Disgruntled Dick Smith and Masters customers need to know their consumer rights

Consumers need to know their rights if they are left stranded with gift cards or lay-by deposits at a retailer in financial dire straits.

Pretty woman with pink glasses and shopping bag looking unhappy about the bag or its contents, unhappy customer

DICK Smith is down, homewares and clothing group Laura Ashley is in administration and Woolworths wants to get rid of its hardware business Masters.

There’s a lot happening in retail at the moment, and consumers are understandably worried about their rights when it comes to gift cards and deposits for goods when businesses collapse or change hands.

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Dick Smith customers were shocked last month when the company went into receivership and they were told gift cards and lay-by deposits would not be honoured.

Dick Smith customers were left in shock when the business went into receivership last month.

While Coles and Woolworths offered to exchange Dick Smith vouchers bought at their stores, many other customers’ cards and deposits effectively became worthless.

Fashion and home furnishing company Laura Ashley’s 38 stores were placed in administration in January and customers were told their gift cards would be honoured only if they spent an equal amount in cash.

When retail businesses go bust customers can be left out of pocket, but if a business is sold and continues trading — such as Woolworths planning to offload Masters — customers’ rights should transfer to the new business, says consumer group Choice.

“If a business goes under, consumers will most likely end up at the bottom of a long list of unsecured creditors,” Choice spokesman Tom Godfrey says.

Dick Smith refused to give Todd Sharpe a refund for a product he was misinformed about.

Unsecured creditors rank behind the secured creditors — usually the banks — when it comes to getting some or all of their money back from debt-laden companies. Dick Smith owes $140 million to secured creditors and $250 million to unsecured creditors.

“Even if you purchased an extended warranty through a third party, you may still be out of pocket if something goes wrong, depending on the contract’s terms between the retailer and the warranty provider,” Godfrey says.

The Australian Competition and Consumer Commission says if you are owed deposit or gift card money by an insolvent company you should contact its appointed external administrator.

“You can register with the voluntary administrators as an unsecured creditor of the business,” an ACCC spokesman says.

“The insolvency process will determine if you get a full refund, partial refund or no refund at all.”

Some customers who paid with a credit or debit card may have chargeback rights that enables them to get a refund from the card issuer, the ACCC spokesman says.

“You should contact your card issuer straight away as there are conditions and time limits on making a chargeback claim.”