Numerous shoppers were left with worthless HMV giftcards following the announcement of the firm's descent into administration last night. Dean Dunham, founder of consumer rights website youandyourrights.co.uk, has likened the practice to theft, and called on the troubled retailer to allow redemptions or offer refunds.
Honouring gift vouchers after going in to administration is hardly standard practice - recently hit rival companies Comet and Jessops also dumped their giftcard schemes on entering administration (though in Comet's case, administrators later relented). HMV's decision has provoked widespread rancour nonetheless.
Speaking to the Independent, HMV's chief executive Trevor Moore declined to shed any light on the fates of outstanding vouchers. There have been "very high levels of redemptions after Christmas", he said. Did you manage to get shot of yours before Tuesday? If not, the following article from MoneySavingExpert may be of use.
With up to 4123 jobs at risk across 223 stores, and a debt of over £176 million, it remains to be seen whether or not HMV will survive administration in any form.
"HMV is an iconic retailer and continues to be a very popular brand, but as we have seen with many high street retailers, the market is changing rapidly and conditions are currently very tough," Deloitte's joint administrator and restructuring services partner Nick Edwards observed in a statement (thanks, MCV).
"Following our appointment, we are working closely with management and staff to stabilise the business in order to continue trading whilst actively seeking a purchaser for the business and assets," he continued. "We appreciate the cooperation and support from the staff, customers, suppliers and landlords at what is clearly a difficult time."
Do you think HMV will bounce back?
By Alex Hawksworth-Brookes
23 comments so far...
CunningSmile on 16 Jan '13 said:
I can't understand why the "watchdogs" (ie busy bodies with no real power) are kicking up a fuss now. Companies in administration almost never honour gift vouchers or refunds policies because technically the second the administrators take over it's a different company, therefore from a legal stand point why should they honour them any more than honouring Amazon vouchers? Not saying I agree but there you go.
My main point though is why complain about "theft" now? It's not like HMV are the first chain to go bust in the last few years, I don't even think it's the biggest, it's just the one with the most nostalgia attached to it.
msbhvn on 16 Jan '13 said:
My friend bought his father and brother HMV gift cards when we went Christmas shopping last year. Unlike with GAME, there was no warning HMV were going to go into administration and customers had no opportunity to redeem the cards. I think there should be legislation on this issue as HMV have taken customers' money and given them nothing in return.
I do agree that the administrators have no obligation to honour the cards, but customers should have had the opportunity to redeem them before the administrators were called in.
FishyGinger on 16 Jan '13 said:
Because Dean Dunham had 20 quid in hmv vouchers. I thought it was because when the administrators are called in all monies left have to be paid out in a set order, administrators fees, bank loans, creditors etc until it gets down to customers and then very little is left.
At my last place we had a customer who went under and we were owed something tiny like 13 quid but the administrators actually sent us a cheque for 27 pence.
Still, it should be changed so the customer can take something up to the value of the card, not get money back as they don't have any.
SkinnerChinner on 16 Jan '13 said:
I recall accepting WW gift vouchers during is final days with no complaints, but I suppose at that point everyone knew it was beyond saving, no one cared, not enough to have to deal with understandably angry customers anyway. What were Deloitte going to do? Sack me?
They were already talking about not paying staff...
Sucks from a customer point of view, but its not a priority for the adminstrators. Some form of legislation should be put in place that customers can still spend pre-purchased gift cards (they've already paid for it after all) on items in store at least.
CunningSmile on 16 Jan '13 said:
All true, and certainly a contributing factor, but the administrators are basically running a new business which has the sole purpose of paying those debts off in the set order. Sad as it sounds but I quite enjoy reading those legally required notices they put up explaining that 'HMV is now a trading name of Deloitte LLP acting as HMV's administrators'
Kettch on 16 Jan '13 said:
As someone who has been through this in the last 12 months, i feel for the staff at HMV. They do not deserve the abuse they are getting over this. And not everyone was aware that GAME was going last year. Some never realised until months later.
The idea behind suspending giftcards is to get actual money into the business then and there, and all being well, HMV will emerge in a healthier form on the other side, and the cards will be valid again. I certainly dont want it to go under. I buy most of my music and all of my films and tv dvds from HMV. I only download the odd track. If they go, what do i do? Im stuffed on the highstreet
Windowlicker79 on 16 Jan '13 said:
I think the main problem is that they continued to sell hundreds of thousands of pounds worth of them coming up to Christmas when they were already very aware of the fact that they might go into administration. Any other time of the year it might not be such a problem, but refusing gift vouchers less than a month after Christmas is a pretty shitty move and will not help them gain favour with consumers. Most people who have lost money in the form of gift vouchers are likely to say "f**k them, even if they do get bought out and stay open I'm never shopping there again".
mariachi2000 on 16 Jan '13 said:
The only part of it that could be called 'theft' is that at least one store was still selling gift cards yesterday. This is a bit more obviously wrong...
FishyGinger on 16 Jan '13 said:
Never realised it went under a different name legally. It was interesting as a supplier to a company in administration, they had to send us regular updates which included their fees. It's strange seeing individuals with wages of 800+ quid an hour trying to help a company....
xXPiperAlphaXx on 16 Jan '13 said:
May I suggest a simple and easy way to stop this kind of thing from happening in the future:
Don't buy f***ing gift cards!
Perhaps people would then use some imagination when purchasing a gift for someone. Failing that, write a cheque/put one of those pieces of paper that the Bank Of England prints a lot of in an envelope.
mford on 16 Jan '13 said:
It does seem awful about the gift cards but i think alot of people knew hmv were im trouble and therefore should have avoided buying them, i personally wont miss hmv too much, as much as i like to look at a dvd face to face they always seemed over priced compared to online. Still my girlfriend will not be impressed, one less place to buy me an xmas pressie as she does not like to shop online.
Maverick_McCool on 16 Jan '13 said:
Have to disagree there , as the only adult gamer in mine and my wifes family , those game gift cards were a godsend and the only salvation I had from a birthday full of shit games!
"Oh look! Iron Man! That was a good film , I'll bet he'll love the game!"
I'd rather have the gift card thanks.
PonderingWalrus on 16 Jan '13 said:
Completely agree with this. HMV have screwed over all their customers who bought gift cards for people for Christmas.
CunningSmile on 16 Jan '13 said:
Apparently several stores in Ireland have had to close up after customers were just throwing their cards on the counter and walking out with stock. Technically it's looting but I can understand why they're doing it.
xXPiperAlphaXx on 16 Jan '13 said:
Hahaha there is that I suppose!
I think gift cards need to be viewed these days as an investment in the company selling them. If they go bust you've had it basically.
The laws are all to cock in my opinion. It's too easy for business owners to wring every last penny from the company and swan about in flash cars and tailored suits, owing a fortune to everyone, and then being able to walk away from their debts and obligations of decency.
CunningSmile on 16 Jan '13 said:
That's the problem right there. The people who've mismanaged HMV et al aren't the owners, merely the managers ie an employee same as the guys on the tills. The owners are the shareholders, often big pension companies investing in the stock market, but also small investors and staff who get shares as bonus. The current laws exist exactly so that all those people annoyed about their gift cards can't turn up on the door step of a random shareholder and take their TVs because "your company stitched me up." That's why the laws seperating companies from the people who own them were created in the first place.
Do some businesses abuse these laws? Yes, as anyone who's ever dealt with a shonky plumber who goes bust every six weks and reopens with a different name can attest, but as someone who owns shares in Tesco I'd much rather those laws existed than have to personally pay compensation for the horse meat fiasco.
FishyGinger on 16 Jan '13 said:
Sorry about that Cunning. Honestly it looked like a cow, they neigh right? When I wodged two tasers inbetween its ears it dropped like a cow. How was I to know.
xXPiperAlphaXx on 16 Jan '13 said:
Agreed, perhaps I should have said Company Directors rather than owners. It's just upsetting that the people at the top seem to get away with murder with no accountability. Perhaps if some kind of compensation scheme had been in place, paid for by taking levies from businesses intending to sell the vouchers, this kind of thing wouldn't cause such bad feeling.
CunningSmile on 16 Jan '13 said:
That's ok Piper (is piperalpha any reference to the oil rig fire?) I fully agree that too many company directors get away with behaving irresponsibly and once the business goes bust and 4,500 staff are out of work they get to walk into another MD job. Don't even get me started on the people who run banks.
xXPiperAlphaXx on 16 Jan '13 said:
Yeah that's the point I was making really, I would introduce a law whereby a Company Director is personally liable for the debts they rack up, then they might think twice before making some of the decisions that brings about a company's downfall.
As a shareholder, you know that investing in a single company carries a degree of risk yet the average Grandma buying a giftcard for a present has no idea that this in itself is a risk, but one without the rewards of dividends and/or an increase in the share price.
The PiperAlpha disaster happened when I was at primary school when I was 10. With my name being Piper, you can imagine the amusement this brought to other 10 year olds. Hence my username.
schwepterbrowser on 16 Jan '13 said:
I have £45 worth of vouchers that I received for Christmas, it's certainly very annoying!
CunningSmile on 17 Jan '13 said:
Ah that explains it. Sorry I was being nosey
Sandbwoy on 17 Jan '13 said:
Gift cards are ridiculous. Why buy someone a gift card that they can only spend at a particular store, when you could just give them cash instead and let them spend it wherever they want? Never made any sense to me.