01.Paying the price
With the news appliance retailer Clive Peeters has been placed into administration, the spotlight yet again falls on consumers' rights when a company goes under. Last year's collapse of Kleenmaid sparked widespread debate about which payment methods provided the greatest safety net for those whose purchases had yet to arrive. Some CHOICE members who had paid for their goods in full found themselves without cash or purchases, having opted to store goods at the company’s warehouse.
The future of Clive Peeters is uncertain. The company is believed to owe a total of about $70m to approximately 1,500 secured and unsecured creditors. On May 28, Ferrier Hodgson was appointed as the new administrators of Clive Peeters, replacing previous administrators, McGrathNicol, who stepped down at the first meeting of creditors after concerns were raised about a perceived conflict of interest. Control of the company lies with its receivers and managers, PPB, who have indicated they intend to continue to trade the company on an as-usual basis while they seek a buyer for the business. However, the Consumer Action Law Centre warns customers against buying goods from Clive Peeters unless they take them away, saying many customers who have already bought goods from the retailer but not received them are likely to be disappointed. Consumer Action’s co-CEO Carolyn Bond says Clive Peeters continues to trade and still appears to be offering ‘interest free’ deals to customers.
"Unfortunately, we’re now hearing of cases where those customers are being told the company has been placed into administration and no goods can be delivered,” she said.
In the wake of these two major collapses, it’s important to be aware of some basic ways to safeguard your interests if a company from which you’ve purchased goods goes under. Your method of payment can make a big difference to whether you’ll get your money back or not.
Buy with a credit or debit card
Customers who buy goods with a credit card or certain debit cards are generally better protected than those who pay by cash. If you have used a credit card to pay for goods in full and haven’t received them, you may have a case for chargeback. On behalf of the customer, the card issuer will seek a refund from the bank of the folded company. The right of chargeback also applies to debit card customers who chose the “credit” option at the time of purchase. Our article on Woolworths' unpopular decision to deny customers the option to choose the credit option on their debit card outlines the potential drawbacks of using EFTPOS instead. It may reduce or eliminate any fees you pay, but it can compromise your safety net if the retailer you have purchased from goes under.
Time limits for chargeback apply and may vary between financial institutions, so it’s important to contact your bank or credit union as soon as possible.
National Australia Bank requires Visa One cardholders to notify the bank of chargeback circumstances no later than the due date shown on the statement of account,.
Teachers Credit Union Visa Debit cardholders should contact the credit union within 45 days of the transaction.
American Express (Amex) cardholders should call Amex on the phone number on the back of their card no later than 120 days from the transaction date or expected date of receipt of goods. All chargebacks are considered on a case-by-case basis.
MasterCard holders should contact their card issuer within 120 days of when the transaction was debited to the account.
Visa cardholders have 120 days to initiate a chargeback and are advised to contact their card issuer as soon as possible.
Diners Club cardholders should call customer service on 1300 360 060 and dispute the charge within two months of when the transaction was debited to the account.
What if I paid cash?
The only option available to customers who paid with cash or a cheque is to wait for the outcome of the administration process. The same applies to customers who used a debit card and had chosen either the “cheque” or “savings” option at the time of purchase.
What happens when a company’s in trouble?
When a company goes into voluntary administration it appoints an external administrator to help plan what steps need to be taken. If nothing can be done for the company, the administrators will try to get the best outcomes for the people or groups to whom it owes money – the creditors.
How do I claim my money back?
Creditors can make a claim by completing a “proof of debt” form, which can be obtained from the voluntary administrator. This is usually done to notify the voluntary administrator of your claim and enable you to vote at creditor meetings.
What if I have unused vouchers?
If you have unused vouchers for a failed business, you are an “unsecured creditor” and must register your details and wait for the outcome of the administration process.
What about my warranty?
You may be able to claim warranty on products bought after the business goes under, provided it’s from the manufacturer. The Kleenmaid case was unique as the company represented both manufacturer and retailer so no warranties were honoured. Our campaign on warranty rights may be able to answer some of your questions.
Go to the ASIC website, for general information about insolvency.