There's been a surge in the number of liquidation sales valleywide recently, and some of them are intended to rip off unwary consumers.
Some liquidation or creditor sales - particularly those in the furniture, stereo and waterbed businesses - are not legitimate, said Bill Beadle, president of the Utah Better Business Bureau.Many of the stores say they are going out of business, but they aren't closing their doors for good. The Better Business Bureau recently sent some people to shop at one of the suspicious liquidation sales. The shopper asked when the store was going out of business.
"They said, `We aren't really going out of business, we are just going to close down for a short while, change the name and reopen,"' Beadle said.
That pattern is typical of rip-off liquidation sales. There are people who run these sales as a profession, he said. They will buy an existing business, run a liquidation sale to hike profits, close the store and reopen shortly under another name, he said.
Companies running rip-off liquidation sales will bring in fresh merchandise for the sale instead of selling their own at drastically reduced costs as they claim, Beadle said.
The companies will describe incredible deals in their media ads, such as stereo speakers for $3, Beadle said.
"But when you go in there, that's not what they are looking to sell. They want to sell you much more expensive items. Some of them are discontinued items. Some are off-brands and some are name brands. They are not necessarily priced to be a spectacular bargain."
A consumer may be misled by such advertising to buy low quality, overpriced merchandise, he said.
Several advertisers have engaged in "bait and switch," he said. When a consumer goes in and asks for the low-priced item advertised, the item may be out of stock or of such an obviously poor quality that one don't want it. The clerk will lead consumers to higher priced items, instead, Beadle said.
The merchandise often carries untrue comparison prices.
"Inflated comparison prices bait consumers with the promise of unrealistic savings," he said.
"When you run a liquidation sale, that means you are closing out your existing inventory for good and you are closing your business for good. Typically, they are held in connection with bankruptcy proceedings. The court orders a liquidation sale to pay off creditors.
"When someone brings in fresh merchandise just to blow it out on the market and attracts consumers through distress advertising, they can mislead consumers into believing they are getting a good price for something when that may not be the case."
To avoid being ripped off, consumers should know how much the same or similar merchandise sells for at other stores, who honors the warranty, where to return defective items, who will service the item and whether the item is used, reconditioned or discontinued, he said.