Unfortunately, it seems to be an increasing trend for high street retailers to go into administration. But what happens if you haven't received a product or service from a shop that goes bust?
Credit card protection
If you buy goods or services on your credit or debit card, you have extra protection if things go wrong compared with paying by cash or cheque.
Under Section 75 of the Consumer Credit Act you can make a claim against your card provider if something goes wrong with an item you’ve bought.
Section 75 means that your credit card provider is jointly liable if something goes wrong. This means it is equally responsible along with the retailer or trader for the goods or services you've bought.
So if the retailer should go bust, and the goods or services you paid for cost you between £100 and £30,000, then you can benefit from the full protection of section 75 by claiming from your credit card company.
- If you pay on your credit or debit card, you have extra protection if things go wrong compared with paying by cash or cheque
- You don’t have to have paid the full amount on your credit card – the card company is liable even if you only made part of the payment by credit card
- If you have vouchers for a company that’s gone bust and they are refusing to honour them, you can make a claim in writing to the administrators with proof of your vouchers – but there is no guarantee you will get all of your money back
Only paid deposit on credit card
You don't have to have paid the full amount on your credit card – the card company is liable even if you made only part of the payment (a deposit, say) on your card.
It's the value of the goods you're buying that is key - not the amount paid on the card.
So, for example, if you ordered a new sofa from a furniture store and paid a £500 deposit with your credit card and paid the balance of £1000 by cheque, you'd be covered for the whole £1,500 if the company went out of business and you didn't receive your sofa.
Using vouchers when a company goes bust
There can be nothing more frustrating than having a voucher for a high street chain, only to find that it will no longer be accepted because the chain has gone into administration.
A number of high street stores have refused to allow customers to use vouchers once they had gone into administration - even though they had already accepted money for them.
Why do they refuse vouchers?
When high street chains go bust, the administrators see customers with vouchers as creditors.
This means you have to get in line with all other creditors, such as the Inland Revenue, mortgage companies, loan companies and the government, to try and claim back any money owed.
The administrators are required to treat all creditors equally and can't prefer one over the other, meaning they're not allowed to level any preference at customers with vouchers over anyone else.
How can I get my money back?
You need to make a claim in writing to the administrators with proof of your vouchers.
The names of those administrators are usually on the website of the company which has gone into administration.
But there's no guarantee that you will get all of your money back, and it could take up to 12 months to process the claim properly.
Not all administrators will take this approach.
Woolworths for example was accepting vouchers before it closed, and children's clothing chain Adams was still accepting vouchers in its stores.
If the shop chain you are dealing with will not accept your voucher then you should make a claim in writing to the administrators.
For further information, follow our step-by-step guide on how to complain if a company goes bust.