N.Y. Atty. General: You Can’t Hold A Going-Out-Of-Business Sale If You’re Staying In Business

The funny thing about a going-out-of-business sale? That means your store is actually going out of business, and thus needs to offload its remaining products before it does. It’s not a time to get everyone to rush over and buy new stuff just because sales are sluggish. That’s why New York State Attorney General Eric “Spiderman” Schneiderman went after a furniture store holding bogus sales while still staying in business.

Schneiderman’s office announced a settlement today with a New York furniture company accused of engaging in deceptive and misleading advertising by telling customers that there was a “going out of business” sale when that wasn’t true, a violation of New York State law.

The company obtained a 30-day license from the town to promote its sale, but just two weeks in, town officials told the store it wasn’t in compliance with the law, because it didn’t note an expiration date of the sale in its ads or post a copy of the remaining inventory in the store.

A month later when the store renewed its application, the town also accused it of violating the law by bringing in new merchandise to stock the store for the sale, which is also against the law. Stocking new products goes against the idea of a store selling off what it has before going out of business.

By March 2014, after 60 days of its “five-day sale” and despite the fact that its license hadn’t been renewed again, the A.G.’s office said the store ran yet another going-out-of-business sale ad and was planning to stay in operation until the office ordered it to stop.

In the settlement, the company has agreed to stop pretending it’s going out of business, pay $30,000 in civil penalties to New York and fork over its $475 application fee to the town.

“This case sends a clear message that our office will hold businesses accountable when they use false or misleading advertising practices to deceive consumers,” said A.G. Schneiderman in a press release. “New Yorkers should be able to trust the claims made by businesses and know that they will be treated fairly in the marketplace.”

Read Comments2

Edit Your Comment

  1. PsiCopB5 says:

    Many moons ago, when I visited that area more frequently than I do now, there were a couple of stores on Grant Ave in San Francisco’s Chinatown that had “going out of business” signs up, and everything marked down (supposedly). Most of those “markdown” prices were around the same as other places were charging for the same stuff. Having been there a few times over the course of several years, those signs were always up and, so far as I knew, those stores never actually closed.

    It seemed like a scam back then and I wondered if it were legal. I know in my home state of CT you can’t have a “going out of business” or “close out” sale without a license from the Dept of Consumer Protection (http://ct.gov/dcp/cwp/view.asp?a=1629&q=428756). I haven’t been to Chinatown in quite some time so I don’t know if they’ve kept this up.

  2. Thorzdad2 says:

    As a kid, there was a furniture store near me that was eternally going out of business. I mean, I grew-up and left for college and the store was still going out of business. Year after year.

    It’s always furniture stores, too. There must be something about the way the furniture industry is structured that lends itself to this.