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What to do if a retailer goes bust
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With the news full of alarming statistics about struggling retail chains at risk of going bust, find out what you can do to protect your purchases
While retailers are slashing prices in an attempt to draw in last-minute Christmas shoppers, a leading corporate rescue specialist has reportedly warned that several major chains are in danger of going into administration.
With stores cutting prices by up to 70%, experts claim that at least 10 regional or national chains are in danger of going bust in January, when creditors are likely to push the companies for the repayment of debts.
This is a real concern for customers with outstanding orders, such as the 30,000 people who are currently owed goods by furniture retailer MFI.
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The company went into administration at the end of November, but admitted last week that it was unable to complete all of its outstanding orders.
MFI has now set up a £30m contingency fund and has published information on its website about how to claim refunds.
So what are your rights if a company collapses before you receive your goods?
Play your cards right
If you’ve paid for goods worth between £100 and £30,000 on your credit card, you can claim assistance from your credit card company under Section 75 of the Consumer Credit Act 1974.
This legally binding piece of protection means the card issuer is equally liable for your refund if a company goes to the wall.
The protection also applies to the full value of the item, even if you’ve just paid part of the cost on your credit card and the remainder in another way.
However, there are exceptions to the rule – particularly if you’ve paid through an intermediate firm such as online payment company PayPal, meaning there isn’t a direct link between your card provider and the company you’ve made the purchase from.
The bad news? This protection is exclusive to credit cards; purchases made with debit cards are not covered.
In these circumstances, there’s no guarantee you’ll get a refund for any incomplete orders.
If receivers are called in to manage the company’s outstanding debts, you’ll need to compete with all of the other creditors to get your share.
by Tom Murphy, 22 December 2008
