The Competition and Markets Authority has issued a cancellation fee warning to hospitality and travel businesses.
The government body has called on businesses to ensure their terms and conditions are fair, warning that any cancellation fees must be in proportion to their losses.
Examples given of unfair terms include businesses taking a large, upfront deposit and refusing to return any money on cancellation or imposing a large cancellation fee, that fails to take into account the actual loss to the company or the reason for the booking being missed.
Paul Latham, the Competition and Markets Authority's director of strategy and communications, said: "Nobody wants to cancel a trip or holiday, but if you have to, it's important that you are treated fairly and don't lose out more than is absolutely necessary.
"Our campaign is asking travel businesses to ‘check in' on their terms to make sure they're fair. Fair terms are a legal requirement as well as helping reassure customers that they're dealing with a company they can trust.
"Unfair terms can't be enforced so they also won't protect businesses if challenged. The small print really can make a big difference."
Kate Nicholls, chief executive of UKHospitality, added: "The CMA's campaign has followed legislation aimed at providing crucial accuracy and transparency for both businesses and customers. It is vitally important that our customers have full confidence when they make a booking with a hotel, a restaurant, a B&B or any other hospitality business.
"A clear understanding of terms and conditions can help foster an open and responsive relationship that gives our customers peace of mind and boosts businesses."