Now the online operations of the business has been purchased by Kogan, which says it won't be honouring outstanding gift card credit.
Shortly after the announcement of the Kogan sale, however, the exclusive provider of extended warranty services for Dick Smith, The Warranty Group, announced that it will honour all extended warranties sold by Dick Smith across Australia and New Zealand. This includes extended warranties sold before and after the chain went into receivership.
According to The Warranty Group. the decision covers all warranties ever sold, including 135,000 extended warranties that were left exposed when Dick Smith went into receivership, accounting for over $2 million in retail value.
Dick Smith emailed customers in the lead-up to its receiver sales, encouraging consumers to take advantage of low prices. But CHOICE warned consumers at the time to use caution when buying Dick Smith-branded models, such as their TVs.
CHOICE Policy and Campaigns adviser Sarah Agar says that while consumers can grab a bargain at the Dick Smith sale, there is still a risk if the company fails to come out of receivership and goes under.
"Consumers who bought Dick Smith-branded products may find it practically difficult to get a refund or repair if the product fails and Dick Smith ceases to trade in the future. Consumers generally have the right to seek a remedy from either the manufacturer or the retailer – when this is one and the same, and it goes bankrupt and is wound up, pursuing a remedy will be difficult, if not impossible."
Dick Smith has issued an open letter to customers, claiming the chain is "under new management" while trying to win back the trust of consumers.
"Backed by our cash back promise, if you purchase products during the receivership of Dick Smith and we are unable to quickly repair or replace it, we will provide you with a full refund."
However there was no mention of extended warranties, gift cards or deposits.
Dick Smith continues to sell extended warranties
Electronics retailer Dick Smith continued to sell extended warranties, despite going into administration in February.
CHOICE Help received multiple queries from concerned consumers who purchased goods from the retail giant, worried that they could be left out of pocket if their warranty is voided, should the company go bust.
However in a statement to CHOICE, Dick Smith's voluntary administrator said that "normal warranty procedures are still in place".
The Australian Competition Consumer Commission (ACCC) said consumers who have purchased an extended warranty issued by Dick Smith can contact The Warranty Group, the administrators of the Dick Smith extended warranty, on 1300 654 621.
A legal document on the Dick Smith website states:
"For extended warranty purchased prior to 1 October 2015 the receivers understand that this cover remains valid. Please refer to the Extended Warranty brochure, provided at the time of purchase, for details regarding your rights available under the Extended Warranty.
For extended warranty purchased during the period 1 October 2015 to 4 January 2016, this cover is currently under consideration by the external provider and is expected to be resolved shortly.
For extended warranty purchased on or after 5 January 2016, this cover remains valid. Please refer to the Extended Warranty brochure, provided at the time of purchase, for details regarding your rights available under the Extended Warranty."
CHOICE spokesperson Tom Godfrey said as the receiver rakes over what's left of the electronics retailer, consumers should be wary of the company continuing to sell manufacturer's and extended warranties.
"The only thing extended for consumers is the likely wait they might face at the end of a very long line of creditors should their products fail."
Extended warranties often aren't worth the extra cost anyway. Our recent shadow shop reveals that many salespeople at leading electronic stores fail to properly understand or communicate the rights guaranteed by the Australian Consumer Law, and may try and sell you an extended warranty that doesn't offer protections above and beyond what's already guaranteed under the law.
However, it still pays to know your rights when a company collapses.