Under existing rules, if a company becomes insolvent, goods paid for in advance that are still in its possession may be considered as assets belonging to the business. The consultation will set out ways of identifying the consumer as legal owner.
The coronavirus crisis has put additional pressure on retailers as many consumers avoid shops and other businesses.
Consumer affairs minister Paul Scully has asked the Law Commission to consult on draft legislation to update the law that establishes when consumers legally own goods for which they have pre-paid.
“With more and more people prepaying for goods online, it is so important our laws are up to date to reduce the risk of customers losing out if a business unfortunately becomes insolvent,” Scully said in a statement.
“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.”