MSE Update Oct 2014:
Please see our latest news story on FarepakFormer Farepak customer? £1m has yet to be cashed in
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Farepak 'What to do now' Guide
Contents Below Include:
New to MoneySavingExpert.com? It's all about free, ad-free, Consumer Help
- Background Briefing
- Ways to get your money back
- Stop any current payments
- Put in a claim
- Credit card holders use section 75
- Visa debit holders try a chargeback (inc. special notes for HBOS, Lloyds, Abbey, A&L and Co-operative Bank customers)
- Sainsbury voucher buyers can get 25% back
- The Farepak Response Fund
- Liverpool Victoria giving £100
- Argos giving money-off vouchers
- Where to protest and/get individual advice
- Christmas MoneySaving, celebrate for less
This site is the UK's biggest money website, with 1.2 million monthly users. It focuses on helping consumers and taking companies on! It's owned, run and written by (me) Martin Lewis; I'm an ultra specialised journalist and broadcaster. Links: About the site, Martin Lewis Biography.
As this is a fast moving subject, to make it easy to change, it's here in the Forum not on the Main SiteBackground Briefing
As most Farepak savers will know, on Friday 13 October the hamper savings company (and Freedom2shop) went into administration. This is a horrible situation for many agents and customers who are seeing their Christmas lost.
Saving for Christmas, rather than building up debt is to be loudly applauded, and thus it's a tragedy that for many people, being sensible with their cash that this has happened. However, sadly, this has always been a concern, I've never been a fan of Hamper schemes as there is no protection (more on this later).
What is 'administration'?
This means insolvency practitioners have been called in to run the company and get what cash they can for the creditors via selling or utilising the assets. In theory you can keep the business running as a ‘going concern’ but as this is a retail company whose reputation has now been slaughtered, that is unlikely. Most likely the insolvency practitioners will simply collect in the assets, try and sell what they can and then distribute whatever cash remains to creditors.
When the money is distributed there’s a priority of who gets the money, which usually works a bit like this:
• The Insolvency Practitioners (if they didn’t get paid they wouldn’t do the job in the first place). Sadly as there are a lot of customers it’s likely the insolvency costs will be high – sending out letters and communicating is expensive.
• Any secured creditors (if they’ve borrowed secured on property/assets)
• Any employees (redundancy pay)
• Everyone else ranked equally (this includes customers, the Inland Revenue etc and all will be ranked pro-rata)
What this means in practice
It means to get money back from Farepak you’ll have to apply for it. It has already said customers won’t receive their hampers, vouchers or get a refund. There is a chance you may get some money back later in the administration process, but you should plan for it not to be very much, at a pure guess 10p in the £1. Plus this will take some time; it sadly won’t be before Christmas.
Why the trade bond won’t help
What this bond really means is Farepak left Hita a deposit when it became a member of the association – yet this will simply go back to the administrators, who will take it into account when they distribute the assets.
IMPORTANT NOTE: Keep up with developments
This is a fast changing information - if any further methods to get refunds from Farepak are reported, they'll be included when necessary in the free weekly money tips e-mail. Do ensure you're getting it (it's free, ad-free, your email will never be passed on and you can cancel any time).
Step-by-step guide to getting your cash back
There are no hard and fast rules, yet there are number of steps any Farepak savers should take to maximise the chance of getting their money back and minimising the damage.
STEP 1. Immediately stop any automatic payments being made
First stop any automatic payments you have set up, i.e., direct debits, recurring payments from credit cards etc. Direct debits can be cancelled simply by contacting your bank to stop the regular payment.
Don’t pay anything else to agents. If agents have any customers’ money still they should return it and make a note in customers’ books that this has been returned.
Do you have a credit card recurring payment set up?
If you have a credit card recurring payment set up - then sadly it's not for you to stop it but the company who its set up to - in this case Farepak. The current advice from Trading Standards says get in contact with the administrators and ask it to stop the payment immediately.
This is a standard problem with recurring payments, however, I also suggest you contact the credit card company itself. While it may tell you it can't cancel the payment from its end, it's worth having a go, and requesting that a note be put on your file explaining that you've asked the company to stop the payment.
There’s a note from the administrators with all the information you need to make a claim on Farepak’s website
. This will be updated regularly; it was last updated on 27 November. Customers/agents can make a claim to the joint administrators, BDO Stoy Hayward, in any of three ways:
- By post: Write to: Farepak Food & Gifts Limited - In Administration, Kings Wharf, 20-30 Kings Road, Reading, Berkshire, RG1 3EX
- By email: [EMAIL="email@example.com"][email protected][/EMAIL]
- By fax: Fax: 01793 606012
Update Note 28.11.06.
Customers are now receiving their paperwork from the administrators. If you need extra claim forms you can now download them from the Farepak website
STEP 3. Did you pay for any of it on a credit card? If so 'hoorah!'
If your hamper/vouchers cost over £100 and you paid all or even part of this on a credit card then your credit card company is equally liable under the law with Farepak, and you should make a claim against it for your money. This is a legal protection that you have and should mean you get all your money back. For full details on Section 75 please see the Consumer Rights Article
STEP 4. Did you pay on a Visa Debit card?
If you paid for Farepak on a Visa debit card, there is a real chance you can get your cash back. Unlike with credit cards, this isn't a legal protection, but a protection from Visa's own rules. It's all about Visa's 'chargeback' system.
What is chargeback?
It's effectively Visa's own refunds system. It's designed so that if you pay for something and that order hasn't been adequately completed or is never received, or the order is illegitimate in some way, your bank can do a chargeback on the bank that collected the payment.
The crucial part of this is that the chargeback means you're asking for a refund from Farepak's payment processing bank rather than Farepak itself, which is great news, as Farepak has no cash, but its bank does!
7 Nov. First Chargeback Successes reported.
The first reports of Chargeback successes are now coming through; one woman has been told by her bank she'll be given the full £1,100 back by December.
I'll be honest, when I first suggested people try this it was as a "it's worth having a go, you've got nothing to lose" as this is an arcane piece of internal Visa regulation. Yet more and more people are reporting successes and it seems there's real hope. Now don't get your hopes up too much; it's still not guaranteed you'll succeed, but it appears there's a realistic chance.
How do you do a chargeback?
Quite simply call up your bank, with all the details of the payments made to Farepak (check your statements, if you don't have them ask the bank for details, but this slows things down) and ask it to start the 'Chargeback procedure' to get you your money back on the basis of "non-delivery of the goods".
At this point it's quite possible the person you're talking to will never have heard of chargeback. Yet don't let that put you off. This is a legitimate system, and you need to (politely) stand your ground. If the bank says no, write an official letter of complaint and note that you'll be writing to complain to Visa.
Luckily, the more people who try to do a chargeback, the more likely it is the banks will know the process and proceed.
What about other debit cards?
If you paid via another type of debit card, you could have a go at the same process, but the rules are different and nowhere near as strong.
UPDATE 13.11.06 Halifax Bank of Scotland and LLoyds TSB will pay all back
Lloyds TSB has publically announced it will give all its customers who paid on a credit card or debit card a refund for all Farepak cash, even those who haven't yet claimed. Also HBOS has told a journalist for the Sunday Post in Scotland (who's been following the Visa Debit successes of people from this site) it will do the same, sending out forms to everyone who spent on the card, even if they haven't tried to reclaim yet.
UPDATE 22.11.06 Abbey, Co-operative and Alliance & Leicester to pay via Chargeback
Abbey, Co-operative and A&L have all said they'll refund any Farepak customer with a valid claim who paid on a debit card.
STEP 5. Were you buying Sainsbury's or John Lewis vouchers?
If you were buying Sainsbury or John Lewis vouchers both have said they'll honour them with Sainsbury's saying it will honour its vouchers to 25% of the amount saved. Read more
STEP 6. The Farepak Response Fund
Charity Farepak Response Fund
has been set up, with the encouragement of policitians, who are urging big business to contribute as 150,000 people have lost money. Many companies have already donated, including £250,000 each from Tesco and M&S and £2m from HBOS.
Update 28.11.06. The deadline for donations has been extended to 6pm, Wed 29 Nov. Plus, there's now a way to donate up to £25. Text eg FAREPAK25 (to donate £25) to 81404 and you'll be contacted for full details. The payment provider, Luup, has pledged to donate 20% on top. Plus remember to agree for your donation to include Gift Aid, which costs nothing extra for you but means the fund can get extra.
The distribution process is still being determined but it's likely the money will be distributed through registered Farepak agents. The fund aims to complete the process by 18 December.
20 Nov. As a quick note, on behalf of the site, I donated £1,000 to the Farepak Fund today.
Update 28.11.06. The Farepakresponsefund still wants to hear from you if you're an agent and have had a full or partial refund. Please do be fair to other Farepak customers and let the fund know as soon as possible. You need to email [EMAIL="firstname.lastname@example.org"][email protected][/EMAIL] or call 0845 370 40 80giving your surname, agent number, how much you've been refunded and how much you paid in originally.
Update 4.12.06. Work began today to distribute the funds donated (these will be in the form of vouchers). Former Farepak agents should receive them by 18 December. Agents will receive a proportion of the amount they banked rounded up or down to the nearest £5.
STEP 7. Liverpool Victoria
Liverpool Victoria is offering £100 to members who were Farepak customers up to a maximum of £100,000 on a first-come first-served basis
"one amount per household" basis. While the deadline for claiming is 5pm, 15 Dec it's best to get your claim in early. Either write to 'Farepak Gift Scheme', The Farepak Officer, Marketing Department, Liverpool Victoria, County Gates, Bournemouth BH1 2NF or email using the "contact us" form on its site here
. Remember to include your full name and address, your Liverpool Victoria policy number and your Farepak reference number.
STEP 8. Argos/Homebase Money-off vouchers
Argos is giving out special Argos/Homebase money-off vouchers for Farepak customers. Simply pick one up in Argos and show your Farepak payment card as proof when you use a voucher. The vouchers are (for Argos) £5 off in December, £3 off toys, £3 off jewellery and £3 off personal care and (for Homebase) £5 off a £50 or more spend. These can't be used in conjunction with other discounts
Martin Lewis, Money Saving Expert.
Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.