Photography firm Jessops has today gone into administration, rendering shoppers' gift cards invalid. What's more, it won't accept returned items.
Administrators PriceWaterhouseCoopers (PWC) were called in this afternoon, and while stores are still open for business, PWC says it is inevitable some will close. (Since publishing this news story all Jessops stores and its website have closed. See the updated Jessops MSE News story for more info).
The collapse of the firm, which has 192 stores, puts 2,000 jobs at risk.
A PWC statement says: "At present Jessops is not in a position to honour customer vouchers or to accept returned goods.
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"Trading in stores is hoped to continue today but is critically dependent on ongoing discussions.
"However, in the current economic climate it is inevitable there will be closures."
Gift card rights
Administrators are allowed to render gift cards and vouchers invalid.
It's unclear whether or not you can claim for one from your credit card provider, if you paid that way, as no definitive rule applies.
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 (see our Section 75 Refunds guide).
Yet this largely applies to goods and services. With gift cards, the Office of Fair Trading says you may get your money back, but this is a largely untested area of law.
If 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 you buy vouchers from a third party, such as a supermarket, you are unlikely to get a refund.
Tesco has confirmed it doesn't offer refunds as standard if another retailer it sells a voucher for goes into administration.
Refund rights, warranties and orders
- Refunds. When firms go into administration, you often cannot return faulty items or have them exchanged. While this may be a legal right, you become a 'creditor' with others the firm owes money to. However, since writing this news story Jessops has closed down all of its shops, meaning it cannot give any refunds. See the updated Jessops MSE News story for more.
- Non-delivered items. Customers will not receive undelivered goods they've paid for either in full or part because the Jessops business has been shut down. If these customers paid on a credit card or debit card they may be able to get a refund through their card company. See 'Can I claim?' below and the updated Jessops MSE News story for more information.
- Warranties. If you have bought an extended warranty, this is an insurance contract so it should still be valid anyway. The contract is with an insurance company, not the retailer. If you're unsure, if the contract says it's "regulated by the Financial Services Authority", it's probably an insurance contract. For anything else any Jessops service promises are no longer valid as all stores have closed down, so check with your manufacturer if it offers any warranty.
- Can I claim? If faulty items are not replaced, or deliveries never come, you should be covered under Section 75, if you paid by credit card and the item cost more than £100. If you paid by credit card for goods under £100, or on a debit card, you may be able to claim via Visa or Mastercard's chargeback schemes. However, these are customer service promises, not legal rights. See our Section 75 Refunds guide.
Today's news about Jessops once again reminds shoppers with gift cards or vouchers for ailing companies to use them quickly or risk them becoming worthless.
There are continued concerns about the future of music store HMV too, after it warned last month it may breach banking agreements.
Electrical giant Comet collapsed late last year, as did JJB Sports earlier in 2012.
Other recent casualties include Clinton Cards and lingerie store La Senza, both of which have since been relaunched under new owners.
When companies hit the financial wall, administrators often do not honour vouchers, and do not give refunds for them.
Comet initially stopped accepting gift cards, but later did a U-turn on that policy. However, this was an exception.
JJB Sports's administrators said gift cards bought before the firm hit the wall would not be honoured.