Calls for Coles and Woolworths to refund ‘worthless’ Dick Smith gift cards

AN ELDERY man in the final stages of cancer splashed out $1200 on a Dick Smith gift card for his grandson to buy a computer. It’s now worthless.

AN ELDERLY man who bought a $1200 Dick Smith gift card for his grandson is among those left out of pocket by the retailer’s collapse.

James Briggs, a PhD student from Sunshine, in Melbourne’s west, told news.com.au he had planned to use the gift card to buy a computer for his studies.

Mr Briggs was dismayed to learn the card, a generous gift from the cancer-stricken man he calls “grandfather”, is now worthless.

And he said staff lied to him when he inquired about the company’s dire financial situation, shrugging off media reports as “vicious rumours”.

“I went into a Dick Smith store in December and asked about the rumours, I wanted to know if they were still stable enough to purchase from,” he said.

“The store staff assured me it was all ‘vicious rumours’ and that they were doing fine.”

Mr Briggs said his grandfather bought the card from a supermarket where a 10 per cent bonus was on offer.

He is not the only gift card recipient who is furious at the situation.

Some of those left out of pocket by Dick Smith’s collapse are turning their attention to Coles and Woolworths, demanding that they issue refunds.

As the reality hits that they may never see the cash — with the receiver appointed by Dick Smith’s bankers refusing to honour gift cards or deposits — some have called on the supermarkets to issue refunds as a goodwill gesture.

That’s what savvy start-up Prezzee has done, announcing this morning that anyone who bought a Dick Smith gift card through its new app could claim its value against one a gift card from one of its other partners, such as Myer and Veronica Maine.

But the supermarket giants, which are understood to have sold hundreds of thousands of Dick Smith gift cards, are unwilling to take the hit for their customers — which is unsurprising, given the amount at stake could well run into the millions of dollars.

News.com.au reader Tony Smith was left hundreds out of pocket by the corporate collapse and is steaming mad at Coles for selling him the gift cards in the first place.

“A lot of consumers (myself included) were caught up in Coles Supermarkets promoting the Dick Smith gift cards with 10 per cent bonus money, right through the recent times in which the retailer was in financial trouble,” Mr Smith said.

“I personally have hundreds of dollars worth of Dick Smith cards that were purchased from Coles, am unable to redeem them at Dick Smith, and Coles has effectively washed their hands of the situation ... I don’t think it is good enough that Australian consumers are treated like this by Coles, which is just laughing all the way to the bank.”

Turns out that ‘10 per cent bonus deal’ was too good to be true.

Dick Smith yesterday announced it had gone into voluntary administration, and receiver Ferrier Hodgson was appointed by its lenders.

The receiver said in a statement that it would not honour outstanding gift vouchers or refund deposits paid for goods, leaving customers to join the queue of unsecured creditors — meaning they are unlikely to recoup the full amount owed to them.

Shoppers left in a similar position by the Borders bookstore chain’s collapse were still fighting for refunds four years later, the Wall Street Journal reports.

When Borders filed for bankruptcy in February 2011, it left behind 17.7 million useless gift cards worth more than $200 million.

Mr Smith argued that Coles should take responsibility for the gift cards it sold.

“The Coles offer was advertised, and involved consumers paying $100 (for example) and receiving $110 in ‘value’ on their Dick Smith cards,” Mr Smith argued.

“You have to think that someone at Coles knew what was going on, that these cards were in grave danger of not being redeemable due to Dick Smith’s imminent collapse, but they continued to sell them in bulk under their 10 per cent extra promotion.”

But Coles and Woolworths, which pulled Dick Smith gift cards from shelves when the news of its collapse broke yesterday, declined to offer refunds.

Both supermarkets sold the 10 per cent bonus gift cards in the lead-up to Christmas. The bonus offer was an initiative of Dick Smith, amid the ill-fated fire sale it had hoped would salvage the retailer’s cash position.

“Coles is unable to offer refunds for gift cards as Coles has already passed on the funds,” a spokesman said in a statement.

“Coles was not informed prior to the company entering administration and we apologise for the inconvenience caused to our customers.

“Customers who have purchased Dick Smith gift cards that have not been redeemed should contact the administrators to register as creditors or for updates on any change to the redemption of gift cards in future.”

Dick Smith’s receiver will not honour gift cards or deposits. Picture: Marc Robertson

A Woolworths spokesman emphasised that the 10 per cent bonus gift card promotion “was an initiative of Dick Smith”.

“Woolworths withdrew Dick Smith gift cards from our stores immediately upon learning that the company had been placed into voluntary administration,” the spokesman said.

“Customers who have purchased these gift cards, and who still have value remaining on the cards, should contact Dick Smith.”

News.com.au understands that the supermarkets’ margin on gift cards is negligible, but they are regarded as an “easy sell” that offers convenience to customers.

Gift card distributor Blackhawk Network, which sold the Dick Smith cards into supermarkets and other retail outlets, has been contacted for comment.

Meanwhile, the national competition regulator is monitoring Dick Smith’s receivership and how it will hit customers.

An ACCC spokesman said the commission would engage with the receiver “to monitor the approach to consumer issues” arising from the situation.

“The appointment of an external administrator and in this case, placing the company into receivership, can affect the position of consumers, for example for those who hold gift cards or have paid a deposit,” the statement said.

“Affected consumers should look to the information provided by the receiver and where appropriate consider whether they should seek to register as an unsecured creditor.”

The spokesman said warranties for some goods may be redeemable from the manufacturer.

More information can be found on the ACCC website.

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