Ministers to close loophole that allows bankrupt shops to withhold items customers have already bought

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MINISTERS are set to close a Victorian loophole that leaves shoppers at risk of missing out on goods they’ve already paid for when retailers go bust.

They will bring consumer laws into the 21st Century by scrapping rules that can see products at the time of bankruptcy withheld from customers.

Currently when a seller goes under their stock is classified as company assets, meaning it can be sold by administrators to pay off debts.

But the Department for Business says that means shoppers can be left out of pocket and has asked lawyers to draw up replacement legislation.

Consumer Affairs Minister Paul Scully said the move is urgently needed because more and more people are now shopping online.

That puts customers at higher risk because retailers could go out of business between receiving payment for an order and shipping it.

He said: “It is so important our laws are up to date to reduce the risk of customers losing out if a business unfortunately becomes insolvent.

“This consultation will look at how the law can be brought into the 21st century, providing clarity for those managing insolvencies and better protection for consumers.”

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