It’s no secret that businesses have been faced with hard times recently. According to the Centre for Retail Research, 38 major retailers were failing between January and November 2019. Big names like Mothercare, Debenhams and Thomas Cook have all found themselves in trouble.
As the economy continues to struggle, we could see more companies going into administration. But, is there a way to protect yourself from being out of pocket when businesses go bust?
Pop it on your Credit Card
The easiest way to protect yourself is to (sensibly and without overstretching yourself) spend on your credit card. Any purchases made between £100 and £30,000 are covered by Section 75 of the Consumer Credit Act 1974.
In the event of anything going wrong, like a company going bust before you’ve received your goods, the credit card company and retailer are liable for any money lost. Whether you bought the product in the UK, somewhere abroad or via an international website, you will still be covered.
Section 75 is still in play if you only paid for part of the purchase on you card. Say you paid the deposit for a fancy new TV on your credit card, but the rest was paid with a bank transfer, you can claim for the entire amount (deposit and balance).
Misrepresentation also falls under Section 75 so if you received goods or services which were not as they were sold to you, you can claim back for that too.
Unfortunately, there are situations in which your money isn’t protected by the credit act. You must have bought the item directly from the supplier. If you bought it through a third party, then you can’t claim. However, it’s a rather complicated agreement so if you’re unsure, it’s worth putting a claim in anyway.
Before you make a claim on Section 75, you must always attempt to get a refund from the retailer first.
Making a claim if a company has gone bust
Making a claim is easy, all you have to do is approach your credit card company for a refund, even if you have closed your credit card account.
I paid by debit card – what about me?
Debit card purchases are not covered under the Consumer Credit Act. If you paid with a debit card, however, you might be able to claim back purchases under £100 via Chargeback.
Chargeback covers you if goods haven’t arrived or were faulty once you received them. You need to make a claim within 120 days and only if you have tried but failed to get your cash back from the company you bought from.
It’s important to note that chargeback isn’t legal protection and is only offered at a company’s discretion.
And always remember to keep on top of your credit card payments – don’t go accruing interest unnecessarily.
Is your holiday protected?
In recent times, there have been a number of travel companies going out of business, leaving holiday makers out of pocket. The most notable being Thomas Cook, who left hundreds of thousands of holiday makers without a holiday and having to claim.
Thankfully ATOL and ABTA exist to provide cover for travellers.
ATOL was specifically designed to cover holidaymakers who fly. If you booked your holiday as part of a package through a company who are signed up to ATOL (Air Travel Organisers’ Licensing) you’re covered for any part of your holiday and entitled to a full refund. Fortunately for the unlucky holiday makers, Thomas Cook package holidays were part of the scheme.
Many travel agents and tour operators are members of ABTA, a travel association who enforce standards and provide insurance for holiday makers, should their travel company go out of business. ABTA protection covers all holidays including travel by rail, road or sea.
Before you book a package holiday, always check whether it is protected by ATOL or the travel company is a member of ABTA. You can find out more information about what to do if your travel company goes bust here.
Are you insured?
It’s pretty sensible to get travel insurance when you book your holiday to cover your personal property, delays and medical situations. Some insurance policies may even protect you in case your travel company goes bust.
Check the small print to see if your policy includes end-supplier failure, this should protect you if any company you have booked through go bust.
Buy from a reputable company
This advice covers almost every purchase you might make, but checking a company’s credentials before making any big financial commitment is just good sense. From estate agents and car sales to builders and plastic surgeons, there are professional bodies for almost every industry you can think of. Whilst not all of them offer financial protection, they can help you spot a reputable company from a less reputable one. Do your homework up front and get as many reassurances as you can that a company is in a solid financial state before handing over your hard-earned cash.
Have an emergency pot
Having a little pot of emergency money set to one side makes good financial sense, whatever your circumstances. This gives you peace of mind when the unexpected happens – be that illness or injury that prevents you from working for a time, a boiler breakdown or indeed a company going bust and taking some of your money with it. Not being able to recover your money from a company that is no longer isn’t ideal, but if you have a buffer, it will help ease some of the disappointment.
If you’d like us to help make sure your finances are as protected as possible, please get in touch with a member of our friendly team who will be happy to help!