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Consumer warning over Christmas gift cards

Consumer warning over Christmas gift cards

Category: Money

Updated: 11/11/2013
First Published: 11/11/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

With the festive season rapidly approaching a lot of people are starting to finalise their Christmas lists, and for many a gift card or two will invariably crop up. But, after the spate of retailers closing their doors and failing to honour gift card sales last year consumers, are being urged to keep an eye on things.

Last year Comet, Jessops, Blockbuster and HMV all went out of business after the Christmas period, and that left thousands of consumers who'd bought gift vouchers seriously out of pocket. Most vouchers were eventually honoured, but some customers never got their money back.

Unfortunately it's not something that can always be avoided. If you buy a gift card there's no guarantee that it'll be honoured if the retailer goes into administration, with voucher-holders being way down the list of creditors.

It's something that consumer groups and trade bodies want changed.

The UK Gift Card and Voucher Association believes that vouchers and gift cards should be guaranteed even if a retailer goes out of business, and would like to see holders of gift cards moved up the priority list should a retailer close its doors.

According to research by insolvency specialists, there could be other solutions which would ensure consumers don't lose out.

Making retailers who offer vouchers buy a form of insurance to cover the cost should they go bust could be one possibility, as could extending the Consumer Credit Act. As it stands, anyone who buys more than £100 of gift cards on a credit card is protected, but this could theoretically be extended to include smaller purchases too.

So far these ideas are way off being implemented, so just what can consumers do in the meantime?

Well, they should think very carefully about where they buy their vouchers from and should avoid any retailer that appears to be struggling – Blockbuster, for example, has already announced its intention to get the administrators back in, as has Barratts for the third time – and ideally any vouchers worth more than £100 should be bought on credit card for a bit of added protection.

Of course there are no guarantees, but those that keep up with changes in the high street will hopefully have a very merry Christmas without being out of pocket.

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