We explain what happens if a company you make a purchase from goes out of business.
Unfortunately it's a sign of the times that companies going into administration is becoming ever more common place. What's more, if 'expert' predictions are anything to go by, it's something that we'll see a lot more of in the year ahead.
So, to help you understand where you stand, we explain your rights if a retailer you make a purchase with goes into administration.
New purchases
Once a retailer has officially gone into administration it will usually remain open for a number of weeks in an attempt to clear its remaining stock and raise as much money as possible. You'll often find some great bargains in these clearance sales so it's worth taking a look.
If you have store credit or gift vouchers you should spend these while the store is still trading. If you don't do this you'll be left having to claim their worth back from the administrators and may end up with little, if any remuneration.
Make sure you keep the receipts from any purchases that you make as you may be able to make a claim if the product later turns out to be faulty.
Returns and refunds
A company's customer refund policy is unlikely to be upheld once they have gone into administration. This means that you will be unable to claim a refund from the store if an item you have previously purchased is unwanted or faulty.
If the store is still open then you should speak to staff and see whether they are able to issue a replacement. However, if they are unable to do this, or the store is closed for business you will need to place a claim with the administrators. Again, you may be lucky and receive some remuneration for the item but this is by no means a given and depends entirely on the amount of capital the company closed with.
Unfulfilled orders
If a company you have placed an order with goes into administration before they have delivered, the first thing you should do is contact the retailer to check the status of your order. Most larger companies will keep their customer service helplines open until all of their shops have been closed and so will usually be able to assist providing you have the details of your order to hand.
If your purchase is completed, packaged and ready to be dispatched in the retailer's warehouse they should still be able to fulfill your order. You may need to reconfirm delivery and in some circumstances arrange to collect the item yourself if they are unable to get it to you.
If the company are unable to fulfill your order and you have already laid down either a partial deposit, or the full amount, there are several courses of action available to you. The most appropriate will depend on the value of your unfulfilled order and how you paid.
If you paid by credit card
If the value of your order was between £100 and £30,000 and you paid at least some by credit card (this can be any amount either under or over the £100 product value minimum), your card provider will be obliged to issue a refund. This is thanks to Section 75 of the Consumer Credit Act 1984 which states that the credit provider is "jointly and severally liable" for your purchase.
If you need to make a claim in this way then contact your credit card provider, explain your situation and ask what you need to do to make a claim under Section 75 of the Consumer Credit Act. They will be able to explain the process, send you a claim form and issue you a refund for the full amount.
If your order was valued at less that £100 and you paid on credit card you will not be able to claim in this way and will need to contact the administrators instead.
If you paid by Visa or Mastercard debit card
If you made your purchase using a Visa or Mastercard debit card you may be able to claim your money back using their ChargeBack service. This is where your debit card provider reclaims the value of your purchase directly from the retailer's bank and charges it back to you.
To make a claim in this way you will need to contact your bank within 120 days or becoming aware of the issue and request that they instigate a 'chargeback' for the value of your purchase. This can be for any amount but you will need to have any details relating to your order to hand.
It is important to bear in mind that this is not a guaranteed process and you may not be able to claim your money back in this way.
If you paid by some other means
If you paid for an unfulfilled order in cash or by some other means, the procedures explained above will not apply. Instead you will need to contact the administrators and make a claim directly.
To do this you should:
- Find out who is acting as the retailer's administrator and how you can contact them. This information should be readily available either on the retailer's website or in the press. However, if you are having difficulty finding it you can search The Individual Insolvency Register (for sole traders or partnerships) or Companies House for limited companies.
- Write to the administrator explaining your situation and detailing how much money you are owed by the company, when your order was place, how you paid and any reference numbers you have. You should include copies of any relevant paperwork and order confirmations with your letter.
Unfortunately, even after doing this there is no guarantee that you will get all, or even any or your money back from the administrators. It depends entirely on how much money the closed company has to be distributed and how many creditors they have with outstanding amounts to be paid.
Consumer Direct have more information about your rights on their website and they are able to offer one to one advice should you need to make a claim from a retailer that has gone out of business.
