Page last updated at 23:01 GMT, Thursday, 6 August 2009 00:01 UK

Shoppers 'need more protection'

Shoppers are losing out when trying to get money back

A watchdog has called for more protection for shoppers who pay for goods in advance but lose their money when a business collapses.

One in 10 consumers who paid upfront during the last two years have not received their order, a poll of 16,010 people for Consumer Focus found.

Just under half of those did not get any money back, losing an average of £242 each, the group said.

In the UK, 24.5 million prepayment transactions are made each year.


The watchdog decided to research pre-payments after the high-profile collapse of businesses such as Christmas hamper firm Farepak and wedding gift list operator Wrapit.

As with many things during a recession, it is the poorest that will be hit hardest
Steve Brooker, Consumer Focus

Newlyweds without their presents were told they would receive little or no refund after Wrapit collapsed in August 2008.

Consumer Focus said that retailers and suppliers going bust was the main reason for consumers missing out on goods and refunds.

Top of the list of goods failing to arrive were electrical goods, books, music, clothing, furniture and non-package holidays.

"Consumers are losing out in the fight to reclaim money from bankrupt businesses," said Steve Brooker of Consumer Focus.

"The problem looks to worsen, given the dramatic rise in companies going under this year. As with many things during a recession, it is the poorest that will be hit hardest."

Card protection

Debit cards were used in 45% of pre-payment transactions and Mr Brooker said the protection for these people should be stepped up.

Brides hand in petition
Brides held a protest after losing money when Wrapit collapsed

He called for the law to be changed, so those using debit cards were offered the same chance of compensation as those using a credit card.

People who pay between £100 and £30,000 in advance for goods can make a claim to their credit card provider if the shop or supplier goes bust. Visa also offers some voluntary protection for its debit cards.

The watchdog also wants customers to be placed higher on the list of creditors to be refunded after a business folds and the administrators sell its assets.

It claimed that they received an average of 3p for every pound spent.

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