farepak

[moneyman]

I have been reading this story for the last few days and cant quite get my head round this and also the red letter days.

1) you pay cash
2) they bank cash
3) they pay for product several months later while earning interest
4) you get product after that
5) they somehow go bust.

How?

how can you lose money when you are taking money in advance for a product, holding on to it and only handing it over if they remember or want the gift?

next question. Why not put your money in a building society?

[karl.rivers]

In answer to your points.

1) A huge mount (clearly too much) would need to be spent on advertising. There is no product on the shelf so how else do you get the word out there effectivley -- so there is one cost.

2) Why not put your money into a building society? Several reasons:

- Some people feel that they are less likely to dip into the money if they don't have access to it.

- People are stupid.

[www.accounting-for-business.com]

Perhaps they were investing a portion of the money rather than just relying on bank interest.

That can go horribly wrong as Nick Leeson could tell you ;-)