Watchdog calls for greater protection for shoppers

Shoppers who pay for goods in advance should receive greater protection if the business subsequently folds, according to the watchdog Consumer Focus.

A new study by the organisation has found that nearly 1.8 million consumers did not receive an item that was paid for upfront in the last two years, with the average loss being £242.

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

With 45% of people using a debit card to make prepayment transactions, Consumer Focus is recommending that such purchases receive the same guarantees as those made with a credit card.

‘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.’

He added: ‘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.’

The investigation follows the high-profile collapse of several firms, which resulted in thousands of customers losing their money.