Holiday home rental company taken to court for unfair contract terms

The Commerce Commission claims that several terms in the accommodation provider’s consumer contracts are unfair and risk breaching the Fair Trading Act.

Examples included terms that:

• meant consumers could lose 100% of the amount paid if they cancelled a booking, even if consumers gave reasonable notice
• allowed Bachcare to keep its service fee even when Bachcare itself cancelled the accommodation
• meant consumers could lose 100% of the amount paid if a booking was cancelled because of an event outside of either party’s control.
• If the court agrees that the terms are unfair, Bachcare will be banned from using them in its consumer contracts.

Don’t let the terms and conditions catch you out

Commerce Commission Chair Dr John Small warned consumers to read the terms and conditions when booking accommodation, especially terms about refunds and cancellations.

While Dr Small expected businesses’ contracts didn’t contain unfair terms that disadvantaged consumers, it was also important to “know what you’re signing up to before you make a booking,” he said.

The Fair Trading Act defines a term as unfair if it:

• would cause a significant imbalance between the rights of the company and the consumer
• is not reasonably necessary to protect the legitimate interests of the company
• would cause detriment, financial or otherwise, to the consumer if it were to be applied or relied on.

Think you’ve found an unfair term? Check out our guide to complaining.

A win for consumers

The proceedings come nearly three years after Consumer NZ complained to the Commerce Commission under the Fair Trading Act about unfair terms in Airbnb and Bachcare’s consumer contracts.

Consumer received an influx of complaints about the companies in 2020 and found the cancellation policies imposed by Airbnb and Bachcare resulted in customers incurring significant financial penalties and being unfairly left out of pocket.

In some cases, penalties applied when travel restrictions during Covid-19 lockdowns forced cancellations and were beyond customers’ control.

Find out more about our complaint to the Commerce Commission.