Gift vouchers
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Last week we highlighted how customers with gift vouchers from the music chain Zavvi were being told that since the company went into administration they weren't allowed to use those vouchers.
Dozens of you contacted us outraged that companies in administration continued to accept cash in their stores but wouldn't accept gift vouchers. Both Zavvi and womenswear chain Viyella are refusing to allow customers to use vouchers, even though they've already accepted money for them.
The current picture is muddled, but Nick O'Reilly from R3, which represents nearly all insolvency practitioners in the UK, says that it's quite normal for stores which go into administration not to accept gift vouchers.
He says that the administrators see customers with vouchers as creditors, and that as such they have to try to claim back their money like all other creditors, including the Inland Revenue and the government. A creditor is someone who pays money for something and doesn't receive it in return.
Nick added that by law administrators are required to treat all creditors equally and can't prefer one over the other, meaning that they wouldn't be allowed to prefer customers with vouchers over anyone else.
Make a claim in writing
Those customers need to make a claim by writing to the administrators with proof of their vouchers. The names of those administrators are usually on the website of the company which has gone into administration. But there's no guarantee that they'll get all of their money back, and it could take up to 12 months to process the claim properly.
Not all administrators have taken this approach. Woolworths was accepting vouchers before it closed, and children's clothing chain Adams is still accepting vouchers in its stores. Its administrators told Watchdog it made "good business sense" to continue to accept vouchers.
USC accepting vouchers in some stores
At clothing chain USC things are more complicated. Some 29 of its 61 stores have been bought out so are still accepting gift vouchers. In the 32 others which are still in administration, it won't accept them but it will direct people to other stores or to the company's website, where vouchers can be redeemed.
Watchdog spoke to some companies who gave the following responses:
USC's administrators, PKF, says that while only 29 of the 61 stores at the moment are accepting gift vouchers it hopes to have 38 stores bought back and accepting vouchers by the end of January. It says that customers can redeem vouchers bought from any store on the company's website and that if customers are having problems they can email vouchers@usc.co.uk or call 0800 876 6682.
Wedgwood Waterford
Meanwhile vouchers for tableware company Wedgwood Waterford were suspended when it first went into administration, but are now being accepted again.
Zavvi
The value of vouchers at Zavvi which can't be redeemed is currently just over £4 million pounds. A number of Zavvi staff have contacted Watchdog saying that they're in an impossible situation. They're worried about losing their jobs at the moment, but they're also having to deal with customers taking their frustration out on them.
Ernst & Young, the administrators for Zavvi, says that since voucher holders are creditors it can't prefer one creditor over another, as laid down in the Insolvency Act. It also says that it stopped selling vouchers in its stores on 4 December, when it became aware of problems with its sole supplier, EUK, part of Woolworths. It added that it doesn't own its stock so has significant costs.
Viyella
Meanwhile Poppleton and Appleby, the administrators for Viyella, say that customers with gift vouchers are seen as creditors. It says that it's confident of finding a buyer for the company and added that it has stressed that it would be a positive step for goodwill and customer care for a company which successfully buys Viyella to recognise the vouchers.
Adams
PricewaterhouseCoopers, the administrators for Adams, said that as it's still trying to sell the business it is accepting gift vouchers. It says it made good business sense to do so, but that it will continue to keep the position under review.
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This comment was removed because the moderators found it broke the House Rules.
Surely, gift vouchers are a product under the sale of goods act, and if they are not honoured they are not fit for purpose and can be refunded
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It is true that the voucher reciever is not a customer (until the voucher is redemed), but the voucher giver IS a customer.
If the voucher is not redeemed on request then the voucher is not fit for purpose for which it was purchased, so the original purchaser of the voucher should be able to return it for a full refund.
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Is it true that customers purchased their Vouchers by Credit card and are then refused acceptance can go back to their credit card company for compensation
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What I do not seem to understand is the following:
The administrators are claiming customers who purchased such gift cards are creditors - as an accountant I can see why they would say this and also why many would also think otherwise.
However lets say these customers are creditors. Now in the business world when a company knowingly keep hold of cash recieved in overpayment by a creditor and do not actively reimburse that creditor this is deemed as fraud and theft.
How do the administrators explain this?!!
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Question;
Regard Zavvi Vouchers
I am wondering if the reason for treating voucher holders as creditors is in order to generate extra income for the Administrators of the Company.
If everyone writes to the Administrators to make a claim as creditors.
Do the Administrators charge on an individual basis and if so how much do they charge?
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This is nothing new, when MVC went into administration about three years ago we had £10 of vouchers which we couldn't use. We registered with the creditors and have still not received any payment. We have however received plenty of letters and brochures from the administrators. It must surely have cost far in excess of the £10 to keep us updated. Crazy?????
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High Street companies are not the only problem. I am awaiting a refund from my credit card company after spending £260 on travel vouchers with Speedferries, which went into administration in November. The administrators have stated that we are considered creditors and are unlikely to receive anything from them.
It seems to me that it is always the consumer who receives little or no legal protection, whereas company creditors and government are the first to benefit from the rest of us when a company goes into administration. I've noticed that my credit card company is being very slow in dealing with my claim.
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Does the 'Sale of Goods Act' not apply to this, as the vouchers bought in good faith are not fit for the purpose they were sold?
Phil Somers
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This comment was removed because the moderators found it broke the House Rules.
The small print that came with my gift card says
"9. zavvi reserves the right to add to or waive these terms and conditions on reasonable notice in advance for legal, security or regulatory reasons via in store displays and online at www.zavvi.co.uk. Further, where, for the reasons above, the cards have to be discontinued, a notice of such discontinuance shall be displayed in-store and shall take immediate effect. All monies on the discontinued cards shall be refunded to the card holder in cash upon production of the card in store with 48 monthsof notice of such discontinuance"
Also confused by the zavvi website on refunds. Is it saying that if the card was purchased between 27/11/08 and 4/12/08 total amount will be refunded BUT if purchased before 27/11/08 you may get an amount yet to be worked out? My card was a gift - how do I know when it was purchased!
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In tonights program, the insolvency "expert" stated that all creditors were equal. This is untrue, there is a pecking order for paying creditors, with the Administrators at the top, followed by the government (VAT etc.), closely followed by the banks (Loans, overdrafts, etc), the people who come LAST are the suppliers and customers, these will get VERY little if anything.
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Zavvi is a joke!! I bought a gift card as a Christmas gift and now it can't be used. (My husband also received one as a Christmas gift)
They realised that they were in trouble, so they stopped selling the gift cards from 4th December, so why did the other outlets still sell them (such as Clinton cards)?. I went into the Zavvi store in Ipswich on 12th December, only to be told by one of the employees that there was a 'computer problem' and they were unable to issue vouchers on that day. However, if I went along to Clinton Cards I would be able to buy one there, which, like an idiot I did.
The treatment of the customers is disgusting, especially at the time of year that it has happened, lots of people not being able to redeem their Christmas gifts, and customers spending their money on expensive bits of plastic!!
I am outraged!!!!!!!
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I am following this with great interest as I am involved with the gift voucher and gift card industry and have been for just over 8 years. The administrators may be correct from a legal point of view but morally and business sense wise they are wrong. People with vouchers and gift cards never go into stores and spend only the value of the voucher or gift card - they always, always spend more. This is a fully recognised fact and has been the case since vouchers were first launched on the market. Therefore the administrators may not be protecting the goodwill and sales values of whichever retailer they are administering - they are, by their actions, losing customers and losing sales.
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i think people should just give cash instead, much safer as u can use it in any shop in the country...
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The Sale of Goods Act must apply, customers buying gift vouchers weren't lending money to the companies they bought them from. If that were the case then this would have to be advertised. It must be illegal to apparently sell something but in fact be asking for a loan?
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I agree with all the comments regarding Gift vouchers not being fit for purpose and this should be tested in court.
I also believe that any deposits taken in advance should be placed in a client account and can only be taken when the customer has signed a release when totally satisfied with the product on delivery, this should apply to gift cards as well.
Many companies take deposits knowing full well that they are in financial trouble and use the money to pay themselves alittle longer, for example airlines furniture stores the list is endless and it is as staed fraud
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If the Bank of Scotland and the Royal Bank of Scotland go bust, are their banknotes going to be worth any more than a Zavvi voucher soon?
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Test Message......The last 7 messages I tried to post never appeared......no idea why.......contacted BBC online help.....no explanation yet.....
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Last message appeared OK, so I'll try again with what I originally wanted to say and have been trying to post since Monday:
Comet and B&Q are now refusing Kingfisher vouchers. I have £45 in vouchers and went to buy a toaster in Comet but they refused to take the vouchers. No explanation; they just pointed me at a notice sellotaped to the till telling me to contact a company called "Flogistics" whoever they may be? As far as I can tell, Comet and B&Q are still afloat.
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If the voucher was purchased with a credit card within 18 months and the store is refusing to accept the voucher the credit card company is obliged under the consumer credit act to provide the buyer a full refund.
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Have just seen on message 21 what I had just found out re. Kingfisher vouchers, My local Woolworths did refuse to take them over the last few days they were open, but wasn't bothered as could go to Comet and B & Q but see can't do that now!!!!!
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