Belfast Telegraph

Tuesday 2 September 2014

Shoppers ripped off as recession bites

One in 10 shoppers are not receiving goods or services that have been paid for in advance, according to research revealed today.

Shoppers champion Consumer Focus said around 48% of shoppers are not getting their money back and have called for new measures to protect consumer prepayments.

Consumer Focus revealed around 1.8 million shoppers have not received an order paid for in advance during the past two years.

The main reason for this was cited as retailers and suppliers going bust.

The research shows 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 average loss for consumers losing money was £242 each, with the worst performing sectors being electrical goods 15%, books, music or other small entertainment items 15%, clothing and textiles 12%, furniture 11% and holidays 11%.

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 3 pence for every pound spent - compared to 35 pence for secured creditors such as banks.

Steve Brooker, markets expert, Consumer Focus, said: "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.

"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."

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