Retail

Consumers up in arms about “almost criminal” conditions placed on collapsed Toys ‘R’ Us gift cards

Dominic Powell /

Toys "R" Us

Toys "R" Us. Source: iStock.

Customers of recently collapsed toy retailer Toys ‘R’ Us are up in arms about the administrators’ plan to honour existing gift cards as the company begins to wind down its 44 stores nationally.

Announced yesterday, the 70-year old retailer will be shuttering its Australian stores after administrators McGrathNicol failed to find a buyer for the local operations, which first entered voluntary administration in May.

This followed over eight months of issues for the company’s UK and US arms, which declared bankruptcy last year and collapsed earlier this year.

But for customers, it wasn’t the stores’ imminent closures that posed the biggest issue. Instead, shoppers took issue with the announced changes to Toys ‘R’ Us gift cards in light of the collapse, swarming to social media to label them as “ridiculous” and “almost criminal”.

McGrathNicol revealed yesterday that current holders of Toys ‘R’ Us gift cards would be honoured until July 5, but with the condition that customers spend an equivalent amount in store.

“In other words, to utilise a $100 gift card in full, customers must spend at least an additional $100 in store,” the administrators said.

On the Toys ‘R’ Us Australia Facebook page, fans took issue with this condition, with many blasting the company for “poor customer service” and threatening to complain to the offices of fair trading — despite the company’s imminent shutdown.

“Huge inconvenience. Would rather lose my voucher the [sic] spend the equivalent in cash. Poor customer service,” one customer wrote.

“That’s almost criminal making someone spend the equivalent to what they are already entitled to spend like forcing someone to spend extra because they unknowingly purchased a gift card on the assumption that they can use it without shelling out any extra cash,” wrote another.

However, numerous customers jumped to the store’s defence, correctly pointing out that as the company is in administration, gift cards are not legally required to be honoured and the decision by the administrators to honour them — albeit with conditions — was generous.

“Whilst it’s not a nice situation, the administrators are trying to do the right thing here,” said one shopper.

According to the Australian Competition and Consumer Commission, customers with unspent gift cards become unsecured creditors at the time of administration, only being paid back once, or if, remuneration is provided to secured creditors.

A similar thing occurred during the Dick Smith Electronics collapse in 2016, as the company refused to honour customers’ gift cards. At the time, the ACCC told SmartCompany unhappy customers should look into other options for getting their money back.

“Affected consumers should look to the information provided by the [administrator] and where appropriate consider whether they should seek to register as an unsecured creditor. There are some other useful suggestions in our website information, including looking to chargeback options that might be available for credit card purchases,” the ACCC spokesperson said at the time.

NOW READ: Treasury is investigating whether Australia should scrap gift card expiry dates altogether

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Dominic Powell

Dominic is the features and profiles editor at SmartCompany.

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