Aberdeenshire Council’s Trading Standards team are offering advice to consumers to help avoid losing money when companies go into administration.
Famous names like ‘Comet’, ‘Jessops’, ‘HMV’ and ‘Blockbusters’ are among the increasing number of companies which have recently gone into administration.
Customers can be left out of pocket because, when a company goes into administration, its legal status changes and so does its legal and contractual obligations.
People who have bought goods which have not been delivered; discovered goods they have recently purchased are faulty, or who have gift vouchers, may find themselves losing out.
The Trading Standards team are advising people of a few steps that can be taken to protect their purchases:
· Using a credit card to purchase goods or services with a cash value of over £100 – Section 75 of the Consumer Credit Act 1974 makes the credit card provider liable if the company goes bust.
· A similar scheme called chargeback applies to most debit cards – there is no minimum spend for most chargeback schemes, but usually a time limit of 120 days to make a claim.
Also this scheme is not backed by law and does not guarantee that you will receive a refund. Contact your bank for more details.
· Companies in administration are unlikely to accept returns of faulty goods, issue refunds or offer repairs. S75 can be used in these circumstances to obtain redress.
Most goods come with a manufacturer’s warranty and this should not be affected by a retailer going into administration.
· Gift vouchers are unlikely to be honoured by a retailer in administration but there is little help available to get your money back. Trading Standards advises people to think carefully before buying vouchers.
A company could go into administration at very short notice. Bear in mind they also come with time limits - an estimated £250 million of gift vouchers go unspent every year.
If money cannot be recovered through a credit or debit card issuer, customers can register with the administrator as an unsecured creditor.
However, even if there are assets in the company, compensation my only be a few pence in the pound at most.
Principal Trading Standards Officer, Kevin Potter, said: “As we have seen over recent weeks, it’s impossible to predict which companies will go into administration, so I would urge consumers to do all they can to protect their spending.”
Free advice on this, or any other consumer-related matter, is available from the Citizens Advice Consumer Helpline on 08454 040506.