What are my rights if a retailer goes bust?
From getting a refund to spending gift cards, this is what you need to know when a retailer goes into administration
Since the start of the pandemic, many retailers have had to shut their doors temporarily, but for others, the closures are set to become permanent. In December 2020, Debenhams announced it was going to close its high street stores, and the Arcadia Group, which owns Topshop, Wallis and Dorothy Perkins, has entered administration. At the time of going to press, Asos is to buy the Topshop brand and Boohoo is in talks to buy Debenhams, Wallis and Dorothy Perkins brands. But all of their physical premises look set to close.
All this is bad news for employees of these companies, whose jobs may be at risk, and there are implications for customers, too. Here is what you should know if you think you may be affected.
IF YOU NEED TO RETURN SOMETHING…
While most high street stores have generous returns policies, where they will usually refund or exchange unwanted items (with proof of purchase), this may not be the case if a store (or its parent group) has gone into administration. In this instance, any returns are made at the discretion of the retailer’s administrators (usually a big accountancy firm that takes over the running of the company until a decision is made over whether the business can be sold with stores saved or closed down). Your best bet is to visit one of the retailer’s stores, if they are still open and if current lockdown restrictions allow, to try for a refund. If you can’t get one, your bank may be able to help. ‘If you can’t get a refund, you may be able to ask your bank or card provider to “chargeback” your money for pending refunds,’ says Martyn James from Resolver, a free independent complaint resolution service. This isn’t legally enforceable, but basically ‘reverses’ the transaction with the retailer’s bank.
IF YOU HAVE AN OUTSTANDING ORDER…
If you haven’t received something you’ve ordered and the company goes bust, you may be able to claim your money back depending how you paid. If the item cost more than £100 and you paid by credit card, you have legal protection, even if you have only paid a deposit. If the retailer can’t or won’t give a refund, ask your credit card company to stump up by making a claim under Section 75 of the Consumer Credit Act. If you paid by debit card, try asking your bank to do a ‘chargeback’.
IF YOU’VE BEEN SOLD FAULTY GOODS…
Usually, you’d go back to the retailer, but if you have no luck because the retailer is no longer in business, contact the product’s manufacturer. In most cases, there will be a one-year warranty. If you bought an extended warranty (when buying electrical goods, for instance), it’s likely to be backed by an insurer, rather than the retailer, so you should be able to get faults fixed.
IF YOU HAVE GIFT CARDS…
If a company goes into administration, there may be a window of opportunity to spend vouchers and gift cards, if stores are still open. ‘However, if a company goes bust, you join the long list of creditors who are owed money by the business; so in effect, you’re at the back of queue,’ says Martyn. ‘When a company goes bust, it is very rare to get any money back, so for most people, any vouchers and gift cards they have become worthless.’ If this happens and you have been given the gift card as a present, you could ask the person who bought it to speak to their bank about doing a chargeback to try to claim back the cost.