Financial journalist Paul Lewis tweeted a timely warning this morning:
Before you buy a gift card from a retailer look at this list of well-known High Street names gone out of business.
When a firm goes into administration, the administrators aren’t legally obliged to honour vouchers. As Andrew Johnson, director general of the trade body UK Gift Card & Voucher Association, explains to Retail Week:
even if retailers take precautions to set aside money received from gift vouchers, the administrator still has the power to prioritise other outstanding debts and use the money elsewhere. Johnson says with Virgin Megastore, certain gift vouchers bought during a specific period were protected by a ring-fenced fund. However, he says even if funds are ring fenced, “all monies are in control of the administrator and it could still choose not to use the funds to honour gift vouchers”.
The UK Gift Card & Voucher Association doesn’t want to scare consumers off, of course, but given the shaky state of the high street at the moment it’s probably wise to think carefully about any vouchers or gift cards you want to give as presents this Christmas – or to use multi-outlet gift cards or vouchers that aren’t tied to specific retailers or shopping centres.