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Call for gift voucher law reform after HMV failure

A CONSUMER champion has renewed fresh calls for legal reforms to protect shoppers following the refusal by doomed retailer HMV to honour gift vouchers.

WARNING: Farepak campaigner Louise McDaid.
WARNING: Farepak campaigner Louise McDaid.

It is thought consumers are sitting on at least £100m of now worthless vouchers for HMV, which continued to be sold until just hours before the company entered into administration.

Louise McDaid, chairwoman of the group fighting for compensation for victims of the Farepak Christmas savings scheme, said the lack of protection for people buying vouchers is a "scandal" and must be regulated by the Government.

Ms McDaid, of the Farepak Victims Committee (FVC), has lobbied LibDem Business Secretary Vince Cable and MSP Jo Swinson to persuade politicians to change the law to protect consumers.

"For the last six years we have been trying to get protection in place for shoppers who buy gift vouchers," she said.

"There is a moral issue with HMV selling gift vouchers after announcing it was massively in debt in December and that should it go into receivership then the vouchers would be worthless.

"You can only think they were selling these things to pay off their debt to the bank without a thought for the customers buying them.

"It's a scandal, ripping people off. Everyone is affected – from children to pensioners – trying to redeem vouchers and unable to, yet the shops are still open.

"How can that possibly be justified? It's just wrong."

Just days before Christmas HMV warned investors there was "significant doubt on the group's ability to continue as a going concern in the future".

Ms McDaid, from Ardrossan, said the retail gift voucher system in the UK is thought to be worth up to £46m a year, yet it is largely unregulated with little protection for consumers should a firm go into administration.

Gift vouchers are categorised as debt owed by the company, leaving holders relegated to unsecured creditors who must apply to join the list of creditors looking for their money back.

Last week saw three major retail casualties – HMV, Blockbuster and Jessops – putting around 10,000 retail jobs at risk.

"This last week has been horrendous," Ms McDaid added. "The voucher market is an unknown market. They don't know who's supplying vouchers; it could be anyone from the local butcher to major high street stores, butwe know it is worth around £46m a year.

"What must be done is to change the status of the customer so that we are protected, but the Government is digging its heels in.

"Unsecured lenders come so far behind in priority to secured lenders and the people who own these companies actually come out of it quite well.

"The Government really needs to take a stand on it. This week has really highlighted the need for better customer protection."

Retail analysts warn there could soon be as many as 40,000 empty shops on Scotland's high streets as the collapse of major chains and retailers shows no sign of ending

Despite the devastation on the high street, new figures have revealed Scotland saw the second-largest increase in shoppers in the UK last month.

The number of people visiting stores was 6.2% higher than in December 2011, according to the Scottish Retail Consortium/Springboard footfall monitor.

Scotland was just one of four parts of the UK to record an increase in the number of shoppers, and second only to the West Midlands, where there was a 10% rise.

The Greater London area also experienced a rise in shopper numbers, but at 3.1% the increase was half that experienced north of the Border.

Fiona Moriarty, director of the Scottish Retail Consortium, said: "With post-Christmas sales still in full swing, retailers will be hoping this boost to shopper numbers sustains some momentum in January's figures."

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