What happens to my vouchers, gift cards and credit notes when firms go bust?

6 min read
April 19, 2020
What happens to gift vouchers when firms go bust?

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 COVID 19 kicked in.

This week we learned that more businesses were potentially going in to liquidation. 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.

In to this mix we have the airlines and holiday firms who are issuing vouchers for future use for people who can’t travel or take their holidays due to the lockdown restrictions around the world.

So what are your rights and what can you do if you’re worried about a firm going out of business?


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 mouldering 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

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 – 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 in to 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 honor them. But the rule of thumb is this – if you hear a firm is going under, spend the voucher.

Holidays, vouchers and credit notes

The impact of COVID 19 has left huge numbers of people who’ve booked a holiday or flight being offered vouchers instead of refunds. For flights and packaged holidays, you are entitled to a refund – but because I’d like to have a holiday at some point and keep these firms in business, I’ve been encouraging people to think about moving their holiday forward in time or taking a voucher.

But there is an element of risk here. Some holiday firms or airlines have gone bust in the last year and it’s likely that some will do so again. So again, if you take vouchers, keep an eye on the news.

Some airlines have told me that people who take vouchers can claim a refund before they expire if they decide they can’t travel or don’t want to in the future. However, this isn’t always clear, so ask the airline or holiday firm to clarify this if you’re not sure what to do.

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 T&C’s.

The Association of Travel Agents (ABTA) has confirmed that credit notes issued by its members will have the same protection as holidays, saying:

A [Refund] Credit Note entitles you to rebook a holiday at a future date or receive a cash refund at the expiry date of the note.  It also retains the financial protection that you had with your original booking.

 If your original booking, for example a package holiday with flights, came with ATOL financial protection, the RCN will still provide this protection.  If your original booking came with ABTA financial protection, for example a cruise holiday or other package holiday including rail or coach travel, the RCN will still provide this protection.

[Full guidance here: https://www.abta.com/news/coronavirus-outbreak]

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.

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 in to administration. You 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 through Resolver

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’. [I have a huge guide on this].

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.

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 and share your experiences at yourstories@resolvergroup.com

Share this:


Need to resolve an issue? Let's get this sorted.

No Comments