues raised by the compensation measures offered by retailers during catastrophic events.

In focus groups, the majority of consumers reported that they had been able to obtain satisfactory compensation from retailers during the pandemic. However, they deplore having had to deal with interminable delays, a chronic lack of information on the part of companies and major communication difficulties. What's more, consumers report having lost money in a number of different scenarios, notably when they chose to cancel a purchase when the company was able to provide the service. Unequivocally, consumers want to have the option of obtaining a refund, even if they are sympathetic to companies experiencing difficulties.

Companies' purchasing terms and conditions with regard to refunds are sometimes unclear and vary from sector to sector. In particular, online platforms for the purchase of travel services or tickets tend to exclude their liability in the transaction and defer to the final service provider to determine the consumer's rights. Furthermore, some companies stipulate clauses that could hinder consumers' ability to be fully compensated in the event of a catastrophic event, notably by
allowing them to withhold fees from the amount remitted, offering insurance with exclusions, prohibiting consumers from transferring their right to access the service, or outright barring them from exercising certain legal remedies.

While Canadian law provides for the reimbursement of consumers when a service is impossible to perform, it nevertheless tends to favor the stability of contracts and the continued performance of a service, even if it has to be performed in a very different way. Consumer protection laws do offer the consumer cancellation mechanisms here and there, but these disparate provisions are fragmented according to jurisdiction and type of transaction, with no real overall regime. Furthermore, the law does not provide a solution for specific situations revealed in the wake of the Covid-19 pandemic, notably as regards the possibility for consumers to request cancellation of a service when they do not wish to benefit from it for legitimate reasons such as fears for their health. Unlike other countries around the world, Canada did not intervene much in contractual relations during the pandemic.

As a result of climate change, catastrophic events are likely to occur more frequently and with greater intensity in the future. Consequently, Option consommateurs recommends the introduction of a consumer protection regime applicable in the wake of catastrophic events, including extended cancellation and refund rights for consumers, the imposition of specific time limits for compensating consumers, and a ban on the imposition of charges when refunds are paid.