SHOPS – the DCA fight for justice continues

In October it will be two years since the NMA (News Media Association) announced its intention to close and wind-up the consumer protection scheme known as SHOPS (Safe Home Ordering Protection Scheme) which was originally founded in 1975 as the Mail Order Protection Scheme (MOPS). The aim was to ensure that readers of nationally published print media could safely buy products from mail order advertisements – as, if anything went wrong, there was a fund to provide compensation to any reader who had paid in advance for goods never received.

That fact that MOPS/SHOPS vetted all potential “mail order advertisers” prior to their being approved by individual publications as advertisers meant that the sector was being policed. A business wishing to advertise had to prove that it held the stock it was advertising and was financially stable. This acted as a credentials check for the NMA members and it is also important to state that the scheme itself enabled each of those national press members to sell considerably more advertising. 

There is no doubt that the former MOPS/SHOPS helped to reduce instances of fraud and to reassure consumers that it was safe to buy from advertisers who they may not have otherwise heard of. The scheme logo within advertisements added an important assurance for consumers and the knowledge that, if anything did go wrong with their orders, they could turn to the MOPS/SHOPS scheme for redress. 

Schemes like this, of course, come at a price and it is important to stress that it has been the advertisers and their agencies funding the operations of MOPS/SHOPS from their annual fees over the years.

“If I count just the companies that I have run or owned over the past 40 years, that’s Kaleidoscope, Innovations, and latterly Scotts of Stow, we’ve paid hundreds of thousands of pounds into this fund. When the scheme closed, the consumer protection fund had a balance of £3.9 million,” said Nigel Swabey who as President of the DCA as well as CEO of Scotts, has been leading the DCA’s fight to see this fund move into an extended and modernised consumer protection scheme.

It has to be asked why SHOPS was closed. “That’s simple,” said Swabey, “The NMA advised the Board of SHOPS that they had taken a decision to wind it up. The only problem with this is that they failed to consult with their co-shareholder on the Board of SHOPS – the Direct Marketing Association - (DMA),” he added, “And, of course, the advertisers, the companies whose contributions have created this not insignificant fund, were justifiably furious. Almost all of them are or have been members of the DCA, and their advertising spend is over £100 million.”

It was in July last year that Swabey led a delegation of DCA members at a meeting, convened by the DMA’s CEO Chris Combemale, at which the then SHOPS management team and NMA were represented. The NMA’s stance was that there had been no recent claims on the fund, it had run its course and that the costs of administering the scheme were eroding the fund. The DCA group made the point that advertisers did not expect to have the funds returned to them but instead wanted to the residual fund (now £3.7 million) used to provide a guarantee scheme for the protection of customers, across all advertising media – print and digital. Internet shopping being where the need for consumer protection is the highest.

Twelve months has passed and, frustratingly, whilst representatives of the DMA and the NMA have met on a number of occasions, they have failed to reach agreement. The talks are understood to be deadlocked.

“The DMA, with our support, wants the funds to be used to seed a new consumer protection scheme. The NMA opposes this and we are not sure why unless they see internet advertising as competition and don’t want the £3.7 million fund to offer protection to an advertising channel that is competitive with newspapers,” commented Swabey. Adding “The trouble with this is that it is not their money and the decision is not solely theirs to take. The DMA can rightfully block any attempt on the part of the NMA to divert or seize this fund. The Articles of SHOPS are quite clear that in that in the event of winding up or dissolution of the company that any remaining fund ‘shall not be paid to or distributed among the members of the company, but shall be given or transferred to some other institution having objects similar to the objects of the company’.”

He added “If the NMA is actually seeking a payment that would seriously diminish the amount of cash residing in the scheme, it would probably make it impossible for anyone to start a new scheme. It is really difficult to understand why the newspapers, faced with declining advertising income, are so intent upon alienating one of the biggest remaining groups of print advertisers.”

Swabey also advised that discussions have been held with a variety of other parties who support the idea of a new broader-based consumer protection scheme. These include Royal Mail, other post and parcel carriers, the Retail Ombudsman, The Chartered Trading Standards Institute, Which?, as well as a number of other trade associations.

“Together we have the opportunity to create the ABTA/ATOL of direct shopping,” he said.