Office of Maryland Attorney General J. Joseph Curran, Jr.

March 1, 2002 Media Inquiries: Sean Caine 410-576-6357


Recently, several Maryland brides-to-be were shocked when the bridal shop they were patronizing abruptly went out of business. The orders for their wedding dresses, along with the deposits they had paid, were lost. Another Maryland woman was similarly upset when a department store filed for bankruptcy before it delivered her $900 dining room set and would not refund her money.

In this month's issue of his Consumer's Edge newsletter, Attorney General J. Joseph Curran, Jr. offers advice on how consumers can protect themselves when a store closes, and tells consumers what they should know about "going out of business" sales.

"If you must make a deposit on ordered merchandise, the best thing to do is make the smallest deposit possible and put it on a credit card," Attorney General Curran said. "That way, should the store go out of business, less of your money is at risk, and you may be able to recover the full amount from your credit card issuer, should something go wrong."

When a store closes, the recourse for customers who are owed merchandise or money varies depending on whether the store has filed for bankruptcy. If the store has filed for bankruptcy, the consumer should file a claim with the Bankruptcy Court. Unfortunately, often the business may not have enough money to repay all its creditors. If the store has not filed for bankruptcy, the consumer should contact the business or its owner to see what can be done. The consumer may also take the business to court, but collecting a judgment can be difficult, time-consuming and expensive. If the consumer paid for the merchandise by credit card, the consumer may be able to request a refund from the credit card issuer. Finally, any consumer experiencing a problem with a merchant that is going out of business, should contact his Consumer Protection Division for help, by calling 1-888-743-0023.

Consumers might be able to pick up some good bargains at "going out of business" sales, but they should shop carefully. Some businesses increase the prices on items just before the sale to give the appearance of big savings. Sometimes, the only "bargains" are on shoddy merchandise improperly brought in by a liquidation company hired to take over the operation of the close-out. Curran says consumers should:

• Check the merchandise to make sure it's the same quality as merchandise they've bought at the store previously.
• Don't assume you're getting bargain prices. Comparison shop elsewhere to be sure.
• Ask about the refund policy. Often sales will be final. Examine what you want to buy carefully.
• Ask about service after the sale. Read warranties to see if there are other places you can take the item for repair or service if needed.

Maryland law provides that a "going out of business" sale can last no more than 60 days. The store must take inventory of all the items to be sold, and the retailer cannot restock the shelves with new merchandise for the purpose of the sale. However, a Bankruptcy Court may sometimes allow stores to bring in new merchandise or conduct a sale for more than 60 days.