Refund policies in a pandemic

WASHINGTON — Travel plans have been disrupted. Theaters are lowering the curtain. And kids are being sent home early from college. As the coronavirus continues to wreak havoc, you may be asking: What’s fair compensation for cancellations and shuttered services?

It’s understandable that cruises, concerts and sports games are being canceled. We may want our lives to continue uninterrupted, but health officials recommend that we avoid large venues, which is why major sports leagues have suspended or postponed their seasons.

Of course, our first concern with the spread of the coronavirus should be about the health of those infected with COVID-19. We all should be doing what we can to avoid spreading the virus.

But as our political leaders scramble to figure out how best to contain the virus, consumers are also concerned about refund policies in the wake of this pandemic.

My take: Give people their money back whenever possible. Yes, I know this crisis isn’t of your making, but folks generally don’t want vouchers for future events or travel. If this pandemic goes on too long, and if there’s a disruption in their income, they’re going to need every dollar to cover daily expenses. Companies shouldn’t shift losses to their customers.

With the cost of college already stressing the financial limits of families, those colleges shutting down should consider how to compensate students sent home. Many of them have taken out education loans to pay for rooms they can’t sleep in and meals they can’t consume.

It may be too soon for colleges to figure this out, but eventually they do need to address the issue of compensation. Will students get a discount on next semester’s room and board charges? Will they get a refund?

Since December 2018, Crystal McDonald of Washington has been making monthly payments for her daughter’s high schoolsponsored trip to France and Spain as part of a foreign language experience.

“It was the only way my daughter would have been able to participate,” McDonald said.

The total cost of the spring break trip, which has been scrapped because of the coronavirus outbreak, was $3,500, including travel insurance.

McDonald and other parents of students at Benjamin Banneker Academic High in Washington have been told they won’t get a full refund. In response to my questions, the tour company, EF Educational Tours, emphasized that it is allowing for a change of itinerary, change of destination (including to domestic tours), a postponement or reimbursement in the form of a transferable travel voucher.

“We are also working with our groups, their schools and individual families to provide flexible options for tours that have already been booked,” the company said in an emailed statement.

A voucher isn’t enough, McDonald argues. Parents were also initially upset that the future travel had to be done by next year. The company has since extended the voucher offer through September 2022.

“Ideally, we would get a full refund minus the insurance and some minimal fees,” McDonald said. “If I lose $200 or $300, that’s OK.”

McDonald, who works for a nonprofit, is particularly irked that the insurance she was paying won’t allow her to receive full reimbursement for a cancellation out of her control.

“At the end of the day, the insurance company can pay out on these policies,” said the single mother. “They are far richer than I am.”

I asked for comment on whether the company could be more generous. I was directed to an informational page about the impact of the virus in which EF gives this reason for not providing full refunds: “We begin planning your tour as soon as you reserve, to ensure the highest quality service at the lowest price. For example, EF Educational Tours books large volumes of flights and hotels months, if not years, in advance. For this reason, EF has designed its cancellation policies to take into consideration the investments we make in your tour long before it departs.”

Depending on what happens with this trip, McDonald said she would be more averse to traveling in the future. She’s making payments on another trip for herself to Costa Rica.

“I’m middle-income, and I made sacrifices to make these payment plans to travel abroad,” she said.

It’s the right thing to cancel large-group activities during this crisis out of an abundance of caution. But businesses are forewarned that how you treat people as a result of these cancellations could have a lasting effect on future business relationships.

The spread of the coronavirus is an extraordinary event. A pandemic of this magnitude requires considerations that are also extraordinary.