We’ve all been there. It’s almost Christmas and there is one person who we haven’t got a clue what to buy for. We often resort to buying a gift card or voucher as it shows we have put some effort in whilst leaving the ultimate decision of what to buy to the gift recipient.
Unfortunately, there have been a number of reports in the media recently which suggest that some high street retailers are currently facing financial difficulty. It is therefore worth considering what actually happens if the retailer you bought your gift cards from goes into insolvency.
Once an administrator is appointed, it is likely that the retailer will stop honouring its gift cards and, instead, the friend or family member to whom you gave the gift card will be treated as an unsecured creditor of the retailer. Unsecured creditors rank low in the order of priority for payment and so, in practice, this means that your friend or family member will only receive pennies in the pound (if anything at all) on the value of their gift card.
What can be done then? Well, for higher value purchases, it is often recommended that you purchase those gifts or gift cards using a credit card. This is because the Consumer Credit Act 1974 provides a certain level of protection to purchasers where goods have been paid for but not delivered. Where the transaction value was between £100 and £30,000, the card issuer is required to refund the paid amount; although, anything below £100 or over £30,000 is not covered here.
Alternatively, both Visa and MasterCard operate schemes which provide that, in circumstances where goods have been paid for, but the retailer goes into administration before they are delivered, Visa or MasterCard (whichever is your card issuer) should be able to charge back and refund the debited payment made using that card (and, in this case, there is no minimum transaction value required).
The most obvious thing to do, though, is to buy gift cards as close to the ‘big day’ as possible and for the recipient to spend them as soon as possible after receipt, to minimise the risk of the retailer becoming insolvent in the meantime.
For more advice of consumer rights and insolvency, please contact one of our specialist solicitors at Jolliffes on 01244 310022 email: firstname.lastname@example.org