When buying:
- Use a credit card, especially when leaving a deposit. If the business fails without providing your merchandise, you can dispute the charge with the card issuer. You might also be protected if there is a problem with the quality of goods for which you have already been billed. You generally have less recourse if you paid with cash, a check, or a debit card.
- Spend gift cards. Use cards and certificates as soon as you can, even if there's no reason to suspect the retailer is having financial difficulties.
After a bankruptcy:
- Verify warranty coverage. Ask the store (or the provider of a third-party warranty) whether you are still covered.
- File any claim with the manufacturer or retailer. If a retailer fails, you still might be able to make a warranty claim with the manufacturer. If the manufacturer goes bankrupt, you may have similar rights with the retailer. Consult the Federal Trade Commission website for more information at www.ftc.gov.
- File with the bankruptcy court. Consumers are usually near the end of the list of creditors and won't recover much during bankruptcy proceedings. But some consumers, including gift card holders, might be able to move ahead by applying as priority creditors. Check online for the name of the court where the company filed for bankruptcy. If the company simply disappeared, ask your local consumer protection agency for advice.
Source: Consumer Reports
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