Shoppers left short-changed by the collapse of Dick Smith are being thrown a lifeline with news that Coles and online retailers Kogan and Mwave will offer store credit for Dick Smith gift cards.
After Dick Smith issued a trading halt on shares early in the new year, speculation was mounting about the future of the embattled retail chain. On January 5, the company announced it was entering administration, and later announced the appointment of receivers to tidy up the company's affairs and start an "urgent" hunt for buyers to bail the company out. A week later, Dick Smith CEO Nick Abboud stepped down.
But while early discussions focused on staff jobs and the spectre of store closures, questions were soon raised about Dick Smith gift vouchers, with receivers Ferrier Hodgson announcing that, "due to the financial circumstances of the Group, unfortunately, outstanding gift vouchers cannot be honoured and deposits cannot be refunded."
The news would have come as a major hit so soon after Christmas, with plenty of Australians turning to tech gift cards as a good stocking stuffer for impossible-to-buy-for relatives. But three local retailers have stepped into the breach to help customers out.
Coles, Kogan.com and Mwave.com.au have all offered affected customers store credit to replace their gift vouchers.
Coles, which sells Dick Smith gift cards in its supermarkets, has offered to exchange valid, unredeemed Dick Smith gift cards purchased in Coles stores for cards of equal value to be used in Coles. The cards must have been bought since July 1, 2015, but the offer is not open to cards bought in Dick Smith stores.
If you bought direct from Dick Smith, you won't get a dollar-for-dollar deal, but Kogan and Mwave will both offer you store credit in exchange for the cards. Kogan is offering AU$25 of credit for Kogan.com, while Mwave is offering AU$20 worth of "Mwave dollars" in exchange for what it calls the "ultimately worthless" Dick Smith cards.
While Dick Smith customers might be miffed about losing unspent cash, this kind of treatment of gift card holders is nothing new.
When a retailer like Dick Smith enters administration or receivership, there are normally any number of creditors to be paid. These can include suppliers who have shipped their products to the stores to sell, employees who are entitled to their wages and leave payouts and even shopping centres that need rents paid.
Store customers wind up at the back of a long line of people waiting to be paid by the company that has gone bust, and they become what is known as "unsecured creditors," with virtually no rights to recourse.
But Independent Senator Nick Xenophon is hoping to put an end to that uncertainty, saying that tighter regulations need to be brought in to protect consumers.
"There ought to be protection for gift card recipients and those that have paid for the gift cards. Those funds need to be put in a trust account process so that it's protected money...it's money in the bank effectively for a good that has not been delivered.
"And finally, if that doesn't work, if a company doesn't have that in place, then directors ought to be personally liable."