Consumer guide - What to do when a business goes under

Closed sign on door

Cover Your Assets When Businesses Go Under


You may not think you have anything at to lose when you hear of another retail outlet closing? But is that really true?

On a near daily basis, consumers open newspapers or turn on the evening news to discover yet another retail store is shuttering their operation.

What should a savvy consumer do when they get word of a new closure? Many of us have investments in these stores – investments such as loyalty points, valid warranties, gift cards and merchandise to exchange or return. Here’s Resolver’s advice on how to protect yourself.

Warranties – Extended and Standard

If you read Resolver’s article on extended warranties, you know they’re generally not worth the cost but if you have bought an extended warranty or have purchased a warrantied store brand item from a retailer in receivership, you want to know that your purchase is still protected. When Sears Canada closed their doors in 2017, thousands of people were left without someone to service the warranties they’d purchased and some where required to continue paying for these now useless warranties on a monthly basis by the acquirer of the Sears credit card business, Scotiabank.

Eventually a buyer was found for the warranty and replacement parts division and DirectBuy took over the warranties but in the meantime, panicked consumers were stymied trying to get information from anyone.

The best solution to this situation is a refund for the unused portion of the extended warranty but consumers must be diligent in their quest for this outcome. Calls to customer service numbers may not produce results so your best bet is to return to the store and ask to speak to a manager to address your concerns. If the retailer has yet to devise a plan for warranties, ask to be notified immediately when a course of action is dictated. Get phone numbers. Ask to be put on a distribution list for email information. Do whatever you can to ensure that you are made aware of the plans for your warranty. Worst case scenario is that due to the financial burdens on the organization, warranties will not be honoured under any circumstance. Best case is, you are provided a refund or someone steps in to acquire the warranties. Either way, you need to know how to proceed and you can only get this information from the retailer prior to close of the business.

If you paid for your purchase with a major credit card, check with the issuer of that card to see if you have any warranty protection included with the purchase. This is your last resort. If perhaps you paid for the extended warranty with a major credit card, you may be able to get that refunded as well. Leave no stone unturned.

Loyalty Points

If you are a member of a store’s loyalty reward program it is highly unlikely that the program will be honoured elsewhere so it’s important to use the points you have accumulated as soon as you can. You may not have paid for these points, but they have a value. Retailers in receivership often have clearance sales where items are heavily discounted for quick sale. Take advantage of these closing sales. You are getting a greater value for your points if you’re purchasing discounted items with them. Buy gifts for upcoming birthdays and holidays if there’s nothing that appeals to you personally but USE THOSE POINTS! You earned them and you should be able to redeem them.

Gift Cards

If you read Resolver’s article on gift cards last year you know that the value of these cards can be lost when a store goes out of business. Like Loyalty points, you need to redeem the value of this card as soon as possible or lose it. Watch for the clearance sales that are inevitable and redeem your card value on the discounted merchandise. Once the physical store is closed, you will have no recourse and the value will be lost.

Undelivered items – unfulfilled orders

Do you have an outstanding order from a company that just announced insolvency? First, determine if the item has shipped. If you have shipping notification like an e-mail or text with a tracking number, you should be fine. That would mean the item is on its way and likely can’t be recalled by the company. However, if you’ve had no confirmation the item is in transit and you’ve been charged for the item, contact the company immediately seeking details on your order. Try to cancel the order with customer service and seek a refund, given the new circumstances. If this isn’t possible, you will have to turn to your credit card company where benefits should allow you gain a full refund for any merchandise you have paid for, but not received.

Returns and Store Credit

If you’ve been putting off returning that impulse buy but the store just announced receivership, you likely have a very small window of opportunity to take the item back. If the store is still accepting customers through the door, you should be able to return an item as easily as you did prior to the announcement. But the clock is ticking. The same goes for any credit vouchers you may be holding from past returns. Once those doors close, your recourse is indeed limited so get out there and use that credit any way you can or it becomes as worthless as the paper the voucher is printed on. Again, think in terms of future gifts if there’s nothing available that appeals to you personally. But use it. It’s your money.

Stay Informed

As consumers, we all must make the most of the money we spend so at the first rumour of a store closing, check it out. Search the internet for news stories that may contain pertinent details or visit the company’s website to see what information may be posted there. These businesses are under no obligation to remind you of any holdings you may have that could become worthless, so it’s up to you to know your rights. If your rights have been denied or you’ve been treated unfairly by a business during receivership, don’t despair. You can still file a complaint here at MyResolver.

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