What are my rights when retailers go bust?
With several major high street retailers pulling down the shutters in recent days, customers who have placed orders for goods may be worrying that they will be left out of pocket.
A series of well-known names have filed for administration, including Jessops, HMV and Blockbuster, with others set to follow suit as battered British shops suffer financial difficulties in the turbulent economic climate.
Here we answer your questions on what rights you have if you buy from a store that falls into administration, and how to make sure you get what you are rightfully owed.
Q: I ordered furniture from a retailer that has now collapsed. What can I do?
Contact the company you ordered the item from to find out what stage the order is at. If your furniture is ready and due to be delivered before the company closes its stores you should receive it as normal, although you may find you have to keep calling to confirm delivery.
If the store is unable to deliver the item, you may be able to collect it from a warehouse. This is providing you can identify the goods as yours, so make sure you keep any paperwork or confirmation emails.
Q: The branch where I placed my order has closed down already and I haven't received my goods - what can I do?
You may find you are unable to get in touch with the company you placed your order with. Alternatively, the company may contact you to tell you it cannot honour your order as it has already shut.
If you have already paid for the product in full, or partially with a deposit, then you will have to contact the company's administrator to arrange a refund - if you paid by credit card, you should contact your card provider (see below).
You'll need to register your claim with whichever firm is administrating the retailer's bankruptcy. The administrator's details should be clearly available on the retailer's website. Then cross your fingers - unfortunately you may face a long wait for your cash, and then only receive a proportion of it.
Q: I paid for goods with my credit card. Can I get a refund from my card provider?
If you paid for goods you have not received, or put down a deposit for them using a credit card, you should be able to claim your cash back in full from your credit card provider under Section 75 of the Consumer Credit Act, provided you spent between £100 and £30,000. This is whether you paid online or not.
However, if you spent less than £100 you will have to contact the administrator for a refund.
Saying that, it is always advisable to register a claim with the administrator - quite often card providers will demand documentation to prove the company has gone bust before they will try to help you.
Q: I used a debit card. Can I claim my refund from my bank?
No. Debit cards are not covered under the Consumer Credit Act, so your bank won't be able to help recover your money.
However, if your bank has given you a Visa debit card you may be covered under the chargeback scheme - which doesn't impose a minimum limit of £100 - if it has signed up to this. Some banks may dispute this so go to Visa direct to check your rights first.
Q: I paid by cash. What are my rights?
If you paid by cash or cheque for your goods, there is unfortunately no guarantee that you will receive them or that you will get your money back.
You're likely to be one of many people in line for a payout from the administrators after a company has gone bust.
Q: I have been given a voucher. Can I still use it in the remaining shops?
You should be able to. When Woolworths went into administration it was effectively business as usual until the very last stores shut down.
However, you should use the vouchers as soon as you can otherwise there will simply be nothing left to buy. If you do not spend your voucher and a shop closes for good, you become a creditor of the company and need to hope there is enough money for the administrators to meet your claim for a refund.
Q: I bought an item but when I took it home it was faulty. Can I still return it and get my money back?
If the company is in administration and you go into a store to try to return something, the store staff may not be able to help you.
The shop will only be open to sell off existing stock, so if you want your money back you will have to register your claim and the faulty item with the administrator - its role is to ensure that as many creditors as possible get their money back, but in a worse-case scenario sometimes there is simply no money to settle any claims and you may not get anything back.
Q: I'm not getting answers from the company itself. Who can I turn to for help?
Contact Consumer Direct on 08454 040506. It can talk you through your rights if you're out of pocket because a company has gone bust.
GONE BUT NOT FORGOTTEN
Famous brands that have gone bust during the financial crisis, and what pushed them over the brink...
Woolworths: Founded in 1909, the historic high street name came under pressure when the financial crisis hit. Customers turned to supermarkets or the internet to gain better value.
Despite Woolies surviving the Great Depression, two world wars and several recessions, even with a price tag of just £1 for its 820 stores, there was no way back from the credit crunch of 2008. It went under in 2009.
MFI: MFI failed to overcome problems with customer service and a dated brand image that made it the butt of countless jokes. It also closed its doors in 2009.
MFI was founded in the 1960s and became synonymous with the trend for flatpack furniture. It battled to survive for years but the economic downturn hit sales of big-ticket homewares hard.
Empire Direct: The company had been established for 25 years and marketed itself as the UK's largest independent retailer of electrical goods, with a turnover of £150 million.
It was severely hit by the economic downturn and saw a hefty reduction in sales, leading to it having to shut up shop in 2009.
Issued by a bank as part of a current account and, in a nutshell, serves as electronic cash. Unlike a credit or charge card, where you get an interest-free period before you have to settle the bill, the funds spent on a debit card are withdrawn immediately from your current account. Unless you’ve arranged an overdraft, if you don’t have the cash in the account, you can’t spend it.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
A person (or business) unable to pay the debts it owes creditors can either volunteer or be forced into bankruptcy – a legal proceeding where an insolvent person can be relieved of their financial obligations – but loses control over their bank accounts. Bankruptcy is not a soft option. Although it may wipe the financial slate clean, it is extremely harmful to a person’s credit rating (it will stay on your credit record for six years) and will adversely affect your future dealings with financial institutions. Bankruptcy costs £600 paid upfront.