Consumer watch: Vouchers are handy, but sometimes not very safe ANNUAL sales of high street gift cards in the UK totalled around £2billion last year, and, with ­corporate incentive sales, and further spending by consumers on voucher sites, independent retailers and coupons, that figure is thought to top £5.5bn. While most ­vouchers are redeemed without problem every year, it is worth understanding the risks you take when you buy vouchers, and consider taking steps to protect your purchase. Vouchers can be a great gift choice for relatives and friends who are saving for larger items, live far away and so can't collect gifts or simply as a gift for people who are difficult to buy for. But with recent high street insolvencies and administrations, and the proliferation of online shopping sites and relatively unknown voucher websites, consumers should ask themselves the question: "Should I give this company or website my money now, for something I may not ­redeem for months?" When you buy a voucher, you are essentially getting a promise from a company or a website to provide you with a product or service at some time in the future. The figures show vouchers are big business because so many - last year around £250million worth of UK high street vouchers - are never redeemed and are lost or expire in a dusty drawer. But the recent demise of electrical retailer Comet brought back into focus the real possibility that even big household- name retailers can fail, and when they do, they take with them the value of all their vouchers. When a firm goes into administration the holder of a voucher, who often sees their purchase as guaranteed, actually becomes a creditor of the business in administration, and whether the vouchers they hold are honoured is at the discretion of the licensed insolvency ­practitioner who has been appointed to look after the interests of the creditors and manage the company. In the past few years the list of big retailers that have failed includes JJB Sports, Habitat, Clinton Cards, Woolworths, GAME, La Senza, Barratts Shoes and Comet. Financial distress is spread across the sector, from gift cards and fashion to electrical and furniture retailers. In the case of the Comet administration, vouchers were eventually honoured after their use was suspended by administrators for a period of time, but there have been many cases in the past where this has not, or could not be the case, and only preparation by the buyer could have protected their purchases. Times are tough on the high street, and we do expect to see more big-name failures in 2013, however the majority of companies will still be here in a year's time when vouchers expire. I wouldn't stop buying vouchers, but buying on a credit card could be the best and cheapest way to ensure you don't lose out. Most credit cards do cover consumers for purchases over £100, including gift vouchers bought directly from a store. However if a store goes bust and you bought your voucher from a third-party provider, your credit card provider is unlikely to pay out. With online voucher websites that sell vouchers on behalf of third-party retailers, there are different risks to consider. Firstly, what if the business for which you are buying a voucher - a restaurant, hotel or driving experience goes out of business? Can the voucher be honoured, or will money be refunded from where I made the purchase? And what if the site from which I made my purchase goes into administration or has a dispute with the business that is supposed to honour the voucher, will I get satisfaction then? Unfortunately, there is no blanket answer and it depends on the small print of the voucher website and their arrangements with advertisers. It is all too often the case that small print protects a business better than it protects a consumer, and in many cases a voucher customer who finds themselves out of pocket has no guarantees and will have to rely on the goodwill of a retailer or website owner. Again, using a credit card often carries greater protection, but it will depend on the particular card terms and conditions. I advise buyers to spend a few minutes reading the Ts and Cs of a site they haven't used before, and potentially even asking the question by email or telephone from either party, and if you don't like the sound of the answer, think about the purchase. Vouchers are a great gift for many reasons, but they are not the same as cash, they are a promise from a retail company, and consumers sometimes forget this when big name businesses they trust are involved. Ken Pattullo of business ­rescue and restructuring experts ­Begbies Traynor is an Insolvency Expert