read in the Mirror Online
It’s been a bit of a grim few years for some of the big brands on the high street.
Thousands of businesses bit the dust last year – and that’s before the impact of Covid-19 kicked in.
In the last few days it’s been confirmed that the Arcadia Group has entered administration – leaving the future of Topshop, Burton, Dorothy Perkins and Miss Selfridge in doubt – while Debenhams began the (hopefully to be averted) liquidation process.
So understandably, lots of the people I speak to are concerned about what happens when a business goes bust but you still have vouchers, gift cards or pending orders.
So what are your rights and what can you do if you’re worried about a firm going out of business?
This is where you stand in terms of the law.
A voucher is basically a piece of paper that entitles you to buy goods or services up to a certain prepaid amount – though many exist in virtual forms these days.
Vouchers can be bought as gifts or issued in lieu of a refund, for example, by a shop if you’ve decided you don’t like the goods you’ve bought or been given.
Vouchers usually have an expiry date printed on them and you must ‘use it or lose it’ by this date. Many vouchers meet this fate moldering in wallets and purses across the land.
This is why businesses like them – people forget to cash them in.
If you have a voucher, put a reminder note in your calendar at least a month before the expiry so you don’t lose out.
Gift cards work in a similar way to vouchers and are almost exclusively purchased as gifts.
Again, they should have clear expiry dates on them, though there have been disputes in the past about these rubbing off or not being very clear.
If you’re making a complaint about a gift card then the purchaser usually has to make the complaint.
What if you lose a voucher or gift card?
Because they are, in effect, cash with a time limit, you might – might – be able to get a lost gift card or voucher reissued.
It depends on the T&Cs and if you can prove you genuinely had the voucher or card.
When firms go bust
Officially, when a firm goes bust, you join the long list of creditors who are owed money by the business.
But in effect, you join the back of the queue. It’s very rare to actually get any cash back.
So for most people, when a firm goes bust, your vouchers and gift cards become worthless.
…but – the process of a firm going into administration isn’t usually instantaneous.
There’s usually a window of opportunity where you can quickly spend the voucher or card before the firm goes under.
There’s no way to definitively prepare for this.
You just have to keep an eye on the news and remember what vouchers and cards you have.
Sometimes the administrators of the company will allow you to spend the voucher or card – or may even honour them.
But the rule of thumb is this – if you hear a firm is going under, spend the voucher.
When a firm gets taken over
In the past there was a general assumption that when a business was purchased or rescued by another party after verging on bankruptcy gift cards and vouchers would be honoured if the firm continued to trade.
That all became a little complicated in recent years.
When House of Fraser was taken over, it was announced that gift cards and vouchers would be replaced.
Yet a considerable number of Resolver’s users got in touch to say that they had to wait for months before they got an answer about what was going to happen next.
In short, don’t assume that your vouchers will carry over under new management.
Returns and refunds
Things get even more complicated if you need to return goods or replace faulty items.
Often this is at the discretion of the administrators of the defunct firm.
Once again, speed is of the essence here.
You may be able to ask your bank or card provider to ‘charge back’ your money for undelivered items or pending refunds. Don’t hesitate.
What other ways can I protect myself from firms going bust?
Looking ahead, there are some precautions you can take to ensure you stand a better chance of getting your money back if you’re buying things in the future and the firm goes bust. Here’s a round up:
Chargeback: Chargeback is an agreement between plastic card providers and can be used on payments made by debit or credit card. Call your bank and ask them to ‘charge back’ your money. Explain this is urgent and that the business is going into administration. Your bank should try to get you the cash back as soon as possible.
However, if the administrators have closed the business’s accounts, it may be too late. So don’t delay. If your card provider makes a mistake or fails to recall your cash, you can make a formal complaint.
Pay by credit card: You’ve got lots of statutory protection if you pay for goods or services using a credit card. There’s a nifty law called the Consumer Credit Act that says if you pay for things on a card that cost over £100 and less than £30,000 you could claim the money back from the card provider.
You don’t even need to have spent the whole amount on the card as long as the deposit falls within the limits. This is known as making a claim under “section 75”.
Avoid paying by cash, cheque or direct transfer. You’ve got no rights to recall your money if this happens. Always question businesses that ask for payments this way and don’t pay if you can’t afford to lose it.
Repairs and refunds
If you’ve bought something that doesn’t work but the retailer goes bust, you’ll need to go to the manufacturer to see if you can get a repair, replacement or refund.
If you’ve not received your goods then ask for a ‘charge back’ from your card provider urgently.