The Trading Standards Team at Milton Keynes Council has stepped in to investigate the failed Winter Wonderland event.
The team will now work to establish whether or not the organisers have committed any offences.
A council spokesman said: “The organiser of Winter Wonderland has let many families and individuals down by not delivering the promised quality event. Milton Keynes Council Trading Standards is looking into whether offences have taken place and, if so, will be taking appropriate action.
“The organiser states that refunds will be given. We ask consumers to ring 08454 04 05 06 if they need advice on how to obtain a refund. You may wish to contact your bank immediately to see if they can offer any assistance.
“While the organisers had previously stated the council was supporting the event, this is not the case. We have not provided any financial or other support. As the event was on private land, the only licence provided by the council was an alcohol licence.
“As a place, Milton Keynes has a track record of popular and successful events, from outdoor cinema festivals to a thriving International Festival and from the Olympic Torch Relay to the Red Bull Home Run. We are very disappointed this event, which was clearly not organised by the council, was not the quality, family friendly spectacle usually experienced in Milton Keynes.”