With gift cards being a popular choice for Christmas and Birthday presents, many people wonder “what happens if the shops go into administration or close down?” Over £4 billion per year is spent on purchasing gift cards so it’s fair to say a lot of money is spent on them.
When a business is struggling financially, a group of people known as administrators will take over the running of the business to try to resolve the issues. However, the company will continue to trade (although this may be limited i.e only certain stores open).
Sadly, the decision about whether or not gift cards will still be accepted is with the administrators. They have the legal right to refuse to honour gift cards if they believe it is in the best interests of the company.
If you realise that a store you have vouchers for is going into administration you should contact them to ask if they will continue to accept vouchers. It may be worth asking a few times as the administrators are allowed to change their mind.
If the company closes down entirely and stops trading (goes into liquidation), you can ask to be reimbursed for the value of the vouchers. This is called claiming against the liquidators.
You should do this in writing. Below is an example letter you can use (just fill in the blanks with the relevant information). It is a good idea to send the gift card with your letter as this speeds up your chances of getting a refund. Make sure you take a note of any information on it such as reference/barcode number or any PIN/security number (or even take a photo of it). It is also a good idea to post it using recorded delivery.
Unfortunately, people who are owed refunds on vouchers usually go to the bottom of the list of people the business owes money to so there is little chance of you getting your money back.
On the other hand, if you purchased a gift card using a credit card and the value was over £100 you may be able to claim the money back from your credit card company using what is known as a Section 75 of the Consumer Credit Act 1974. Under this law, credit card companies are jointly liable for breaches of contract (or in other words failing to provide the goods or service).
Our top tips for gift cards
- Spend them as soon as possible (in case the company goes into administration).
- Double-check any terms and confirms. Some gift cards cannot be used online and some cannot be used on certain products.
- Check if they have an expiry date and make a note of this. A good idea is to set a reminder on your mobile phone one month before they are due to go out of date.
- If the company allows you to register gift cards on your online account do this. It means if you lose the card you can still use the voucher.
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