Consumer rights when a retailer goes bust
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.
Returning goods
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.
Related posts:
If you have paid for goods by credit card and the company goes bust.
Does the original sale invoice for the goods have to have the same name as the name on the credit card used to pay for the purchase or is the Credit Card transaction slip sufficient to make claim from the Credit Card provider.
My example is that my credit card was used to purchase a kitchen using a trade account in my sons name.
Section 75 of the CCA governs transaction between the card holder and the supplier. Therefore the name on the invoice will be irrelevant. However S 75 covers only consumer credit agreements made with consumers or partnerships. Therefore if you are a limited company, you won’t benefit from protection.
Can you confirm for me that if I pay some of the balance of my holiday (minimum £100) by credit card and the remainder by other means (cash or debit card) – that in the event that the travel operator/agent goes bust we will be protected.
Thanks
The total value has to be over £100, you can pay as little as 1p on the credit card to be protected by Section 75 of the Consumer Credit Act.
I have a prolonged on going dispute with HSBC Mastercard & HSBC bank ref a full refund of monies lost when xl (travel city direct) went bust before we could take our holidays, we made low deposit on a credit card, then the rest on 3 payments with my debit card (all from same account) this was for 6 people (me,the wife, son, his fiancee & 2 friends of ours). the bank have made an offer of only refunding 2/3 of the money paid as they claim that sec75 of CCA 1974 only covers close family members! 1 are they talking rubbish? 2 as at this stage I can not afford court fees what can i do now as i am getting to the end of my tether.
Hi Malcolm,
There is no mention of non-family members being excluded in the Consumer Credit Act. Trading Standards will write a letter on your behalf to HSBC for a small fee – this should do the trick. Alternatively, if the transaction was less than £5000 you could go through the Small Claims Court, which is affordable.
This thread on the forum will be of interest: http://whatconsumer.co.uk/forum/holidays/876-xl-holiday-issue.html
I purchased some furniture from a company that has gone into administration and the furniture has not yet arrived. I paid by visa debit and so not covered for claiming back on my credit card. I am told there is little chance of me receiving the items and even less that i will get my money back.
The shop i purchased the items from still have display items on the shop floor. Can’t i just take those items as lets face it, i have paid for them.