The street which lost Christmas

Farepak customers Burns Avenue Enlarge Image

Christmas could be cancelled for many residents of Burns Avenue in Feltham this year.

The residents of this Middlesex street have totted up that, between them, they have lost £30,000 as a result of the collapse of Christmas savings company Farepak

"It's a huge amount of money," said Maria Hutton, one of those facing a bleak Christmas. "Every day I hear another story - and they're sad stories."

But Maria is trying to help residents and the surrounding community band together.

"We're in this hole," she told BBC One's Real Story. "It's not a nice place to be, but the only way we're going to deal with it is we're going to have to stay together on this."

Thousands of people joined the Farepak dream of spreading the cost of Christmas over the year. At its peak, the firm had an annual turnover of £81m.

Every day I hear another story - and they're sad stories Maria Hutton, Burns Avenue resident

But the dream was shattered when the company went under on 13 October, taking an estimated £50m of savers' cash with it.

Now, though, the victims are fighting back.

Public voice

Suzy Hall is one of those behind the website unfairpak.co.uk, which has provided self-help for those affected as well as relentless campaigning.

One minute the single mother from Edinburgh is fielding the media. The next, she is advising people like collecting agent Martha Ore, who had to tell friends, family in her local community that their £9,000 had gone.

"Your customers won't blame you, Martha," Suzy tells her.

"I know they don't," comes the reply, "but I feel it myself.

Suzy Hall is part campaigner, part adviser

"We were an agent and we took their money from and gave it to them and I really feel awfully guilty."

The anger of those like Suzy who have lost out to Farepak's collapse has driven the campaign to MPs, MSPs and on into the corridors of power.

"They totally underestimate the power of the people and the internet," Suzy says.

"I believe that our forum coming together has worked wonders."

And now the campaign is paying off .

Suzy is one of those people being consulted by the Office of Fair Trading.

"I can't believe I was asked for my input," she says.

But the victims are also facing other pressures.

'Knocks on the door'

Back in Burns Avenue, loan sharks have been circling.

Mother-of-two Flo Woods, who lost £500, said: "Me and my friend were approached at the school.

"The only way I can describe him is a loan shark. He approached loads of people. We've been getting leaflets through the door and knocks on the door.

One such lender expected her to pay back £275 interest on a £500 loan.

Farepak's financial woes began when it borrowed £34m from the Bank of Scotland (now Halifax Bank of Scotland) in 2000 to buy a business it eventually sold three years later for less than a tenth of what it had paid.

Forensic accountant David Winch told the BBC it was "a serious wound to a company of this size" and a major loss for its parent company.

Mr Winch said this was compounded by the parent company buying three new businesses which need time to mature and reach a profit.

"The only funds they could count on were those of the savers from Farepak," he says.

Farepak collapsed in October

The body-blow, though, came in February 2006 when the voucher company that supplied the firm went bust - and the new voucher system changed the cash flow cycle leaving it short of cash when it needed the funds most.

However, the financial post mortems are scant consolation to those hit by the firm's demise.

"The people who have saved by doing this had set up a security for themselves and that is now gone," Maria Hutton says, adding: "So they are in desperate situations."

Some help is at hand from the Farepak Response Fund, which ended its appeal last week after raising £6.4m from corporate donors and the general public.

Savers should receive about 15p for every £1 they saved in the form of vouchers which the charity faces a race against time to distribute by 18 December.

The firm' administrators expect to pay victims a further 4p or 5p for every £1 saved, while the DTI said banks were expecting to refund an extra £4m to Farepak customers who had paid via credit or Visa debit card.

See the full story on BBC One: Real Story Mon 4 Dec 1930GMT.