‘You wouldn’t read about it’, goes the old saying when something unexpected happens. Unfortunately, in news which came unexpectedly this week, the more accurate summary is, ‘You won’t be able to read about it.’ The news that’s come to light is that Aussie online retailer Booktopia is $60 million in debt.
Booktopia was placed into voluntary administration earlier this month, but the depth of debt has surprised some. More surprising – and alarming – for customers and the public is that it now appears many paid book orders won’t be filled.
And for those who have purchased or received Booktopia gift vouchers, the news is no better. A reporter speaking to ABC Melbourne’s Raf Epstein yesterday indicated there was virtually no chance of obtaining a refund.
Booktopia’s collapse has come as less of a surprise to publishers, who were made aware of payment difficulties last year. Jane Curry is one of those publishers. Her independent company Ventura Press stopped orders through Booktopia months ago.
“It wasn’t a surprise,” she told ABC News. “We’ve been fearing it and dreading it for most of last year. The company had been going on and off ‘stop’.” The phrase ‘stop’ refers to the practice of halting supply when invoices haven’t been paid in the agreed 30 days.
What can Booktopia customers do to recoup costs?
Australian law provides legal avenues for those who have been left out of pocket when a business goes under. These allow for assets to be liquidated (sold off) in order to pay off creditors. For your average book buyer, though, the system is likely to leave you behind if the amount owed by the business exceeds the value of its assets.
The reason for this is, for want of a better term, your place in the pecking order. Unsurprisingly, the place of an individual customer with a gift voucher or waiting for a book delivery is not high. The administrator’s priorities will lie with those creditors owed the most.
In technical terms, those owed the most will usually be ‘secured creditors’, while the average customer will be an ‘unsecured creditor’. Secured creditors have a source of recompense, such as a bank having a mortgage on a house for which it has provided a loan.
If you have prepaid for a book or purchased a gift voucher, you will not be a secured creditor. Your place in the queue will be well behind publishers and Booktopia staff owed wages.
All may not be lost
As an unsecured creditor, your chances of receiving a refund are reduced but not necessarily zero. This is especially true if you have paid by credit card. In such cases, you may be able to apply for what’s known as a ‘chargeback’ via your financial institution.
On your behalf, the institution (usually your bank) will seek a refund from the bank of the folded company. The right of chargeback also applies to debit card customers who chose the ‘credit’ option at the time of purchase. If you use a debit card but did not choose the ‘credit’ option at the time of purchase, your refund chances are further diminished.
It’s important to note that time is a major factor when it comes to chargebacks. If you have made a recent purchase from Booktopia through a credit card, acting now may work in your favour. Chargebacks may also be possible through secure online payment providers such as PayPal.
Lessons from Booktopia
While it may be too late to recoup losses sustained through Booktopia transactions, this episode serves as a timely reminder. If you purchase or receive a gift voucher, use it as soon as practicable where you can. And for larger purchases, use a pay on delivery option where possible.
Finally, stay informed as much as you can. Read about it before, as has happened with Booktopia, you are no longer able to read about it.
Had you heard about Booktopia’s difficulties? Have you been affected? Let us know via the comments section below.
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It looks like some investments are terribly scary. As older Australians we tend to scrape whatever we can to put into an investment hoping something good comes out over time. But there again all these failed investments put a heavy boulder on our shoulders, and we come out poorer than ever.
I purchased a book online from Booktopia a week prior to receiving an email from the administrators notifying me that I was now a creditor to the tune of $45. As they owe approx. $60 million I didn’t see much chance of recouping anything. Then I had a brainwave- I’d paid with PayPal so I thought that I’d approach them for a refund. I reported that I hadn’t received the item that I’d paid for and included the email from the administrators to show that Booktopia had accepted my payment while obviously aware that administrators were about to be appointed. I received an immediate refund from PayPal- no questions asked. No doubt there are many others who paid via PayPal and that company will be a major creditor of Booktopia.