Farepak Christmas Savings Club

Former Member

Does anyone know anyone affected by the fall of Farepak?

I'm shocked to learn that the Christmas savings club industry is worth about £200 Million

And for those that don't know what this is - it's a scheme to save money and you get back exactly what you put in in the first place at Xmas.

So they just hold the money for you and I assume keep the interest or invest it in something else.

So basically these people (as I understand it) used the scheme because they didn't trust themselves to simply put it in a bank account (as well as earn interest) and not touch it until Xmas? or is there some added benefit I've not heard about?

http://news.bbc.co.uk/1/hi/programmes/working_lunch/6084156.stm

Former Member

These firms are predominantly used by people on low income who aren't very good at saving. If you put £10 a week in a bank account, the temptation is there to take it out if your short one week, but paying money to an agent it's more difficult to get it back. They're not good value for money though, especially the food and drink hampers, you can buy the stuff much cheaper yourself. Though you can save for store vouchers on, i think, a like for like value basis.

I was talking about this to the bf this afternoon. How can a company that gets all it's money up front (you've usually paid for your order by November) go bust ? Unless of course they invest the money to make some more and the investments went kaput.

Former Member

Also some people can't actually get bank accounts.

Former Member

RubberSkin wrote:

How can a company that gets all it's money up front (you've usually paid for your order by November) go bust ? Unless of course they invest the money to make some more and the investments went kaput.

I was wondering that too, but I think (this was on the news last week) that the money was used as investments under another company that is part of the same umbrella company as Farepak and they lost all the money. Presumably the investments went kaput as you put it.

Former Member

Blagsta wrote:

Also some people can't actually get bank accounts.

There's that too of course.

Former Member

I've done this for the past few years, it's too tempting to keep the money in a savings account, Im not a very good saver. It's not a food hamper I get though, only shopping vouchers.

Former Member

Yeah my mums friend lost £800!

Its shit :mad:

Luckily they are in a position in which they can still afford to have a christmas, unfortunatley lots of people arent that lucky.

:thumb:

Former Member

Glittery wrote:

I've done this for the past few years, it's too tempting to keep the money in a savings account, Im not a very good saver. It's not a food hamper I get though, only shopping vouchers.

I'm sure Tesco's ave a savings scheme with stamps and I think you get back more then you put in as well?? :chin:

How do you give them the money anyway? To an agent or through direct debit?

I do remember the TV Commercials at Xmas from years back when they had Xmas hampers and it looked well god I remember thinking as a kiddie.

Former Member

DiamondGeezer wrote:

I'm sure Tesco's ave a savings scheme with stamps and I think you get back more then you put in as well?? :chin:

How do you give them the money anyway? To an agent or through direct debit?

I think you get an extra fiver or something if you collect saving stamps.

My Mum is an agent so I (and her other customers) give the money to her and she pays it to the company at the post office. Final payment in made at the end of October, vouchers come the first week of November.

Former Member

my boyfriends parents lost £300 and the people they work with lost thousands as a group. i think they do it to make sure they actually have money come christmas time cos it helps to have the money somewhere you cant get at it. Its not just hampers and vouchers they have catalogues full of stuff and they pretty much order all their presents there, usually neway!
saves you having to worry about trudging round the shops to find all your presents aswell.

Former Member

Sopycookie wrote:

my boyfriends parents lost £300 and the people they work with lost thousands as a group. i think they do it to make sure they actually have money come christmas time cos it helps to have the money somewhere you cant get at it. Its not just hampers and vouchers they have catalogues full of stuff and they pretty much order all their presents there, usually neway!
saves you having to worry about trudging round the shops to find all your presents aswell.

I guess that would have been handy before the internet happened of course you could now get the same effect by setting up an online bank accounts and paying in at the post office a bit each week, and just not giving the person the passwords to the online account until xmas ..

I guess anyone who is an gent feels well bad, I saw one agent took £3,500 loan to pay all her customers back..

BTW what did the agents get out of it?

Former Member

I imagine there's more to it than just that. Basically they're getting almost all of your Christmas shopping, with no chance of you taking advantage of that great special offer that one of their rivals is putting on, so it stands to reason that they'll give you a better offer than you'd get just by saving up in a bank account then doing your shopping on Christmas week. But I'm pretty sure it's possible to set up a savings account where you can't touch the money until a set date.

Former Member

I think you'll actually find it would be almost impossible to set up a bank account where the bank would be legally able to refuse you access to the money in there if you changed your mind -

'Hello can I take some money out?'
'Sorry you said you didn't want to take it out till November'
'It's my money, and I need to get the money out to pay for the funeral of my family.'
'Here's your money sir...'

It is possible to have accounts where it would take a certain amount of time to get the money - or trusts where the money is paid out in small amounts but they require the money in advance (from wills, etc) - which defeats the object here.

And it's not as a simple as you would think to open a bank account for many people. Especially people without a job, or with bad credit ratings. Basic bank accounts aren't well advertised and require a huge amount of personal ID which people on a very low income may not have.

It's actually one of the most common problems in the money section of askTheSite, and something that affects the a significant number of people.

As to Farepak itself - most disgusting is that Farepak wasn't in problems itself - then money was stolen by the parent company to prop itself up. Worst still, I remember from the Guardian article that the company didn't even keep details of who was making specific payments, something that is causing huge problems for the recievers.

The website is here - http://www.farepak.co.uk/ and anyone who has lost money should, without fail, fill in one of the following

The customer claim form
The agent claim form

It's worth bearing in mind the agents are in no way to blame - they tended to be members of their community who would simply recieve a small percentage for collecting the money, or vouchers or hampers themselves.

More information is also available from the newly set up independant charity - Farepak Response Fund..

Obviously we're a charity ourselves and I wouldn't normally do this but in the spirit of Christmas it's worth considering those affected are often from the lowest income families. So, if you can, do considering donating a quid to the Response Fund.

Former Member

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Former Member

Jim V wrote:

Obviously we're a charity ourselves and I wouldn't normally do this but in the spirit of Christmas it's worth considering those affected are often from the lowest income families. So, if you can, do considering donating a quid to the Response Fund.

Done.

Former Member

JustWondering wrote:

BTW what did the agents get out of it?

Commission.

Former Member

And let's not forget that many utilility companies offer discounts for direct debit payments, which essentially taxes the very poorest without bank accounts - but that's OT and should probably be in the banking thread.

Former Member

I won't be surprised if the big supermarkets start some kind of xmas club scheme - at least there's no chance of the likes of Tesco's going bust.

or perhaps put money into like premium bonds and maybe they'll win one of the big prizes, and if not they still get their original money back.

I'm sure though there's gonna be a major tightening up of the law for these kind of schemes