BHS administration: What does it mean for consumers?

Picture by PA.
Picture by PA.
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High street retailer BHS has confirmed it is going into administration - putting more than 11,000 jobs in jeopardy.

But what rights do consumers have, and how will they be affected by the company's collapse?

:: What happens when a company goes into administration?

When a limited company enters administration, insolvency practitioners with accounting and business finance expertise are appointed.

They will try to see if the company can be kept going, and will recoup money for creditors by identifying any assets and selling them.

:: Do consumers have rights once a company enters administration?

A customer's rights depends on a number of things, such as how they paid for any goods, how much they cost, if they are faulty, when they were ordered and if the goods have been delivered.

Consumer group Which? currently recommends shopping in store rather than online, as once a company enters administration there is a risk "the good won't arrive".

:: How will BHS gift vouchers now work?

According to Which?, a number of high street stores have refused to accept vouchers once their administration process has begun - but some will still take them.

Alex Neill, Which? director of campaigns, said: "Our advice to anyone with a BHS voucher is to spend it as quickly as possible."

:: What if you cannot spend your vouchers?

Vouchers can often be refused because administrators will view customers in possession of them as creditors.

To try to get the cash value back, a claim in writing with proof of the vouchers will need to be made to the administrators - but this process is not guaranteed and can take up to a year.

:: Can items be returned?

Once a retailer goes into administration, returns are not always accepted.

Customers normally have the right to return faulty goods, but once the administration process is under way this is invalid, according to Which?

If the faulty item is under warranty, a refund or repair can be claimed from the manufacturer if it is within the warranty period. Or a claim can be lodged with the administrators for the cost of repair.

:: Can consumers claim refunds?

If goods have been purchased on a credit or debit card, this offers more protection than if a shopper paid by cash or cheque.

If something has been paid for by credit or debit card and cost more than £100, according to Which? it means the card provider is jointly responsible for any contract breaches.

A refund can be requested when goods are not delivered or if they are faulty. A letter must be sent to the credit card company with details of the claim if the company goes bust.

Customers who paid by debit card and find their goods are faulty or have not arrived, may be able to claim through the Mastercard and Visa chargeback - as long as it is under the 120-day threshold when the claim is made from purchase.

:: What is a chargeback claim?

Chargeback applies to all debit and credit card transactions. It allows customers to get their money back on purchases that are under £100 and are not covered section 75 of the Consumer Credit Act.

There must be evidence of a breach of contract for this to apply - such as in the case of a company going into administration, goods that do not arrive, that are damaged or different from the description.

A chargeback claim is made to the bank that provides the debit or credit card.

:: Can a customer claim money back if they only paid a deposit?

Yes, it is the value of the goods and not the amount paid on the card that is important. This means the card company is still liable even if a part payment was only made on the card.

Under Section 75 of the Consumer Credit Act, as long as the value of the product is between £100 and £30,000 the customer will be covered for a refund.