Thousands of Australians owed money after major retailer collapses

Thousands of customers who placed orders with collapsed online bookstore Booktopia will not be getting either their purchase or money back.

The company, founded in 2004 by Steve Traurig and brothers Simon and Tony Nash, went into voluntary administration and stopped taking orders on July 3 this year as it sacked more than 200 staff.

Booktopia was Australia’s largest online book retailer with 54.7 per cent of the market, vastly ahead of closest competitor Amazon with 11.1 per cent of book sales.

It is understood any outstanding orders placed before July 3 will not be refunded or fulfilled by the new owner digiDirect who bought the company for an undisclosed amount in August. 

Sydney cook and author Nagi Maehashi, who runs the successful RecipeTin Eats website, took to social media on Wednesday to tell followers she would personally refund any orders of her new cookbook that Booktopia could not fulfill. 

‘This is a message for customers who have lost money due to pre-ordering my new cookbook Tonight from Booktopia,’ Ms Maehashi wrote.

‘Booktopia will not be honouring pre-orders of books prior to [July 3]… I have received upset messages from readers and I  wholeheartedly agree it is unjust.’

Ms Maehashi said it had been weighing down her mood ahead of the launch date for the book so she ‘decided to do something about it’ herself and refund fans out of her own pocket.

Booktopia entered voluntary administration in July this year, after accumulating debts of about $60million.

The majority of that debt is owed to suppliers, primarily book publishers, but with $12million in unfulfilled customer orders and $3million owed in gift cards. 

According to some reports there are around 150,000 unfulfilled orders. 

The new owner, online electronics retailer digiDirect, will reportedly offer ‘special arrangements to customers with unredeemed gift cards’.

Daily Mail Australia has contacted digiDirect for comment.  

Booktopia also owned the Angus & Robertson and Co-Op Brands.

Customers with unfulfilled orders can nominate as unsecured creditors via administrators McGrathNicol Restructuring but they would likely be at the bottom of the pack to receive any recovered funds.

Another option would be to request a chargeback via a bank or credit card issuer.

The company went into voluntary administration on July 3, just weeks after it announced more than 200 jobs needed to be cut

This is a dispute of a transaction done via a card which a customer believes is an error.

‘The chargeback rules and process is governed by the schemes from Visa, Mastercard and others, not the banks,’ Tyro head of payments, Michael Bjazevic, told MoneyMag.

‘If a customer asks their bank for a chargeback, a decision is made on whether it’s valid, based on the rules of the card scheme. Banks that are members of card schemes are legally obliged to pursue chargebacks under the law of contract.’

Example of where a chargeback can be sought include multiple charges for the same purchase, fraudulent purchases, a charge for a cancelled recurring payment, and cases where a company has gone out of business.

A chargeback does have a window within which they must be requested.

This varies between card issuers but can be as little as 45 days or up to 120 days.

If a chargeback is refused, customers can lodge a request with the Australian Financial Complaints Authority which will review the claim.

Booktopia has not taken on responsibility for preorders racked up before the administration, but it has offered to support customers seeking chargebacks through their credit providers.

Ms Maehashi, who is a former auditor, said pursuing a refund via the new owner would be ‘pointless’ as it would have been outlined in the agreement to purchase the company that it would not take on unfulfilled orders.

‘I used to work in corporate. I know how they operate, they aren’t going to offer refunds ‘just to be nice’. It’s legally not their problem,’ she said.

Best-selling author and RecipeTin Eats founder,  Nagi Maehashi (pictured), is offering fans a refund out of her own pocket

She said those who bought her book from Booktopia can contact her for a refund

It is not known how many pre-orders of Ms Maehashi’s new book were made on Booktopia but her previous title RecipeTin Eats: Dinner, reportedly sold around 253,000 copies across all retailers in 2023.

This would make the book one of the bestsellers in the country, while her new book is currently the most pre-ordered book on Amazon Australia. 

Booktopia’s new owner, Shant Kradjian from digiDirect, told the Australian Financial Review he intends to immediately invest millions of dollars into turning the company around.

‘The Booktopia infrastructure and systems are very good, and we believe that with some investment and the right team and strategy, we’re well-placed for growth,’ he said.

The announcement of a new owner has several immediate upsides. With solvency assured, Booktopia can now resume trading. 

Even though the as-yet-undisclosed sale price does not cover the company’s current debts, reactivating operations reanimates the business’s revenue stream, which may bring relief for publishers who’ve supplied stock and customers with outstanding backorders.

All current staff will be retained and there are plans to recruit an additional 100 staff, potentially including some laid off two months ago. 

And the fact that the new owner is an Australian company bodes well for a continued focus on promoting titles by local authors.

However, shareholders will not see any returns from the sale and the company will still need to pay a $6million fine for making misleading statements to customers about their consumer rights. 

Some have also raised eyebrows about previous sales and marketing practices that included listing out-of-stock titles for sale.

Booktopia was hit with the multi-million dolla fine by the Australian Competition and Consumer Commission in 2023 for making misleading statements on its website.

It said that consumers were only entitled to a refund, repair or replacement if they notified Booktopia within two business days of receiving a product that was faulty or not what they ordered.

Booktopia also admitted to making misleading representations, by stating that consumers were not entitled to a refund for digital products such as eBooks for any reason, including if the product was faulty.