From Thomas Cook to Mothercare, 2019 saw a string of well-known companies collapse, and the outbreak of COVID-19 means we’ll likely say goodbye to more in 2020.
If it happens to a retailer, venue, or holiday company you’ve bought something from, it doesn’t have to mean your money is lost.
There are a few ways you can protect money if a company collapses and you don’t receive what you’ve paid for.
Follow these five tips to protect your money.
- You can keep up to date on our latest advice on the coronavirus outbreak over on our coronavirus advice hub.
1. Pay with your credit card
Good news: you have extra protection when you pay for something on your credit card.
Thanks to Section 75 of the Consumer Credit Act – a piece of law in use since 1974 – your credit card company is jointly responsible with the retailer if something goes wrong.
You can make a claim against your card provider for any item between £100 and £30,000.
And this still applies even if you only paid some of the money (like a deposit) on your credit card.
So, if you paid a £50 deposit with your credit card, and paid the remaining £950 on a debit card, you’d still be covered for the full £1,000.
You can use our template letter to make a claim to your credit card provider.
2. Or pay with a debit card
If you pay by debit card, you can try a chargeback claim.
This is where your card provider reverses a transaction if things have gone wrong.
Unlike Section 75 this isn’t enshrined in law, but it’s a scheme that most high street banks have in place.
Most banks only accept chargeback claims within 120 days of the payment, but each card provider will have different rules, so it’s worth getting in touch with your bank to double check.
Read our guide on how to use chargeback.
3. Get a warranty
Securing a refund for a faulty product can be a lengthy process if the retailer has collapsed.
One way around this is to get a warranty when you make your purchase.
A warranty – which is like an insurance policy – means you can claim a refund or repair from the manufacturer, even if the retailer has gone bust.
They’re particularly useful for protecting big purchases, such as tech products or household appliances.
You do normally have to pay for warranties (while guarantees are free and often last for a shorter length of time), but they offer extra protection if something goes wrong.
4. Protect your holiday
If you book a package holiday with a UK travel company, it’s likely that you’ll be covered by Atol.
Atol protects your money if a company involved in your trip goes bust before you depart, and guarantees you’ll be brought home if the company collapses while you’re abroad.
The Foreign and Commonwealth Office have advised against all foreign travel until 16 April, which means that airlines and travel agents are obliged to cancel holidays, and issue refunds or allow you to rebook.
However, many companies are refusing to reimburse customers.
If your flight or package holiday was scheduled before 16 April and is now cancelled, you don’t have to accept a credit note or rebook for a later date. You are legally entitled to a refund and can ask for one.
Some airline passengers who booked with a credit card are attempting to claim through their card provider too. It’s unclear yet whether this will be successful but is worth trying.
5. Are you insured?
Home contents insurance covers the cost of replacing your belongings if they’re damaged, destroyed or stolen.
If you receive a faulty product from a bust retailer, it’s worth making a claim with your insurer.
There are lots of different types of contents insurance you can sign up to.
Depending on the cover you choose, you may be able to get a brand new product of equivalent value.
It’s important that you shop around to find the right insurance for you: read our guide for more information.
If you’re booking a big event like a wedding, it’s worthwhile getting specialist wedding insurance so you won’t be left out of pocket if a key supplier or venue goes out of business.