Bachcare’s cancellation policy deemed unfair by High Court following Commerce Commission proceedings

A popular holiday rental company has been forced to change its cancellation policies after guests were unable to cancel bookings or obtain a refund during Cyclone Gabrielle.

The High Court has found certain Bachcare cancellation policies were unfair to customers.

The Commerce Commission brought proceedings against Bachcare, which owns and operates a digital platform that lets guests book holiday accommodation, after receiving complaints from customers.

Bachcare has since changed the terms and conditions.

The court said that some of Bachcare’s cancellation terms for guests were unfair under the Fair Trading Act and “created a significant imbalance that was ultimately detrimental to consumers”.

Commerce Commission chair Dr John Small said the unfair terms included conditions where guests who cancelled their booking could lose up to 100% of the amount paid, regardless of how far away their holiday was or the reason for the cancellation.

The terms also allowed Bachcare to keep its service fee even when the accommodation was cancelled by the company or the property owner.

“Our action was prompted by a number of complaints to the commission and Bachcare from ordinary Kiwis who had booked a place to stay through the online platform,” Small said.

“For example, multiple complaints concerned cancellations due to Cyclone Hale and Cyclone Gabrielle, with guests unable to cancel bookings and obtain a refund when travel to the accommodation was unsafe, not recommended or not possible.

“A number of complaints also related to guests losing deposits when they had made an administrative error, which they then tried to correct.”

The High Court today approved a settlement between Bachcare and the Commerce Commission.

Bachcare managing director Tracey Foxall said she was pleased the legal proceedings had been resolved, and said she believed the company’s new policies “strike the right balance”.

“We respect the court’s decision to approve the agreement we reached with the Commerce Commission and are pleased to have reached a conclusion that puts fairness, clarity and consistency at the heart of our guest policies.

“The updated terms have already been adopted, and we believe they strike the right balance between guest protection and owner confidence.”

Small urged businesses to review their terms to ensure they are transparent and fair.

“The judgment identified a range of unfair cancellation clauses, reinforcing the need for businesses to assess the fairness of their cancellation terms and the remedies available to consumers when contracts are cancelled – whether by the supplier, the consumer, or circumstances beyond their control.”

In 2019, Bachcare was fined $117,000 for editing and in some cases not publishing customer reviews.

The Commerce Commission said Bachcare removed negative comments about the company and rental properties listed on its website, while reviews with a rating below three-and-a-half stars weren’t published at all.