We explain your options if a store that you have gift vouchers for falls into administration.
Gift vouchers can seem like the ideal birthday or Christmas present; flexible enough for the recipient to choose what they want, but more personal than just giving cash.
Unfortunately, the collapse of large high street chains is becoming more frequent and this means gift cards are no longer the safe present they were before.
Now, the safest way to protect yourself when it comes to gift cards and vouchers is to spend them as soon as you can after receiving them, although that's no help if the product you want isn't out yet or if you're saving against a big one-off purchase.
In this case you should review your gift cards regularly. Keep tabs on how much you have hoarded, where they're from, and when they were bought. It's also worth checking that none of the issuing companies are facing financial trouble.
If a company that you have gift cards for goes into administration, you'll likely be faced with four options:
It's not set in stone that vouchers will become worthless, although most companies will stop accepting vouchers when they first enter administration.
Instead it's up to the appointed administrator in each case to determine whether gift cards and store vouchers will still be honoured. Usually, they'll release a statement soon after taking control to confirm one way or the other.
If you have gift vouchers for a company that's gone into administration check their website to see who the administrator is and look for any press releases giving clarification.
If you can't find anything on the company website, contact the administrator direct.
Of course, there's nothing to say that the administrators won't get the company back on its feet or find a buyer; in which case your vouchers may well become valid once more.
That said, even if the company is to be wound down the administrators may allow customers to redeem gift vouchers for a short time. This happened in the past with Comet (Deloitte, in 2012) and could happen again.
It's worth noting that you're unlikely to be able to get a refund for gift vouchers purchased via a third party store because your 'contract' would be with the company the gift vouchers are for rather than with the store you purchased them from.
Most gift cards and vouchers are for amounts below £100. If this is the case, and you paid by debit or credit card, you should try making a chargeback claim.
Our guide Chargeback Claims: How to Get Your Money Back explains how to do this.
Your claim would be on the basis that the goods are 'not as described': you expected to be able to use your gift card to purchase products of a certain value, but you're no longer able to.
However, the Chargeback scheme is not set in law and your bank or card provider may deem your transaction to be ineligible (as with transfers to PayPal), so there are no guarantees that this will work.
That said, it is still likely to be your best chance of getting your money back.
If you bought a gift card or voucher using a credit card, to the value of £100 or more, you may be able to claim your money back under Section 75's consumer protection laws. Again, you would argue that the goods are not 'as described'.
Under Section 75, your card issuer and the store are "jointly and severally liable"; they're both obliged to reimburse the full amount, independently of the other. As the store is in administration, this responsibility should fall to the card issuer.
However, Section 75 claims are relatively untested in this area. Read our guide: How Section 75 of the Consumer Credit Act Protects You for more information.
If none of the above options work for you and the company that issued your gift vouchers is to be liquidated, you'll need to register as one of its creditors.
First, contact the administrator to get their advice on what you should do. Then you'll need to download, complete and return a Proof of Debt form from the GOV.uk website.
You'll be kept informed of the company liquidation process and what sort of return you could expect for your losses, as well as any fees. Compensation recovered from selling the company's assets is paid proportionate to its total debt.
It's unlikely you'll get the full amount returned to you, but it is still worth doing.
Spending with a credit card offers extra protection from scammers and fraudsters with Section 75 cover. Compare credit cards to find one that suits how you spend.