Jan 15

My rights when a shop goes bust

Retailers like HMV, Comet, Jessops and Zavvi are among the sad list of high-street names that have gone bust in recent years. So what are your rights if you’ve bought goods or you have gift vouchers for those stores?

Your rights if you bought something just before a shop goes bust

If you’ve bought something with a credit card then you should be covered. According to section 75 of the Consumer Credit Act (1974) your credit card will cover you for any goods with the value of between £100 and £30,000. Although you will be covered if you paid a deposit of a nominal amount on your credit card and paid in some other way – cash, for example.

If you’ve paid with a Visa debit card, you may be able to get your money back for goods under £100 via ‘chargeback’, but the credit card provider is not legally obliged to pay you. You have 120 days to contact your provider to ask them to get a refund – if this approach is unsuccessful you have the right to appeal through the Financial Ombudsman Service.

If you’ve paid only in cash, the chances are that you’re likely to lose your money. Unfortunately, the priority of the liquidators is to pay off secured creditors and all staff, with customers being much further down the chain. However, if you’ve bought something and your order has been processed and is waiting to be sent out, then legally the item is yours and must be delivered. You can find out who the administrators are by searching the Companies House website.

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Your guarantee if a shop has gone bust

Many products are sold with an automatic manufacturer’s guarantee (or warranty) which usually lasts for a year.

  • Guarantees are a contract between you and the manufacturer, not the shop, and the manufacturer must do whatever it says it will do in the guarantee – generally to repair or replace a faulty item.
  • But you do already have your rights under the Sale of Goods Act and retailers can’t ignore this.
  • You could be legally entitled to a free repair or, in some cases, a replacement item for some time after the manufacturer’s guarantee has expired thanks to the Act. So if the retailer has since gone out of business then depending how you paid you may get your money back:
  1. If you paid using your credit card for something that cost between £100 and £30,000 you may be able to get your money back through section 75 of the Consumer Credit Act 1974. This makes your credit card company equally liable for the shop’s breach of contract.
  2. If you paid less than £100 and you used a Visa debit card or a credit card it may be possible to get your money back via ‘chargeback’. This means the card provider can try to get your money back from the shop on your behalf, although they’re not legally obliged to. Citizens Advice has a template letter you can download and send to your credit card provider to claim money back.
  3. If you paid for anything with cash, a cheque or a non-Visa debit card, it’s unlikely you’ll get anything back.

Your warranty if a shop has gone bust

Longer-term guarantees and warranties are generally underwritten by a third party, which will be legally required to honour the contract whatever has happened to the retailer who originally sold the item.

If you’re worried about the warranty, dig it out and read it carefully so that should anything go wrong with your item you know the terms and conditions and how long your product is covered for.

Your gift voucher if a shop has gone bust

If the shop has gone into liquidation but continues to trade, then any gift vouchers can still be used.  If the company has ceased trading then it’s highly unlikely that any money can be recouped, however it’s worth trying to claim monies owed through ‘breach of contract’ under section 75 of the Consumer Credit Act.

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