One in ten lose out on goods they paid for in advance

Published on Thursday 6 August 2009 22:03

ONE in ten shoppers are not receiving goods or services that have been paid for in advance, according to research.

The research shows about 1.8 million British shoppers have not received an order paid in advance during the past two years, with the average loss being 242.

And yesterday there were warnings the problem was set to get worse, with more retailers and suppliers going bust and consumers having trouble getting their money back.

Consumer Focus, who were behind the research, called for new measures to protect consumer prepayments.

The study shows that low-income consumers are hit hardest as companies targeting this group are more likely to fail.

Low-income consumers were also less likely to use credit cards – the best source of payment protection.

The worst performing sectors were electrical goods, books, music and other small entertainment items, clothing and textiles, furniture and holidays

Consumer Focus said shoppers should also be moved up the list of creditors who receive a share of proceeds when the assets of an insolvent company are sold off.

Shoppers currently lie near the bottom of this hierarchy, receiving an average of only three pence for every pound spent – compared to 35 pence for secured creditors such as banks.

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

"As with many things during a recession, it's the poorest that will be hit hardest.

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