As the retailer falls into administration it says statutory obligations will be honoured, but it is unlinkely discretionary transactions will be successful
Thousands of consumers could lose out after music and entertainment retailer HMV said it will no longer accept gift vouchers following its descent into administration.
The troubled group has warned that shoppers’ gift vouchers will no longer be accepted in stores, nor will it accept returned goods, unless they are faulty.
“Where we have statutory obligations we will honour them, but when it’s a discretionary thing such as an exchange or return it is unlikely that shoppers will be successful,” a HMV spokesman said.
“We effectively have different owners now, and it is up to them to decide how gift vouchers are treated, but there will be a process for voucher holders to follow and the administrator will be able to offer more information on this.”
HMV has confirmed it will call in administrators from Deloitte, as the 250-strong chain became the latest casualty of the shift to online shopping, putting 4,500 jobs at risk. However, Deloitte said it had not been officially appointed so could not yet outline its plans. Confirmation is expected later.
The HMV spokesman acknowledged that if the retailer survives its period in administration it may accept vouchers again; likewise the administrator could begin accepting gift vouchers at any time if it believes the business is in good enough health.
Stores were still trading on Tuesday 15 January and the HMV spokesman urged people to continue shopping. “The more people continue to visit the store and purchase goods from us, the more likely it is that we will get through this difficult period,” he said.
The music chain is far from the first major high street casualty of recent months. In early January 2013 photographic equipment retailer Jessops fell into administration, putting about 200 stores and 2,000 jobs at risk. This followed a string of closures in 2012 including Comet, JJB Sports, Game, Peacocks and Blacks Leisure.
HMV has been hit by a double whammy of a wider economic downturn as well as the trend for people to purchase CDs and DVDs online at cheaper prices and the accompanying shift towards paid-for music streaming services.
Consumers quickly took to the internet to register their sadness and anger at the news. One Guardian.co.uk user wrote: “Disgusting that HMV are not accepting vouchers. People have paid hard-earned money for these. Cynical timing – wait until just after Christmas when lots of people have purchased vouchers as presents and then a couple of weeks later refuse to honour them – money for nothing!”
On HMV’s Facebook page, one person wrote that she had a gift card with £207 on that she was now unable to use: “I had to take back my daughter’s faulty nexus7. I did not have my partner’s bank card so they said they would put it on a gift card. That was only two weeks ago.”
Others were more upset than angry. On Facebook, Jamie Smith wrote: “I am absolutely heartbroken at the news of tonight. Literally gutted. HMV is my favourite shop in existence, I’m a proud HMV plus member and still have over £30 on my giftcard.”
Can I still shop in HMV?
Branches are still open, but depending on what the administrator decides they could close at any minute.
Are gift vouchers worthless if a company is in administration?
Pretty much. Gift vouchers are categorised as debt owed by the company, so if it goes bust holders become unsecured creditors who join a queue of creditors looking for their money back. Administrators can, at their discretion, continue accepting vouchers but this is unusual, at least in the early days of administration. HMV has already stated it will not accept them.
If you have unspent vouchers you need to lodge a claim with the administrators and hope for the best. Failing that, depending on how much the voucher cost you could ask the person who bought it if they would be prepared to try and get their money back and give you the cash (see below).
So I shouldn’t throw my vouchers away?
No. You will need them to lodge a claim with the administrator, but there is also a chance HMV will begin accepting them again. When Jessops fell into administration recently it stopped accepting vouchers immediately, but after the administrator had analysed the business it started accepting them once again.
I bought vouchers for someone else – can I get the money back?
It depends how you paid. If you paid by credit card you are covered under Section 75 of the Consumer Credit Act, as long as you spent at least £100. This doesn’t all need to have been spent on vouchers, just the total of a single transaction. The protection also covers undelivered goods and those that prove to be faulty.
If you bought goods on other plastic you may have some protection. Visa, MasterCard and American Express all offer a scheme called chargeback, which allows customers to claim back money spent on a debit or prepaid card if the goods do not arrive or are faulty, or where the retailer has gone bust. There are time limits for these claims so you should act as soon as you can. See our factsheet for more on Section 75 and chargeback.
If you paid by cash or some other means you will have to contact the administrators to make a claim directly.
I’m awaiting delivery of an item – will I get it?
This is unclear at present. Contact HMV to see what stage your order is at (020 8495 4434). If it is ready for dispatch the company might still be able to fulfil it.
What if it doesn’t arrive or turns out to be faulty?
If the company is unable to fulfil your order it is unlikely you will receive a refund at this point – any administrator will lock down the company’s transactions until it can obtain a complete picture of the state of the business.
HMV has said it will replace faulty items in-line with its statutory obligations while it remains open (under the Sale of Goods Act you have the right to reject an item that is not of satisfactory quality), but if there is no ongoing business to complain to, you’ll end up in the queue of people wanting their money back from the administrator.
Will the guarantee I bought with my product still work?
Yes. Manufacturers often provide their own guarantee, while longer-term guarantees and warranties are usually underwritten by a third party, which will be legally required to honour contracts regardless of what has happened to the retailer which originally sold the product. In HMV’s case, for example, its Extended/Play warranty is underwritten by Allianz Insurance.
Allianz said that people with policies covering goods under £150 should contact HMV in the first instance, while customers with claims on goods over £150 should contact Allianz Insurance directly at 0844 893 9497 or email@example.com.
• We will update this article once more details are available from the administrator