When a business suddenly collapses, how can customers get money back?

The spate of caravan companies going bust has led to hundreds of customers losing tens of thousands of dollars in deposits.

From Sunshine Coast based Zone RV last December to Australian Off Road just last month, there is a long list of manufacturers going bust after trading while insolvent.

But buyers being caught up in business insolvencies is not a new issue.

Building companies and tech giant Dick Smith in 2016 have left customers out of pocket, while the collapse of whitegoods company Kleenmaid saw a former director jailed.

When it comes to getting back money you have forked out for a deposit, Deloitte senior liquidator Richard Hughes said there are no guarantees.

"You have to be really careful."

And if possible, he warns, do not pay by cash.

Is paying by credit card the answer?

Mr Hughes helped creditors fight over the carcass of Kleenmaid, which collapsed owing $100 million, and says credit card payments can be good insurance.

His forensic examination of the company's books found customers were set to lose $25 million in deposits.

But when he realised half of those had been paid on credit card, he was able to help get $12.5 million back into disillusioned customers' bank accounts.

This was through charge back requests, which is when customers have paid for good or services they did not receive, like a cancelled flight or a brand new caravan.

How does a charge back request work?

The Australian Banking Association describes it this way.

"When someone pays for goods or services by card that they never receive, they can ask their bank to dispute the transaction," a spokesperson said.

"The rules are set and administered by the card schemes, such as Visa and Mastercard — time limits apply, so customers should contact their bank as soon as possible."

The customer's bank lodges the claim through the scheme with the business's bank.

"If the claim succeeds, the money goes back to the customer and is taken from the business's bank," the spokesperson said.

"Payments by cash don't carry charge back rights."

The Office of Fair Trading said financial institutions may be able to assist customers who have paid "by credit card, debit card, or through a secure payment provider such as PayPal".

Will changes to card fees make it hard to pay by credit?

From October 1, the reserve bank banned credit and debit card surcharges across major card networks.

Some customers may be concerned about whether these changes will impact their ability to pay a deposit, and whether companies may stop accepting credit card payments.

But Mr Hughes said he believed businesses would still be happy to take credit card deposits, with card fees most likely added into their quotes.

If a small business insists on only cash, it could be seen as a red flag.

Customers are also encouraged to do a financial health check on the business they are putting their faith in.

It is also important to remember that unlike real estate companies, which are legally bound to hold deposits in a protected trust account, small businesses are not.

How to check if a business is struggling

ASIC says warning signs customers can watch out for include:

• bad reviews
• ongoing losses
• board disputes and director resignations, or loss of management personnel
• suppliers placing the company on cash-on-delivery terms
• a sudden change of name
• movement of a business or its assets to another company

ASIC encourages customers to check whether a company has entered liquidation or external administration through ASIC Connect or ASIC's Published Notices website.

Will creditors get money back?

When a company goes into liquidation, the question every creditor wants answered is simple: am I going to get my money back?

According to ASIC, the data is stark.

In most small to medium-sized corporate insolvencies, 97 per cent of creditors received between 0–11 cents in the dollar.

In the recent cases of collapsed caravan companies, majority of customers have not been able to get their money back, and have seen their savings vanish.

Caravanning Queensland Trade advised any customers who have purchased a product they haven't received to contact the appointed administrator or liquidator as soon as possible, and bring their contract, receipts and proof of payment.

"For anyone considering buying a caravan, Caravanning Queensland recommends a deposit of 10 per cent of the purchase price, with the balance paid when the completed van is ready for inspection and handover," chief executive Jason Plant said.

"We remain committed to promoting responsible business practice, transparency and consumer confidence across the caravan and RV industry."