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Comet on the brink: Spend gift vouchers NOW

Comet will go into administration next week, which means it is vital anyone with a gift voucher spends it immediately or risk it becoming worthless.

The electrical chain's demise will represent one of the biggest failures on the high street in recent years, threatening 6,000 jobs.

Below are the key points affecting customers, which also include whether orders and warranties will be honoured. (Please note: Comet is refusing to engage with journalists to answer any of the points mentioned in this story. So we have written them based on our knowledge of the law and past administrations).

Spend gift vouchers NOW

When companies hit the financial wall, administrators do not usually honour vouchers, and do not give refunds for them. So spend any Comet vouchers immediately.

Last month, when JJB Sports went into administration, its administrator KPMG said gift cards bought before 1 October would not be honoured. It also said consumers wouldn't get any immediate refunds.

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.

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.

Will you get undelivered items?

Update, Thu 1 Nov, 3.45pm. Comet's website has been taken down. A message for customers reads: "We are currently upgrading our site. Please bear with us and we will be back online shortly."

Update, Fri 2 Nov, 4.40pm. Comet is still refusing to answer basic questions from us to help customers understand where they stand. However, we have seen a Comet spokesperson quoted elsewhere as saying it's "business as usual" for now, meaning deliveries will hopefully be made.

If you've ordered something that hasn't arrived, it's unclear whether that item will be delivered.

Based on the experience of past administrations, don't hold out too much hope. Again, using the JJB example, its administrator said it wouldn't fulfill orders.

However, Comet is not yet in administration, though there remains a risk items expected to arrive next week may not come.

But 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 electricals be discounted?

Comet's impending demise may also lead to a fire sale with stock massively reduced, which can represent an opportunity for bargain hunters.

So keep an eye out over the coming days.

Is it safe to buy from Comet?

Stores are still open, but beware buying anything that requires delivery as you risk it never arriving. So only buy items you can take away then and there.

But if Comet eventually goes bust, it's unlikely you will get a replacement for faulty goods, while some warranties may become invalid (see below).

Will warranties be honoured?

Again, we don't know for sure.

However, generally speaking, warranties that are actual insurance contracts should still be valid, 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.

On the other hand, service agreements, such as a contract for the store to replace faulty goods, may not be covered.

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