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Are you buying gift cards this Christmas?

Are you buying gift cards this Christmas?

Category: Money

Updated: 10/12/2013
First Published: 10/12/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

With Christmas a mere two weeks away, a lot of people are finalising their Christmas lists (and could well be approaching a state of last-minute-shopping panic). For many, a gift card or two will invariably crop up, but after the spate of retailers closing their doors and failing to honour gift card sales last year consumers are being urged to keep an eye on things.

Last year thousands of consumers were left seriously out of pocket when Comet, Jessops, Blockbuster and HMV all went out of business after the Christmas period and failed to honour gift vouchers. Unfortunately when retailers go into administration there's no certainty that consumers will get their money back, something a lot of consumer groups and trade bodies want changed, with the UK Gift Card and Voucher Association believing that vouchers and gift cards should be guaranteed even if a retailer closes its doors. But, such a guarantee is still a way off being implemented!


If you're buying gift cards this Christmas just what can you do?

You should start by thinking very carefully about where you're getting vouchers from and should avoid any retailer that appears to be struggling – Blockbuster, for example, has already announced its intention to get the administrators back in, as has Barratts for the third time – and if you're buying vouchers worth more than £100 you should ideally buy them on credit card for a bit of added protection.

What happens if the company I've bought vouchers from goes into administration?

In this case a lot of retailers won't honour gift vouchers, but if yours are refused you could try to claim your money back – you'll need to write directly to the administrators with proof of purchase (you should be able to find the name of the administrators from the website of the retailer) but there's still no guarantee that your claim will be upheld, and it could take up to 12 months to process too.

Am I protected if I give someone a gift voucher this Christmas?

Technically, no, but the rules change if you buy the voucher on credit card. Under Section 75 of the 1984 Consumer Credit Act, the card issuer is "jointly and severally liable" for your purchase – which means they'll be obliged to refund you the amount spent if the retailer doesn't honour the voucher. However, this only applies if the vouchers are worth over £100 (with an upper limit of £30,000, should you be feeling particularly flush this Christmas), and if you need to make a claim you should go directly to your card issuer. If you paid on a Visa or MasterCard debit card you might also be able to claim your money back using the chargeback scheme, whereby your claim is based on the fact your vouchers are fundamentally different to what you paid for, but this isn't guaranteed. Contact your bank for further details.

It's also worth remembering that the recipient of the gift won't be able to make a claim – it always needs to go through the person who actually bought the vouchers.

If I buy a product with a gift card can I get a refund if it's not right?

The rules regarding refunds will often vary according to the specific retailer, and if you pay using a gift voucher a lot will only offer store credit (or a replacement voucher) should you be unhappy with your purchase. But, should they go into administration the returns policy is unlikely to be upheld, so you'll need to place a claim directly with the administrators (again, bear in mind that you may get little, if any, remuneration). Alternatively, if the item is faulty and under warranty, you should be able to go directly to the manufacturer to get a refund or could potentially claim through your card issuer – check your documentation to make sure.

What happens if I buy an item online but the company goes into administration before I have received the item?

If your order has been packaged and is ready for despatch, there shouldn't be a problem with your order being fulfilled. Your first course of action should be to call the company directly to check the status of the order and see how you can arrange delivery, or alternatively if you've already paid but the company can't fulfil your order you'll have to go through one of the routes mentioned above – contact the administrators or your card issuer.

Of course there are no guarantees and the best curse of action is to choose your retailer wisely, so if you keep up with changes on the high street and bear in mind the above points you can have a very merry Christmas without being out of pocket.

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.