Know your rights if retailer goes down

It won’t have escaped anyone’s attention that a good many retailers are in trouble at the moment.

Peacocks, Pumpkin Patch and Hawkin’s Bazaar are just some of the chains which have been making headlines for all the wrong reasons.

With that in mind, this week’s Your Money is taking a look at your rights as a consumer when a shop goes bust.

It is a sad thought to have to share, and one which is indicative of the times in which we are living, but if you are planning an expensive purchase like a kitchen or a car, then it is probably worth checking that the company you are buying it off is financially sound and likely to be around long enough to complete the deal.

As well as the obvious financial issues, getting everything sorted out is likely to prove stressful.

You can help yourself by making sure that the gap between paying for and receiving the goods is as short as possible. And always try and pay a deposit rather than the full amount up front.

But if you do have the misfortune to order or buy something from a company that runs into difficulties, what are your options?

The first thing to note is that you will need to be patient. Your claim will be just one of thousands that the liquidator will have to deal with so you’re unlikely to get any of your money back straight away.

And there is no guarantee you will get any money back at all. If a big kitchen retailer goes under, for example, the few thousand they owe you for some new units that never got made will pale into insignificance when compared with the millions they probably owe to the taxman.

To a certain extent, it depends at what stage of the order the company went down, as at some point the goods legally become yours. If you know the order was complete and awaiting delivery, it’s worth making a visit to the warehouse with proof of order and ID to see if you can pick up the goods yourself. Your best bet, however, will probably be to make a claim with the administrator as soon as possible.

Some customers will have a better chance of claiming money back than others. Putting purchases of more than £100 on a credit card offers you a level of protection as Section 75 of the Consumer Credit Act makes the credit provider jointly liable for goods up to £30,000.

If the goods are under £100, pay for them using a Visa Debit or a Visa or Mastercard credit card and you’ll be able to make a chargeback claim.

Away from retail, other sectors are easier to deal with. Package holidays, for example, are generally protected by ABTA or ATOL (or both). There are schemes in place to either give holidaymakers their money back or fly them back from wherever they were.

Note that this protection does not apply to tickets bought for standalone flights, or those booked directly with an airline, so again using a credit card is a good option.

Financial companies are different again. They are governed by the FSA and they should be your first port of call if you have a complaint.

Rules for distance buying, online or over the phone, are similar to those on the high street. Buying large items with a credit card is still a good idea, wherever the company resides, and provided the company is based in the UK, you can make a claim to the receiver as usual.

If the business is based overseas, however, (and they can still use a .co.uk address if they are) then getting your money back could be more difficult. Again, do your research.