Book Description

Consumers often make "prepayments" to businesses, paying for goods and services in advance of receiving them. In the UK, online retail sales and the gift card and voucher market are booming, and consumers frequently pay in advance for products - from flights and theatre tickets to gym memberships and bathroom suites. If the business that has taken the prepayment becomes insolvent, consumers may be left with neither the item they paid for, nor any real prospect of a refund. Insolvency law does not give consumers any special protection. Along with trade suppliers, landlords and many others, consumers are unsecured creditors who will not receive anything until secured creditors (typically banks and investment funds) and preferential creditors (such as employees) have been paid. This does not mean that consumers always lose out. There are many ways in which consumers may be protected - through arrangements put in place by individual businesses, as a result of refunds available through credit and debit card issuers, or because of the commercial decisions taken by administrators. However, these arrangements are often voluntary rather than underpinned by legal rights. Where consumers do suffer losses, they range from relatively modest amounts - perhaps a low value gift voucher - through to hundreds or even thousands of pounds, for example for furniture, home improvements or cars