It is all too common these days for retailers to go into administration and it is imperative that consumers protect themselves and know what their right are if the shop they have ordered from goes bust.
It is not just the small shops that are closing down but large household names such as MFI, Woolworths and Zavvi; and there will many more shutting up shop throughout 2009.
Buying from a shop in administration
It is safe to buy from shops that have gone into administration, but you have to remember that you may not be able to get your money back even if an item is faulty. You will have to wait in line with the rest of the creditors and that assumes that the company hasn’t been completely wound down.
To protect yourself in these circumstances you have a number of options:
- If the item you are buying is more than £100 it is wise to pay by credit card to make the credit card company is equally liable under the Sale of Goods Act. This is a provision of the Consumer Credit Act 1974 as defined in Section 75.
- If the item is less than £100 or your don’t have a credit card you should pay using a Visa Debit Card as you will then be protected by the Visa Debit Chargeback Scheme. However, many banks continue to make it difficult for consumers to make a claim and many call centre staff do not know about it. It is also worth pointing that you have to make your claim within 120 days of the company going bust, so if the item becomes faulty on day 121 you won’t be covered.
- If you cannot pay by credit card or the item is below £100 then it might be worth considering buying an extended warranty for peace of mind. In fact, this is probably the only circumstance where we would recommend buying an extended warranty.
Your order hasn’t arrived and the shop has gone bust
It depends really on the exact situation and whether the item is available and ready to be delivered. If the shop is still trading while in administration the chances are you will get the goods. If you don’t and you can’t make a claim under section 75 of the Consumer Credit Act or the Visa Chargeback Scheme then you will be put on a list of creditors and you might get back a proportion of the amount you paid – hopefully all of it.
If you are returning something which you simply don’t like, chances are you won’t be able to. If the item is faulty, you still have the right to an exchange or a credit note, in line with your consumer rights. If however you would like a refund on a faulty item, this may well not be possible and you will have to register a claim with the administrators.