Consumer groups want more protection for debit card users

Almost everyone that has paid deposits for goods with an insolvent retailer are likely never going to get their money back, particularly if they paid by debit card or cash. Consumer groups are calling for a change of the law to protect those using a debit card, as a recent number of insolvencies involving many high profile high street retailers has created worrying times for all.

There are thousands of customers that have goods on order, and as these stores have had to call in the receivers, the issue is really pressing. Among the companies that have gone into receivership this week are TJ Hughes the discount department stores based in Liverpool, Habitat the home furnishings group and Homeform, which is the parent company of Sharps Kitchens, Moben and Dolphin Bathrooms.

There are possibly thousands of customers that may have paid a deposit on a large ticket item like a bathroom suite or furniture who could lose the entire amount. One such customer paid £2,000 for a kitchen to Moben but now no one responds to phone enquires and the branches are all closed.

Consumer advocacy groups are asking for legal protection for those paying with debit cards. When a store calls in the receivers, their customers are all at once are at the bottom of the list of creditors. Secured lenders are first, like banks and landlords, followed next by the administrators called in to wrap up the business. Customers that are owed deposit refunds ranks alongside staff that may be waiting on back wages.

Credit card holders that paid a deposit are protected by the 1974 Consumer Credit Act under Section 75, with all purchases from £100 to £30,000 are covered by the provider of the credit card. This makes certain that consumers will not be left paying for services or goods they were never provided or received.