Consumer Advisory: Consumers urged to act quickly to protect their rights when businesses suddenly close
HARRISBURG - Consumers are urged to act quickly and file formal complaints when they encounter businesses that suddenly close - especially if consumers have pre-paid for goods or services that have not been delivered.
It is not uncommon for businesses, whether small or large, locally-owned or national chains, to close unexpectedly. These businesses sell a variety of products - from carpet and heating fuel to weight loss supplies and wedding photos. It is important for consumers to act quickly, to help minimize any potential loss and maximize the Bureau of Consumer Protection's ability to intervene, and to attempt to recover as much as possible for consumers, before a business files for bankruptcy.
Consumers should take steps to research businesses and minimize potential losses before making major purchases. If you believe that a business has closed without delivering items that have been paid for you can take the following steps:
Consumers should also take steps to limit any financial losses when faced with the sudden closure of a business:
Additionally, it is important for consumers to consider the possibility of a business closing before they make a substantial purchase, and to take steps to limit any potential loss should something happen to the business before their goods are delivered.
Also, consumers should limit the amount of money they pay up-front:
Finally, consumers should be watchful for problems and aggressive about protecting their rights. According to the Closing-Out, Damaged Goods, and Defunct Business Sales law there are specific restrictions regulating a manner in which a business liquidates and clears its merchandise in preparation for going out of business.
The select business must obtain a license, from its municipality, in order to hold a going out of business sale. The license is valid for 30 days and may be renewed for 30 days. Advertising of the sale may not misrepresent the inventory nor misrepresent the "sacrifice pricing" nor may a business embellish an inventory with additional stock or stock from another of its locations.
An enterprise, using any terminology to describe a sale in which the business will cease operations, must obtain a license for the sale, prior to the sale.
When the sale is a result of fire, smoke, water or flood damage, the advertising shall reflect the same in order to clearly identify the damaged items.
Upon filing for such a license, the written application must include the owner of the merchandise, the reason for such a rush to sale, and a truthful description of the sale supporting the reason for the sale, and the total retail value of the merchandise based upon the inventory used for the most recent federal tax return.
The business must post a bond with the municipality against any claim by a consumer, or debt owed to the governing body.
Prompt action by consumers can allow for possible intervention before a business closes, when there still may be a time to address problems before they grow to crisis level.
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