Comet crashes into administration: what it means for you

Update, 6 Nov, 9pm: Administrator Deloitte says Comet is now accepting gift cards, after originally saying no, except for those issued by corporate customers such as insurers. However, you should still use them ASAP. Comet intends to fulfil orders "where the item is in stock". If unavailable, it will NOT offer a refund.

Stricken electrical store Comet has gone into administration this afternoon, but there is no official news on what this means for customers with gift cards or outstanding orders.

Administrator Deloitte says stores will continue to be open for now and staff will be paid.

Key Points

  • Electrical giant enters administration this afternoon
  • Unclear if gift cards and deliveries to be honoured
  • Stores to stay open, fire sales likely

However, the unfortunate reality is gift cards usually become invalid and orders don't get delivered when a company hits the financial wall. Deloitte says it doesn't have definitive information on these points at present.

As stores are open, it means huge discounts are likely. But beware buying anything that requires delivery in case it doesn't arrive.

If stores end up accepting gift cards, and you have one, use it as soon as possible.

Below, we outline your customer rights if you lose out.

Will you get a gift card refund?

When firms go under, administrators do not usually honour vouchers, and do not give refunds for them.

What's more, if you bought vouchers from a third party, such as a supermarket, you are unlikely to get a refund. For example, Tesco has confirmed it doesn't offer refunds as standard if another retailer it sells a voucher for goes into administration.

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It's unclear whether or not you can claim for gift cards from your credit card provider, as no definitive rule applies here.

Under Section 75 of the Consumer Credit Act, card firms are jointly liable with a retailer if something goes wrong, so long as the item you bought cost over £100.

The Office of Fair Trading says you may get your money back in this circumstance, but this is a largely untested area of law.

If you fail to use a gift voucher in time, and it's not covered under Section 75, you'll have to try to claim the cash from the administrator by becoming what is called an "unsecured creditor".

But don't get your hopes up of getting your money back via this method — it rarely happens.

If undelivered items don't arrive

The silver lining is you may be able to get your money back via your credit card firm.

Make a claim under Section 75 of the Consumer Credit Act, if the item is over £100. For full help on making a claim, see our Section 75 Refunds guide.

While gift cards are a grey area, there's no doubt with actual goods; card firms must pay up.

If the item is for less than £100 or you bought it on debit card, try the Visa or Mastercard chargeback schemes.

These are customer service promises rather than a legal requirement, so there's no guarantee of success. For more help on making a claim, see our Visa/Mastercard Chargeback guide.

If you don't get anywhere via one of these schemes, or you paid another way, you'll have to try to claim the cash from the administrator. Again, don't hold out much hope of getting your money back this way.

Will extended warranties be honoured?

Deloitte says they remain valid.

In any case, warranties that are actual insurance contracts should still be valid anyway, since the contract is with an insurance company rather than the retailer.

If you're unsure, if the contract says it's "regulated by the Financial Services Authority", it's probably an insurance contract.

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