Biz Bulletin: Going-out-of-business sales not aways the cheapest source

Biz Bulletin: Going-out-of-business sales not aways the cheapest source

August 29th, 2014 By Jim Winsett in Business Diary

Jim Winsett

Photo by Contributed Photo/Times Free Press.

Q: I bought an item at a going-out-of-business sale, but it turned out to be defective. Since the business has closed its doors, is there anything I can do about my product not working?

A: Every year, thousands of businesses close down, move or sell out and hold special sales to clear out their remaining stock of merchandise. Better Business Bureau warns that in some cases such "going-out-of-business sales" may not offer the best buys in town.

Better Business Bureau strives to create an ethical marketplace where buyers and sellers can trust one another. BBB accomplishes this by creating a community of trustworthy businesses, setting standards for marketplace trust, encouraging best business practices, celebrating marketplace role models and denouncing substandard marketplace behavior. One major function of the BBB has been to monitor local advertising in accordance with the BBB Code of Advertising.

There are times when a store must close its doors and liquidate any remaining stock quickly. According to the BBB Code of Advertising, "Liquidation and going out of business sales should not be advertised unless the stated or implied reason is a fact, should be limited to a stated period of time, and should offer only such merchandise as is affected by the emergency. Advertisers should conform to the requirements of applicable local, state and federal laws."

Liquidation, bankruptcy, and going-out-of-business sales sometimes provide consumers with opportunities for big savings. However, unscrupulous businesses may run "final closing" sales regularly, ringing up big sales because the stores imply a sense of urgency, and consumers believe they are purchasing the merchandise at greatly reduced prices.

Some stores try to convince consumers they are going out of business over several months, yet they continue to bring in new merchandise. Or a store may post artificially high prices, just so it can claim big savings. For instance, the $500 item marked "half-off" may normally sell for less than $250.

Instead of closing down, a store may reopen under a new name in the same or a new location. Once it reopens for business, it may run another going-out-of-business sale. Another ploy used by deceptive merchants is the going-out-for-business sale, a play on words used to lure customers with the implied promise of savings.

While big savings may be found at a legitimate "everything-must-go" sale, such savings shouldn't automatically be assumed. Consumers should compare price and quality, and read warranties carefully to find out if the item can be taken to a service center or other facility, since the store is closing and won't be able to offer service on its merchandise.

By comparing prices and understanding the real meaning of advertising promotions, consumers can avoid misleading sales pitches and take advantage of stores offering truly good deals.

BBB suggests if a company has closed its doors and/or has gone bankrupt and owes you money or merchandise:

• Try to contact the company directly first with a certified letter.

• If the certified letter goes unanswered and there is no way to contact the company, you can file a dispute with your credit card company if that was your method of payment. To be eligible under the Fair Credit Billing Act, you must file the dispute within 60 days of the transaction.

• If the company goes bankrupt, you may be paid after the business liquidates its assets. To protect your rights in the bankruptcy proceeding, complete a Proof of Claim form and file it with the bankruptcy court.

• Realize that there is no guarantee that a customer will get money or merchandise owed in any situation. If you are owed a large amount of money, consider contacting a private attorney.

Jim Winsett is president of the Better Business Bureau of Chattanooga.