The consumer watchdog is speaking with the receivers at Dick Smith to find out how the electronics retailer’s collapse will affect customers. Banks have generally been perceived as being very strategic in pulling the plug on Dick Smith as it was at its cash high point for the year after festive season sales. This has left thousands of people who bought Dick Smith vouchers, paid deposits on products or are waiting for deliveries anxious as to what they can expect after the electronics retai
l chain went into receivership.
According to Consumer New Zealand CEO, Sue Chetwin, customers who paid deposits on Dick Smith products may able to request chargeback from their banks.
“There is a non-compliant merchandise clause where banks will consider refunding the credit card deposits so, in this case, that has definitely happened,” she said. “People have paid the deposit and then the company has said it is not going to supply the product.”
As for gift vouchers, Chetwin said she was unsure whether consumers will be able to request a chargeback from their bank because it is a legitimate transaction.
Receiver Ferrier Hodgson has said it will not honour gift cards or refund deposits on goods, prompting the Australian Competition and Consumer Commission to ask for more detail.
“The ACCC is currently making enquiries of the receivers about how they will be dealing with consumer issues arising,” the watchdog said in a statement on Wednesday.
Independent senator Nick Xenophon called on the corporate watchdog to urgently investigate the collapse and requested a parliamentary inquiry into whether the Australian Securities and Investments Commission missed warning signs.
“The corporate watchdog ASIC needs to explain to Australians how this great Australian company went into receivership with seemingly little warning,” Senator Xenophon said.
“We also need to know whether our corporate watchdog has in fact been asleep on the front porch while Dick Smith Holdings unravelled.”
Dick Smith, which employees about 3,330 people across 393 stores in Australia and NZ, first warned in October its full year profit could fall as much as 15 per cent.
It stepped up discounting and advertising to boost sales but the slump continued into November, resulting in the company dumping its revised profit forecast just a few weeks later.
The retailer then launched a pre-Christmas firesale to clear unwanted stock that cost it about $60 million in writedowns, pinning its hopes on crucial holiday period sales, but sales remained worse than expected and the company’s shares were placed in a trading halt on Monday.
It went into receivership on Tuesday, with a syndicate of lenders including National Australia Bank and HSBC appointing Ferrier Hodgson with the aim of salvaging value.
The first meeting of creditors will be held on January 14.
