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:

• Call the Attorney General's Consumer Protection at 1-800-441-2555, or file an online Consumer Complaint using the Attorney General's website.
• If a business is located out-of-state, also file a complaint with that state's Attorney General or Consumer Protection Agency. (see www.ConsumerAction.gov a free federal resource of businesses, government contacts and useful information.)
• Document all transactions, in order to assist investigators and to support any possible legal claims.
• Gather receipts, invoices, or bills that show what items were ordered, what you paid and when delivery was promised.
• Keep any phone records or any notes that indicate which company employees you spoke with, and when those conversations occurred.
• Try to contact the company's headquarters or "customer service" line, or use their website to lodge a formal complaint with the company.

Consumers should also take steps to limit any financial losses when faced with the sudden closure of a business:

• If you paid with a credit card, contact your credit card company to dispute the charges and have them removed from your bill (dispute information is listed on your monthly statements).
• If you paid by check, contact your bank to determine if payment can be stopped.
• If you arranged for long-term financing, contact the financing company and dispute any payment for items that have not been delivered.
• If you arranged for some form of automatic payment plan, contact your bank or credit union to immediately stop any future withdrawals from your account.

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.

• Research the business.  Consumers can check with the Attorney General's Bureau of Consumer Protection and the Better Business Bureau to see if the company has a history of problems.
• Also consumers can use popular Internet search sites to look for information about unresolved consumer complaints and other problems.
• NOTE: It is still possible for businesses to suddenly close without any past history of trouble, but some research before a purchase can help you avoid many problems.

Also, consumers should limit the amount of money they pay up-front:

• If the item you are ordering cannot be delivered immediately, pay only a small down-payment - 10 or 20% - just enough to secure your order, while minimizing your loss if the business suddenly closes.
• Consider using a credit card instead of cash, especially if the item is supposed to be delivered in the near future.  Credit card charges can be disputed and reversed for goods or services that have not been delivered, but consumers are often limited to a 60-day period for disputes.
• Make sure your receipt or invoice lists exactly what you have ordered (brand name, model number, color, size and other details) and also lists all advance payments.

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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