It seems that you're using an outdated browser. Some things may not work as they should (or don't work at all).
We suggest you upgrade newer and better browser like: Chrome, Firefox, Internet Explorer or Opera

×
avatar
hedwards: Depends whether the customers had access to all the relevant facts. If they were selling them without disclosing how close they were to bankruptcy, that could be regarded as fraud, even if there weren't any other wrong doing. Obviously, we're talking UK law, so who knows. But, it's questionable at best to sell gift certificates knowing you might be closing your doors in a matter of weeks.
avatar
Magnitus: I find it very unlikely that their execs wouldn't have foreseen the current situation at least a few months in advance with 95%+ confidence.

Proving it without access to their paperwork is another matter entirely though.

My guess: They'll probably get away with it.
It's the UK, rather than US, so it's at least possible that they'll get punished. In the US, they put in the fine print that they're not actually promising or guaranteeing anything and the courts generally go along with that.
avatar
anjohl: Again, assymetrical access to information. Companies selling gift cards should be required to fully disclose their financial health at all times if the law is going to treat them as interest free loans.
That's probably unrealistic, but I do think change is necessary. Since they're sold as store credits, they should be required to hold in reserve enough funds to cover the obligations so that in case of bankruptcy or a larger than expected number of people using the cards, they don't get caught short.
Post edited January 19, 2013 by hedwards
avatar
hedwards: Since they're sold as store credits, they should be required to hold in reserve enough funds to cover the obligations so that in case of bankruptcy or a larger than expected number of people using the cards, they don't get caught short.
So when they go bust, the money will go to the administrator, who will hand it out to whichever creditors are considered the most deserving. Which probably won't be the person with the $50 gift card.
avatar
hedwards: Since they're sold as store credits, they should be required to hold in reserve enough funds to cover the obligations so that in case of bankruptcy or a larger than expected number of people using the cards, they don't get caught short.
avatar
movieman523: So when they go bust, the money will go to the administrator, who will hand it out to whichever creditors are considered the most deserving. Which probably won't be the person with the $50 gift card.
Considering the changes that would have to be made, I think making them give back the money they've borrowed on this basis first would be a given. It won't ever happen, because the retailers like counting on people never using the gift certificates, but it makes no sense to regard those as general debt, when they'd be required to hold money in reserve to cover it.
I think the real problem is what kind of asshole gives others HMV gift cards, of all things.
avatar
anjohl: Because the consumer is at the lowest level on the totem pole, and is hurt the most. A gift card is in fact not a loan, it is adeferred sale. The money was spent, the customer should be entitled to a refund or valued appropriately.

A supplier owed $20,000 has a lot.more info on a partners financial health than a consumer.
Thanks for your answer. It is certainly incorrect to suggest a supplier would have more financial information than a consumer, but I can understand why you would think that. I also don't understand how a consumer owed $50 is hurt more than a supplier (who could be an individual small business owner) owed $20,000, but I guess that is just an opinion, which is fine. Personally, I have seen many suppliers go under because their main customer has gone into liquidation.

The kind of financial information that anyone would need to make an informed decision about the financial position of the company is simply not disclosed to suppliers or customers. The reality is that suppliers are almost always as surprised as everyone else.
I guess we have very different ideas about capitalism and consumer protection.
avatar
anjohl: I guess we have very different ideas about capitalism and consumer protection.
and equality and fairness
avatar
anjohl: I guess we have very different ideas about capitalism and consumer protection.
avatar
htown1980: and equality and fairness
Equality and fairness must always skew towards the consumer. Suppliers know the risk of doing business, a customer is not doing business, a customer IS the business. To let a company take money for nothing is a crime, and should be outlawed, creditors be damned.

When a consumer walks into a store, they are a walking wallet, looking at price tags, not an investor. Capitalism by definition is based on deception and antagonism. Consumer protection exists to try to achieve parity, or as close to as possible, by limiting the ways a business can deceive consumers.

I can't imagine how anyone aside from a creditor of said business could support this atrocity. Either businesses selling gift cards should be forced to pay out interest on the "loan", funds should have to be retained to pay them out before any and all other debt considerations, or merchants selling them should be forced to make all internal communication regarding financial health public.

There is no other way. For anyone to accept that taking someone's money and giving nothing in return is just is to accept that we all exist to serve business interests, as opposed to the other way around.

WE the people ALLOW corporations to form. Their charters are validated by the governments WE elect. They survive because WE vote for them with our money.

To allow something like this to happen, where merchandise is available, and gift cards are not being accepted is ludicrous. What, are we supposed to check financial insiders before buying a gift card, or consult our investment advisor? Give me a fucking break.
avatar
htown1980: It is certainly incorrect to suggest a supplier would have more financial information than a consumer, but I can understand why you would think that.
Also, it is VERY fucking correct that a supplier would have more financial information regarding a partners financial health than a consumer, but I can understand why a capitalist pig like you would think otherwise.
Post edited January 20, 2013 by anjohl
avatar
hedwards: It's the UK, rather than US, so it's at least possible that they'll get punished. In the US, they put in the fine print that they're not actually promising or guaranteeing anything and the courts generally go along with that.
Yeah, the U.S seems to be particularly bad in terms of corporate law.

Then again, we're (Canada) catching up.

Just recently, our beloved neo-con PM enshrined into law the moral right of corporations to enforce DRM.

Now, it is illegal to break DRM (like ripping DVDs), even if it's for personal use only.

Don't ask me how they'll enforce it (though they can certainly use this to target distributors and downloaders of software that breaks copy protection), but legally speaking, they could throw you in jail or charge you a sizeable fine for harmless activities like ripping a backup copy of your DVDs for personal use.

I guess it does hurt distributors financially, because it impedes their ability to sell you the exact same piece of intellectual property several times within your lifetime.

The right often talks about free handouts hurting society.

Well, to turn their own language right back at them: If that isn't a free handout (all that the copyright owners have to do on their end when your DVD breaks or you number of installs run out is produce another copy and then charge you a ridiculous price for the effort involved on their part), I don't know what is.

Anyways, I'm getting off topic so I'll stop here.

avatar
anjohl: I can understand why a capitalist pig like you would think otherwise.
I'm left leaning myself (center left to be exact), but calling them pigs is unwarranted.
Post edited January 20, 2013 by Magnitus
avatar
htown1980: and equality and fairness
avatar
anjohl: Equality and fairness must always skew towards the consumer. Suppliers know the risk of doing business, a customer is not doing business, a customer IS the business. To let a company take money for nothing is a crime, and should be outlawed, creditors be damned.

When a consumer walks into a store, they are a walking wallet, looking at price tags, not an investor. Capitalism by definition is based on deception and antagonism. Consumer protection exists to try to achieve parity, or as close to as possible, by limiting the ways a business can deceive consumers.

I can't imagine how anyone aside from a creditor of said business could support this atrocity. Either businesses selling gift cards should be forced to pay out interest on the "loan", funds should have to be retained to pay them out before any and all other debt considerations, or merchants selling them should be forced to make all internal communication regarding financial health public.

There is no other way. For anyone to accept that taking someone's money and giving nothing in return is just is to accept that we all exist to serve business interests, as opposed to the other way around.

WE the people ALLOW corporations to form. Their charters are validated by the governments WE elect. They survive because WE vote for them with our money.

To allow something like this to happen, where merchandise is available, and gift cards are not being accepted is ludicrous. What, are we supposed to check financial insiders before buying a gift card, or consult our investment advisor? Give me a fucking break.
avatar
htown1980: It is certainly incorrect to suggest a supplier would have more financial information than a consumer, but I can understand why you would think that.
avatar
anjohl: Also, it is VERY fucking correct that a supplier would have more financial information regarding a partners financial health than a consumer, but I can understand why a capitalist pig like you would think otherwise.
I am sorry if I have upset you. I guess firstly, having called me a capitalist pig, I should clarify my political views. I certainly live in a capitalist country, I may well be a pig. On the political compass I am left and liberal/anarchist. I am a member of the Australian Greens Party, which is the most left leaning and liberal of any of the mainstream and semi-mainstream political parties in my country (although many would accuse it of being anything but mainstream).

Consumer has a broad definition. I company can be a consumer. In my view, equality and fairness must skew to those who are less powerful and disadvantaged. In my view that means, individuals or natural persons. But those individuals must also be aware of their rights. Ignorant consumers do not help anyone.

Suppliers do know the risk of doing business. Consumers should also know the risks of consuming. I know that whenever I order something to be delivered there is a possibility that the company supplying it will go under before it arrives and I will be included in the pool of creditors with all other creditors. It happens more often than you might realise. It is not particularly difficult to understand. Any consumer who goes into a transaction ignorant of the risks, can really only blame themselves. It's not rocket surgery.

A consumer is a vital part of a capitalist economy. The consumers who purchased HMV vouchers didn't do so because the needed the goods that HMV supplied, they did it because they wanted to purchase a luxury item or give a gift that would allow another person to purchase a luxury item. Those consumers are a cog in the capitalist machine and to suggest otherwise is absurd.

It should be clarified that if, for example, consumers who purchase gift cards are given priority to other creditors, it is not to the detriment of the company, but to the detriment of other creditors. That includes, for example, other consumers who may have purchased goods on lay-by/lay away or people who have paid for goods yet to be delivered, or a person running a small business who has supplied some goods and not been paid. They miss out because their share of the funds from the liquidation would be returned to the gift card holder, in goods or in cash.

In my view, all of those persons are victims of the liquidation. I don't feel that one should be advantaged to the detriment of others, but that is exactly what you are advocating. I just can't see how you can suggest a person who buys a gift card should benefit at the cost of a consumer who has ordered goods and not received them.

You say that it shouldn't be accepted that people should take someone's money and give them nothing in return, yet you take no issue with doing that in the examples I have mentioned above. You also don't seem to have an issue with a corporation taking something someone may have spent days making and giving them nothing in return. These are all consequences of a company going into liquidation. Now if you are suggesting a company should not be permitted to go into liquidation, that is an entirely different discussion. All I am speaking to is whether one creditor should have priorities over others.

I don't know why you keep referring to the person that is supplying goods as a "partner". They are not partners. There can be as much inequality in that relationship as in a consumer relationship. I don't know how you can suggest that an individual who may supply home made products to a large multinational corporation can somehow get access to that corporation's financial information.
avatar
anjohl: I can't imagine how anyone aside from a creditor of said business could support this atrocity.
That's fine. So long as you don't expect anyone to lend money or provide stock to companies in future.

Losing money on gift cards sucks, but so does being laid off because your employer goes bust after providing stock on a sale or return basis to a retailer who goes bust and is then forced to hand over money to people with gift cards instead of giving it to other creditors.
avatar
anjohl: I can't imagine how anyone aside from a creditor of said business could support this atrocity.
avatar
movieman523: That's fine. So long as you don't expect anyone to lend money or provide stock to companies in future.

Losing money on gift cards sucks, but so does being laid off because your employer goes bust after providing stock on a sale or return basis to a retailer who goes bust and is then forced to hand over money to people with gift cards instead of giving it to other creditors.
This is ridiculous. Bottom line, reclassify gift cards as deferred purchases, which is what they are in fact. The consumer has the same rights to merchandise after the declaration of bankrupcy as they did before, in the same way that they have the same rights to previously purchased items.

In short, stores view gift cards as "same as cash", so the law should change to reflect that reality, or impose stricter restriction on companies to remove the huge asymmetrical advantage they have. I think you people forget that capitalism is an antagonistic system, and that *you* are not in the club.
avatar
anjohl: I can't imagine how anyone aside from a creditor of said business could support this atrocity.
avatar
movieman523: That's fine. So long as you don't expect anyone to lend money or provide stock to companies in future.

Losing money on gift cards sucks, but so does being laid off because your employer goes bust after providing stock on a sale or return basis to a retailer who goes bust and is then forced to hand over money to people with gift cards instead of giving it to other creditors.
This is absolutely ridiculous. Where do you account for the other businesses that are out the money that these consumers no longer have to spend? Why should corporate interests come ahead of giving people their money back?

If you're lending money to a corporation you generally have more information on the corporation's financial status than your average consumer does. I fail to see why consumers should be the ones that get screwed over when they're precisely the ones that are needed to keep these businesses going.

Also, if one business' going out of business puts another company out of business, or forces them to lay people off, they weren't doing a very good job of running their business in the first place and those people shouldn't have been counting on keeping those jobs anyways.
avatar
hedwards: This is absolutely ridiculous. Where do you account for the other businesses that are out the money that these consumers no longer have to spend? Why should corporate interests come ahead of giving people their money back?
Because that was the deal they made when the company provided the loan. Loans can be provided with preferential terms, deconstructing that would mean ripping apart a large portion of the way business conducts itself. Perhaps gift cards shouldn't be considered loans, but right now they are, so this is how it works. If they weren't considered loans, and we in fact created some legal concept of a "deferred purchase" then companies would simply loan money to other companies on the basis of a "deferred purchase" of £XXX. Yes you could restrict the amount it could be etc. however at that point you are just opening a door for the purchase of 500,000 gift cards as a loan or some other inventive way to shoehorn it in. The unfortunate fact is that we have to play by their rules, and just be better at it than them, or only shop with companies we trust (this is probably the most important point).

avatar
hedwards: If you're lending money to a corporation you generally have more information on the corporation's financial status than your average consumer does.
They both have the opportunity for this information, and it's true that HMV did issue a warning prior to christmas, however in our distributed world it's unlikely that either were directly lending. There's probably money from your pension pot currently being argued over at HMV.

More importantly these large scale loans were probably made with a 3 year period, so they couldn't exactly change their mind once things went south (although actually they did, in that the company went into administration because they breached the covenants on their loans). You could argue that the gift card purchasers are more empowered because they can check the state of the company over such a short period.

avatar
hedwards: I fail to see why consumers should be the ones that get screwed over when they're precisely the ones that are needed to keep these businesses going.
This is precisely why they are getting screwed over, because they can be. There's a sucker born every minute, a fool and his money are easily parted, etc.. You can legislate all year, you won't stop companies screwing the customers. What you will achieve is the opposite of what there seems to be in america, which is customers actually picking their providers based on reputation. In the UK where the consumer walks into a store with the perception of a plate mail protection, only to get ripped to shreds. I agree there should be consumer protection, but if this sort of thing encourages consumers to eschew the large companies for their more trusty local provider, it's a good thing.

avatar
hedwards: Also, if one business' going out of business puts another company out of business, or forces them to lay people off, they weren't doing a very good job of running their business in the first place and those people shouldn't have been counting on keeping those jobs anyways.
And you're back to capitalism, nice move there, you done a 360 on me.
For those with gift cards

http://www.bbc.co.uk/news/business-21118711

They're being accepted again from tomorrow