What Are My Consumer Rights When A Retailer Goes Into Administration?

8 April 2019

When a retailer goes into administration many consumers are left unsure about what their rights are in regards to obtaining a refund or replacement product or service.  TRUE Solicitors explain what it means for a company to go into administration and how it affects customers and their purchases. From this, we can make recommendations on how to continue shopping safely with a brand that has gone into administration.

What does it mean if a retailer goes into administration?

When a business goes into administration it means that it has insolvent. In order to avoid complete insolvency an appointed administrator will be brought in to help the company repay debts. The administrator may also work on the retailers behalf to sell the company on to a new owner, or to dissolve the company if a buyer doesn’t come forward. You may find it more difficult to exercise your consumer rights when purchasing or trying to return something from a retailer that is in administration.

Returning goods when a retailer is in administration

The Consumer Rights Act 2015 can offer you some form of protection if you need to return an item to a retailer that has gone into administration, but is still trading. You may be able to obtain a refund or replacement item under the act.

If the retailer has ceased to trade while it is in administration you are eligible to submit a claim in writing to the administrator. This however, doesn’t guarantee that you will receive a refund or replacement product.

For faulty items you can submit a claim direct to the administrators to obtain a refund or for the cost of repairing the item.

What happens to my warranty when the retailer has gone into administration?

Items purchased under a manufacturer’s warranty should usually give you the right to be eligible to claim a refund or replacement/repair direct from the manufacturer. A manufacturer’s warranty typically provides you with a form of protection for the first year after purchase, sometimes even longer. It is important to check the paperwork that you were given at the time of purchase to be certain of the exact details.

What is Chargeback and how can it be used to get a refund?

Chargeback allows consumers to reverse a transaction processed their debit or credit card that they dispute. You can use Chargeback to help you to get money back from the retailer when the goods that you purchased were damaged, not as described, when the retailer failed to deliver them, or when the retailer has ceased trading. Chargeback comes in useful for protecting your purchases with a value of under £100, when section 75 of the consumer credit act doesn’t apply. You have 120 days from the date of the transaction to make a Chargeback claim.

What is Section 75 of the Consumer Credit Act and how does it protect my purchases?

Under Section 75 of the Consumer Credit Act it states that the credit card company is jointly liable for any breach of contract or misrepresentation by the retailer. So if you used your credit card to purchase goods or services from a retailer that has since gone into administration, you can make a claim to the credit card provider to recover your losses.

Section 75 applies to purchases that cost between £100 and £30,000. This is also applicable to any deposit or part payments that have been made using your credit card. For example if you purchased a solar panels for your home which cost £6000, and you paid a 10% deposit of £600 with your credit card, if the solar panel installation company went into administration you can make a claim for the full amount of £6000, should there be a fault with the solar panels.

Can I use gift vouchers if the retailer has gone into administration?

Retailers may decide to stop accepting gift vouchers as a form of payment if they have gone into administration. This is obviously extremely frustrating for consumers who have been consequently left out of pocket through no fault of their own. Consumers can write to the administrators, with proof of their vouchers, however the administrator is not legally bound to refund gift vouchers.

To conclude, paying for purchases over £100 on a credit card will offer a form of financial protection should a retailer go bust, or if you are caught in a dispute over a refund with company that you purchased the goods or services with. Should have a dispute over a product or service that was sold to you by a company that has since gone bust, you can make a claim by going direct to the Financial Ombudsman Service. 

Our financial mis-selling team are experienced in obtaining compensation for clients who have been mis-sold solar panels and  SIPP pensions.