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Shoppers need more protection, says watchdog

Shoppers need more protection, says watchdog

Category: Money

Updated: 07/08/2009
First Published: 07/08/2009

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 It is now over 6 months old so the content may be out of date.

Shoppers paying for goods in advance only to lose their money when firms go bust should be afforded more protection, a consumer watchdog has said.

In a poll, Consumer Focus found that nearly 1.8 million people had not received goods they'd pre-paid for, with retailers and firms going bust cited as the main cause.

On average, consumers were left out of pocket to the tune of £242, with online sales accounting for more than six in ten (61 per cent) purchases were are not received.

The group is now calling for the Government to move consumers up the list of creditors entitled to a share of proceeds when assets of firms that have gone bust are sold off.

Consumer Focus has also called for debit cards – which are used for 45 per cent of the 24.5 million prepayment transactions made in the UK each year – to benefit from the same protection given to consumers using credit cards.

Currently, people making payments between £100 and £30,000 can make a claim for funds from their lender if the firm goes bust.

"Consumers are losing out in the fight to reclaim money from bankrupt businesses, and the problem looks set to worsen, given the dramatic rise in companies going under this year," said Steve Brooker, markets expert at Consumer Focus.

"Better protection of prepayments is in everyone's interest. Consumers will be reassured that their money is safe, which will encourage spending and keep a valuable source of credit open to struggling businesses."

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