It’s been a bit of a grim few years for some of the big brands on the high street – even before Covid-19 kicked in. With the news this week that Arcadia Group (owner of many of our high street stalwarts such as Topshop, Topman, Miss Selfridge and Dorothy Perkins) is on the brink of going into administration, we wanted to be clear to you 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 retailer 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. 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 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 and said brand or business may still trade as it looks to seek a new buyer. There’s usually a window of opportunity where you can quickly spend the voucher or card before it goes under. But 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. Here’s a round up:
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. 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 complain using Resolver. 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 ‘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. There’s a nifty law called the Consumer Credit Act that says 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 and don’t pay if you can’t afford to lose it
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 if it has been cancelled. Resolver has been clear that now is the time for airlines to play fair and if lockdown means you can’t travel because you’d be effectively breaking the rules then you should be able to get a refund for your flight as it should have been cancelled.
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.
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 (Ts&Cs).
However, it’s important to read the Ts&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.