Vouchers: Not much of a gift if the company goes bust

Gift vouchers can seem like the perfect present. And a few years ago, no one would have thought twice about buying them. I know when I got married, vouchers seemed to be the gift of choice. And for many months after my wedding, I spent Sunday afternoons wandering around Meadows & Bryne picking out the latest kitchen gadgets. Back in the boom, it would never have dawned on most people to worry about the value of vouchers should a business go into liquidation.

But this is the reality of the times we now face. Businesses that appear to be trading on a Monday can have closed up shop by Tuesday. At Taylor Solicitors Cork, we see many incidents of people left holding vouchers for everything from facials to flying lessons when a company goes bust.

What are my rights?

Unfortunately, consumers have very limited rights when a company goes out of business. Where a consumer has paid for a voucher but hasn’t used it, they are unlikely to have their voucher payment refunded.

Generally, when a company goes out of business they have racked up numerous debts to a variety of creditors. Under the liquidation process, creditors known as “secured creditors” such as banks and “preferential creditors” such as employees and the Revenue are given priority: i.e. they get paid first. The consumer who has purchased a gift voucher is known as an “unsecured creditor” and ranks in priority after the “secured” and “preferential” creditors. In many liquidation cases, there simply isn’t enough money to pay “secured” and “preferential” creditors, let alone anyone else. The reality is that in most liquidation cases, the ordinary consumer who has purchased a gift voucher is unlikely to get any refund or compensation.

If I’m buying a gift voucher, what precautions can I take?

– If you buy or receive a gift voucher, don’t let it sit in the bottom drawer for months on end. Use it as soon as possible.

– Before you buy a voucher, think about who you’re buying it from…. Does the business look like it’s trading successfully or are there “Closing Down Sale!!” signs plastered around the shop. Use some common sense.

– Think carefully about the amount you spend on a voucher. Consider the risk of buying a €50 versus €500 voucher.

– If possible, pay for the voucher by debit or credit card. In some circumstances if you’ve paid for the voucher by credit or debit card you may be able to claim against the retailer under the payment card processing rules. You should contact your card provider to find out if this is possible in your particular case. In contrast, if you pay by cash, you will have no comeback under these rules.

Remember, each situation can be different. Depending on the particular circumstances surrounding the purchase of your voucher, you may have other options. In a situation where you’ve spent a large amount of money on the voucher, it may be worth your while to contact your solicitor and get legal advice specific to your situation to see if you have any other options.

Taylor Solicitors Cork

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