What happens to my vouchers, gift cards and credit notes when a business goes bust?

It’s been a grim few years for some of the biggest brands on the high street. This week we found out that iconic UK brandThe Body Shop will be closing up almost half of its stores. They follow in the footsteps of the Arcadia Group (owner of Topshop, Topman, Miss Selfridge and Dorothy Perkins), Debenhams, Wilkos and other big high-street retailers who have gone into administration in the last few years.

In the post-Covid era, people and businesses are struggling more than ever before to stay afloat. But what happens when they don’t? What are your rights and what can you do if you’re worried about a retailer going out of business?

In this article, we wanted to give some about what happens when a business goes bust but you still have vouchers, gift cards or pending orders.

Vouchers

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. 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

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 I lose a voucher or gift card?

Because they are, in effect, cash with a time limit, you might be able to get a lost gift card or voucher reissued. It depends on the terms and conditions and if you can prove you genuinely had the voucher or card.

When firms go bust

Officially, if a retailer 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 company goes bust, your vouchers and gift cards become worthless.

But – the process of a firm going into administration isn’t usually instantaneous. Said brand or business may still trade as it looks for a new buyer. This means that there’s usually a window of opportunity where you can quickly spend the voucher or card before it 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.

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 retailer goes into administration.

Chargeback

Chargeback 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 in to 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, then you can raise a complaint using Resolver.

If you’ve bought something that doesn’t work but the retailer goes bust, then you’ll need to go to the manufacturer to see if you can get a repair, replacement or refund. And if you’ve not received your goods then ask for a ‘chargeback’ from your card provider urgently.

Pay by credit card

You’ve got lots of statutory protection if you pay for goods or services using a credit card.

Perhaps the most important is a nifty law called the Consumer Credit Act. This says that if you pay for things on a card that cost more than £100 but 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 – don’t pay if you can’t afford to lose it

Holidays, vouchers and credit notes

During Covid-19 huge numbers of people who’d booked a holiday or flight were offered vouchers instead of refunds. For flights and packaged holidays, you are entitled to a refund if it has been cancelled. Resolver has been clear that airlines must play fairbut there is always an element of risk here.

A number of holiday firms and airlines have gone bust in the last year and it’s likely that some will do so again. So again, if you take vouchers for a cancelled trip, keep an eye on the news.

Credit notes and packaged holidays

Some holiday companies are offering credit notes instead of vouchers. The difference between the two is rather complex, so in brief, you generally have a few more rights with credit notes which should be specified in the terms and conditions (T&Cs).

However, it’s important to read the T&C’s thoroughly so you know your rights if the firm does go under. There’s nothing wrong with asking for this to be clarified before agreeing to take the credit note.

Resolver can help you sort out complaints about pretty much anything – so why not help a friend or relative sort out a problem, get a refund or make a claim. Check out www.resolver.co.uk to start your complaint for free.