An outdoor events firm has said it will not have the money to refund thousands of people over cancelled events.
Devon-based Tribal Clash said it was “facing bankruptcy” after cancelling events in Devon, Portugal and the United Status due to coronavirus.
The events would have attracted about 450 teams of six who have paid a total of £270,000 in registration fees.
The government said refunds should normally be given for cancellations of “promised goods or services”.
Tribal Clash, billed as the “world’s most savage team competition” was founded in 2013 as a series of physical tasks on a beach with teams of six – three men and three women.
It expanded in 2017 with competitions in Australia, Portugal and the US.
About 100 teams who had entered the Devon and Portugal events this year had received refunds, said co-founder Andrew Barker.
But there was “no cash” left from the ticket sales and “we simply don’t have and never have carried enough cash reserves to refund 100% of our customers”, he said.
Some of the ticket money had been spent on subsidising previous events and investment in future events, while the rest had gone on overheads, paying hire companies, landowners and transport.
The firm had offered an online competition, a training weekend and discounts.
The total package “we believe far exceeds the price paid”, said Mr Barker.
The firm, which netted £174,000 in a 2018 crowdfunding appeal, had considered rolling over entries to 2021, but the firm said it had “no idea” if they would happen.
“We are in a very precarious situation and we are literally on the brink of bankruptcy,” Mr Barker said.
Lots of consumers ‘distressed’
By Andrew French, Which? consumer rights expert
The pandemic has been nothing short of a nightmare for the live events industry and for those with tickets to those events.
We are hearing from lots and lots of consumers who are really distressed by not being able to get hold of refunds.
Consumers should get a full refund if they’ve paid for an event that isn’t going ahead, depending on terms and conditions.
A customer can take online courses or whatever an event organiser is offering, but a refund has to be an option.
The best option is to turn to your bank. If you have paid with debit cards there is something called chargeback where your bank can claw money back from the recipient account.
If you pay for something that’s more than £100 on your credit card there is something called Section 75 in the Consumer Credit Act which gives you protection and the credit card company has to refund you.
What we really need is government stepping in to support these businesses either with clear instructions on how the events industry can open up again or financial support that they need to survive in the meantime.
Mr Barker added: “There are many other companies in the live events sector in exactly the same position.
“The leisure sector has been hit hardest by the coronavirus crisis.
“None of us has been able to make any sales since this began.
“The government has mandated that we cannot trade and have promised 100% refunds but that has not been balanced against the need to protect our industry and all of the jobs that businesses like ours provide.”
Mr Barker posted a message about the firm’s plight on Instagram and some responses were sympathetic.
“This is an awesome and creative compromise. I wish you nothing but success,” said Mike Carroll.
Former Tribal Clash competitor Chris Mills, who set up a website for customers seeking refunds, said: “Everyone wants to have Tribal Clash, but at the moment it is very one-sided, we have put money in but we are not getting anything out.
“I’m disappointed because it feels as if the customers are footing the bill for Covid-19.
“That angers me because every other event that I have been involved with has found some solution.”
Firms that failed to refund people for events cancelled because of the coronavirus outbreak could face legal action from the consumer watchdog.
The Competition and Markets Authority (CMA) said it would take companies to court if they flouted the law.
The CMA said it would “normally require the consumer to be offered a refund for any services they have already paid for but that are not provided… because of government public health measures.
“This may be a partial refund of the total amount the consumer has paid, to reflect the value of the services already provided.”
A Department for Culture, Media and Sport spokesperson said: “We have been clear that we want to get the performing arts and live events fully back up and running safely as soon as possible.
“We have developed a five-stage roadmap which provides a clear pathway back to performance and are working closely with the sector as well as public health and medical experts on guidance for this phased approach.”