Many companies (call them D for Defendant) require monetary deposits from consumers (C for Claimants), before D undertakes time and effort to order the product. C is an unsecured creditor, and ignorant on consumer law.
Don't just answer that D shouldn't buy from companies that require down payments — this is impractical.
But after C pays their deposit, if D goes bankrupt, then C can't recoup their deposit — because D has little to no assets. Or C ranks so far behind D's secured creditors that C won't be restituted. Or the deposit is too teensy to warrant paying fees to file a claim, even in Small Claims Court!
Presume that the company has NOT set up a separate escrow or trust account to hold customer deposits, and to protect them from a bankruptcy.
How could C have protected C's deposit? Don't just answer that C should buy from and seek trustworthy companies. Even big box retailers can bankrupt!
What are securer alternatives to deposits? I have heard of "letters of credit" before, but can they assist me here? Can I ask my bank to issue a letter of credit to the company's bank?
This fact pattern has happened 3 times in my family. In my grandpa's case (call him G), D was a medical equipment company. For my aunt A, D = a mattress company. For my mom M, D = a furniture company.