James Walker: How to protect yourself when firms bite the dust

Mothercare is closing 79 stores across the UK. Picture: Ben Birchall/PA Wire
Mothercare is closing 79 stores across the UK. Picture: Ben Birchall/PA Wire
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The collapse of Mothercare has once again shown us how much the high street as we know it has changed forever. In 2018, 43 brand names went bust, closing 2,594 stores. And 2019 will end with much grimmer stats.

The past few years have seen some pretty big names bite the dust. So understandably, lots of the people I speak to are concerned about what happens when a business goes bust when you’ve paid them money but haven’t got what you purchased.

Here are a few simple tips on how to shop so you’ve got more rights:

Chargeback

First things first. Call your bank and ask them to “charge back” your money. Explain this is urgent and that the business is going into administration. Chargeback is an agreement between plastic card providers and can be used on payments made by debit or credit card. Your bank should try to get you the cash back as soon as possible. However, if the administrators have closed the business’s accounts, it may be too late. So don’t delay. If your card provider makes a mistake or fails to recall your cash, you can make a formal complaint through Resolver. (visit the website below).

Pay by credit card

You’ve got lots of statutory protection if you pay for goods or services using a credit card. There’s a nifty law called the Consumer Credit Act that says if you pay for things on a card that cost over £100 and less than £30,000 you could claim the money back from the card provider. You don’t even need to have spent the whole amount on the card as long as the deposit falls within the limits.

Failing that, pay by debit card

It’s not a legal right, but providers usually accept “chargeback” on such cards. Using electronic money services like PayPal also gives you some rights, but read the dispute resolution rules first.

Avoid paying by cash, cheque or direct transfer. You’ve got no rights with these methods. Always question businesses that ask for payments this way and don’t pay if you can’t afford to lose it

Vouchers and gift cards

If a firm goes bust, then vouchers and gift cards you may have with them become invalid. They are generally treated as cash you are owed. Some firms that have gone in to administration have honoured their vouchers. But if you hear rumours that a business is in trouble, don’t delay – use your vouchers and gift cards before it’s too late. As money is usually refunded to the card of the person who paid for the vouchers, speak to whoever bought them for you.

Repairs and refunds

If you’ve bought something that doesn’t work but the retailer goes bust, you’ll need to go to the manufacturer to see if you can get a repair, replacement or refund.

If you’re worried you’ve been stitched up by a dodgy retailer, speak to your local Trading Standards officer – they’re based in the council offices. They can let you know if there’s a wider problem and can investigate the business if they think there’s a cause for concern.

The best way you can protect yourself is to keep your eye on the news. If it sounds like a firm is in trouble contact them asap. But act quickly – it’s the best way to safeguard your hard-earned cash.