How to Get a Refund from a Bankrupt Business
Have you made a purchase recently from an online business, only to find that the business suddenly went bankrupt?
Now it looks like you’re out the money, and you’re not going to get the product or service you paid for. It’s a frightening prospect, but it happens more often than you might expect. Fortunately, all hope is not lost—consumers do have certain protections in-place which can help them recover their funds from a bankrupted business.
What Happens When a Business Goes Bankrupt?
To put it simply, bankruptcy is a state in which a business can no longer pay its debts or cover its regular costs of operation. When this happens, the business may be able to continue operation, or may suddenly and completely shut down.
For example, let’s say that you’re getting ready to go on vacation. You’ve planned this trip for months, booking your flights, hotel and a rental car all through the same site. Then, the week you’re about to leave, the site suddenly goes bankrupt, announcing that it doesn’t have the money to book any flights, and they can’t refund what they don’t have.
This throws everything into chaos—now you’re worried about getting your money back and stressed by arranging alternate plans, when all you wanted to do was enjoy a vacation.
What can you do next?
Contact the Merchant First
Even during a bankruptcy, any legitimate site will have a way for customers to contact them with questions or concerns, so first check the company’s website for their contact information.
It’s best to try and use designated channels for assistance, such as a customer service phone number or email. Most eCommerce merchants will either have a prominently-displayed link to their contact page, or will provide their phone number and email address on each page.
Take note of whether the site lists hours of availability for their customer service line, as some sites will only be able to offer assistance during certain hours.
What if I Can’t Get Through?
What if you try to contact the site’s customer service, but can’t get help due to the volume of service requests? Don’t worry—as long as you used a credit or debit card to complete the transaction, there are still ways to see your funds returned.
Under federal law, consumers are guaranteed the right to dispute a charge, a process known as a chargeback. The process and regulations vary depending on the circumstances, but in most cases, a transaction will have a time limit of 120 days after the initial purchase in which consumers can request a chargeback.
When this happens, the customer’s bank forcibly withdraws money from the merchant’s bank account. Most banks require merchants to maintain a reserve of money, a special type of savings account, so even following a bankruptcy, consumers’ chargeback requests might still be honored.
While a chargeback is legally warranted in these types of situations, it isn’t always the best course of action.
Unsavory consumers who learn about the bankruptcy might be tempted to exploit the opportunity to file an illegitimate chargeback. They’ll fabricate a refund request for something they actually did receive and basically commit cyber shoplifting.
Because the situation is strained for everyone involved, cardholders’ banks and the merchant might execute more due diligence while reviewing each chargeback request. This additional attention to detail, combined with the sheer volume of requests, could extend the refund process to several weeks or even months. If the bank suspects you are trying to take advantage of the situation—even if your refund request is entirely legitimate—there is a chance your chargeback could be denied. Then, you’ll lose your chance at a refund entirely.
If the merchant advises customers to act in a certain way (request a refund, file a chargeback, etc.) the shopper should proceed as instructed. If a refund process hasn’t been outlined, you might get a refund quicker and easier through a third-party.
eConsumer Services® is Ready to Help
eConsumer Services® specializes in resolving disputes between merchants and their customers. The company’s unique process is much faster and easier than filing for a chargeback and offers a better chance of success without consequences.
When transaction disputes arise between merchants and consumers, eConsumer Services® offers the best chance of achieving a fair and agreeable resolution for all parties involved.
If you’ve shopped with a company that has since gone bankrupt, contact eConsumer Services® today. We’ll help you determine the best course of action.