If a retailer or other firm is seriously struggling, the first step may be for creditors to call in administrators to see if the business can be saved.
When a company goes into administration, this has serious implications for consumers, especially if the firm is wound up.
Paid for but not received goods
If you have ordered and paid for goods when the company goes into administration, there is a chance you will not receive them or get your money back from the firm.
This will depend on what the administrators decide. As a customer who is owed certain goods, you will join the business’ other creditors – such as banks and HM Revenue & Customs – in a queue to get your money back.
If you have bought goods from a retailer that is in administration and they turn out to be faulty, you may not be allowed to return them.
However, you should still be able to claim on a manufacturer’s warranty – white goods such as washing machines and dishwashers typically come with at least a 12-month manufacturer’s guarantee.
Often when a company goes into administration, it will no longer accept gift vouchers, although again this will depend on what the administrators decide.
This is worth bearing in mind when buying vouchers as a present. Instead consider vouchers which can be used at a wide range of stores, rather than at a single retailer, thus reducing the risk of them becoming worthless if a company goes into administration.
Read more about getting refunds on gift vouchers.
Claiming from your bank or credit card company
If your goods aren’t delivered or are faulty, or you have bought gift vouchers that are no longer being honoured, it may be possible for you to get your money back from the company which provides your credit or debit card.
With credit cards, this applies if your goods cost £100 or more, even if you only used the card to put down a deposit and paid the rest in cash or by cheque.
Under Section 75 of the Consumer Credit Act, lenders are jointly liable with retailers if something goes wrong – so you can ask your credit card firm for a refund.
If you paid with a debit card, or used a credit card for a purchase under £100, you may be able to claim from your bank on the chargeback scheme.
This is not legally binding, but most banks adhere to it. Claims must be brought within 120 days of you finding out there was a problem.